Warren Buffett once said that his favourite holding period is forever. I own a particular S&P/ASX 200 Index (ASX: XJO) share that I expect to hold for the rest of my life.
Holding a good investment forever can be very beneficial. It can mean never having to activate a capital gains tax event or pay brokerage for transactions.
The ASX 200 share I'm committed to as a long-term investment is Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), the investment house that has operated for over a century.
There are three reasons why it's the one ASX 200 share I can imagine holding for decades to come.
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It's a diversified portfolio
Diversification is often touted as a key strategy to lower risks while still delivering pleasing returns.
However, owning just one ASX 200 share doesn't seem very diversified. But, as an investment business, Soul Patts' asset base is a diversified portfolio.
The business is invested in areas like telecommunications, resources, financial services, healthcare, building products, industrial property, electrification, swimming schools, agriculture, credit, and more.
It'd be comfortable to only be invested in one company when it's so diversified.
ASX 200 share can change its investments
Soul Patts doesn't have a permanent portfolio; the investment team can decide to change its investments if it wants to.
I'd expect that not every one of Soul Patts' holdings will remain good investments for decades, so I would encourage it to change its portfolio as it sees fit to ensure its portfolio is future-proof.
The business has a flexible investment mandate which enables it to look from small businesses all the way up to the ASX's largest companies. It can also invest in whatever sector it thinks has the best opportunities. Swimming schools and agriculture are relatively new focuses for the company. Funerals are another area the business has invested in this year.
I'm very interested in seeing where it invests in the future to expand the portfolio.
Good returns
I wouldn't hold an investment just for the sake of it; I'd want to see good investment returns over time.
Impressively, the ASX 200 share has grown its annual ordinary dividend every year since 2000, the best record on the ASX in terms of consecutive increases. In addition, the business has generated pleasing capital growth over time.
When the business reported its FY25 half-year results, it pointed out its pleasing long-term returns. In the prior five years, it returned an average of 12.6% per annum, outperforming the All Ordinaries Accumulation Index (ASX: XAOA) by an average of 4.4% per year. Over the prior 25 years, Soul Patts shares delivered an average return of 13% per year, beating the All Ords Accumulation Index by an average of 4.5% per year.
Overall, this ASX 200 share offers everything I want from an investment, and I plan to hold it for decades to come.
