Although it can certainly be testing for your patience at times, holding onto companies for the long-term is the most rewarding and most profitable investing strategy available to investors.
By investing for the long-haul, you get the pleasure and satisfaction of watching your wealth slowly follow the company's growth on the upwards trajectory, sharing in any dividends paid along the way. The tax benefits for long-term investing are equally as attractive – any shares held onto for more than 12 months will result in a 50% capital gains discount when the shares are eventually sold.
If you needed any more convincing, it is also the method by which investing great Warren Buffett plays by – he once said that he bought companies on the assumption that he would still be happy holding those shares if they closed the market the next day and didn't reopen it for the next 10 years.
Telecommunications giant Telstra Corporation Ltd (ASX: TLS) is one such company that fits Buffett's description. While the company boasts superior customer service and products compared to its rivals, it will also continue benefiting from society's increasing reliance on smart phones and broadband services. What's more, it also offers an incredible 5.6% fully franked dividend, which is larger than most term deposits or bond yields.
Market favourite Woolworths Limited (ASX: WOW) would also be a perfect company to add to your holdings for the long-term. Like Telstra, it has the capacity and balance sheet strength to survive through even the toughest economic conditions, making it a 'safe' or 'defensive' investment. While it would be easy to assume that these 'defensive' plays would be slow growing or 'boring' investments, Woolworths is anything but.
It recently reported a 6% increase in sales and 6% increase in net profit after tax (NPAT), which are astounding results for a company its size. Its Masters Home Improvement business is another avenue in which it could continue to benefit from as it competes against Wesfarmers Ltd's (ASX: WES) Bunnings business. Priced at $35.81 a share, it also offers a dividend yield of 3.8%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is another one for you to consider. The company is a conglomerate of both listed and unlisted businesses and is a major shareholder of entities such as Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM) and coal miner New Hope Corporation Limited (ASX: NHC). Although its investment in New Hope is currently weighing down its overall earnings, its other investments are holding up strong.
The company is in a strong position to act on any further attractive opportunities that comes its way with a cash balance of $82.9 million and short-term term deposits worth $1.32 billion – not bad for a company with a strong reputation for buying companies early in their growth stories.
Foolish takeaway
Committing for the long-term can often be more easily said than done. It requires enormous levels of patience and faith in the company's executives to manage your investment responsibly – especially when the business is going through turbulent times.
However, this commitment can prove incredibly beneficial for your wealth. Just look at the gains shareholders of Woolworths have recognised over the last five (35%), 10 (206%) and 20 (1,054%) years. Those figures were achieved in spite of the dot.com crash of 1999 as well as the global financial crisis and aren't even including dividends paid.
