# Is Long-Term Investing a Myth? What the Data Shows "Just stay invested" is not a plan. Why blue chips stalled for years, why investors earn less than their funds, and an adaptive approach that works. By Nikhil Varghese, CA · 3 October 2025 · https://finniki.com/blog/long-term-investing-myth **Quick answer:** Long-term investing works, but "just stay invested and you will automatically make money" is a myth. Returns depend heavily on **when you enter**: Nifty 50 returns over long periods have ranged from about 7% to 20% a year. Blue chips such as Reliance and Infosys went through years of flat returns, and some "safe" names, such as DHFL and Lakshmi Vilas Bank, wiped shareholders out. Investors also earn far less than their funds, often **6 to 7%** against a reported 12%, because they buy late and sell in panic. What works is **adaptive, disciplined investing**: mostly index funds you rebalance, some money you add when markets are cheap, a small amount of risk money, a cash buffer and clear rules. *Updated October 2026. Figures are as of the episode unless stated; the SEBI trader data is from its study of FY25.* [Watch the episode: The truth about long-term investing (what no one tells you)](https://youtu.be/VQZCdk7UzQ8) ## Is long-term investing a myth? Not the investing, but the promise. Markets do grow over time, but they also crash, stall for years and sometimes wipe investors out. "Time in the market beats timing the market" is true only if you can sit through 30 to 50% falls without panicking, and most people cannot. Blind faith in staying invested is hope, not a strategy. ## Do stocks always return 12% over the long term? No. The familiar "12 to 15% long-term equity return" depends on the start date and assumes you never missed a SIP. Nifty 50 returns over long periods have ranged from roughly **7% to 20%** a year depending on when you entered. Even a 27-year holding, 1990 to 2017, returned about **13.7%** a year: good, but not guaranteed, and not what someone entering at a peak would have earned. ## Do blue-chip stocks always pay off if you hold them? Not smoothly. The episode's two examples: - **Reliance Industries:** about **13% a year** over 2006 to 2025, with ₹10,000 growing to about ₹1.22 lakh. But between 2008 and 2016 it was stuck for years, while inflation quietly ate the value of the money. - **Infosys:** about **10% a year** over 2015 to 2025, ₹1 lakh becoming about ₹2.68 lakh, but nearly flat for about three years during the IT slowdown of 2018 to 2020. Many "long-term" investors sold in that period, before the recovery. And some names once seen as solid did not recover at all. **DHFL** collapsed and its shareholders were wiped out when it was delisted after its takeover in 2021. **Lakshmi Vilas Bank** shareholders lost everything in its 2020 merger, and **Yes Bank** shareholders lost most of their value in its 2020 rescue. In 1992, after the Harshad Mehta scam, the Sensex fell by about half and investor confidence took years to return. ## Does missing the best days really ruin returns? It cuts both ways. Studies show that missing just the **10 best days** in the market can halve your returns, which is the usual case for never selling. What is mentioned less often is that missing the **10 worst days** would raise returns by even more. The real lesson is not that timing is easy, it is not, but that blind holding also has a cost. ## Why do investors earn less than their funds? Because of behaviour. Even when funds report 12%, the average investor often earns only **6 to 7%**, because people enter late, after a rally, and exit early, in a fall. Three habits do the damage: - **Loss aversion:** losses hurt about twice as much as equal gains feel good, so people hold bad stocks too long and sell good ones too early. - **Herding:** buying in euphoria and selling in panic, along with everyone else. - **Overconfidence:** believing you can outsmart the market, and walking into obvious traps. ![Funds may report 12% returns while the average investor earns only 6 to 7%, because of buying late and selling in panic.](https://finniki.com/blog/media/41c924957a60b0c841e6c086.jpg) Trading is the extreme case. SEBI's study found that about **91% of individual F&O traders lost money in FY25**, an average loss of about ₹1.1 lakh each, and over ₹1 lakh crore in total. ![About 91% of individual F&O traders lost money in FY25, according to SEBI.](https://finniki.com/blog/media/6b9c354fdee52dc3d6ebed69.jpg) ## Do famous investors just buy and hold? No, they manage risk too. Warren Buffett has had many losing bets and keeps a huge cash pile, about **$380 billion** at Berkshire Hathaway in late 2025, not because patience guarantees returns but because he wants to be ready when prices fall. Charlie Munger said the big money is in the waiting, George Soros built his fortune on the idea that markets are often wrong, and John Templeton, who compounded at about 15% a year for decades, admitted that timing "maximum pessimism" is almost impossible. ## Does any investing strategy always work? No. Every "foolproof" approach has had long bad spells: - **Value investing** lagged growth for much of the last decade. - **Index investing** concentrates money in the same few large companies as more people buy the index. - **Momentum investing** works until a sharp reversal wipes out its gains. - **The all-weather portfolio** struggled when correlations rose in a crisis. - **Black-swan hedging** protects against disasters but drags down returns in normal years. ## Are SIPs always the best way to invest? Not always. SIPs shine in falling or volatile markets; in strong bull runs, investing a lump sum early often does better. And SIPs only work if you keep them going: many investors stop them in a fall and break the compounding they were counting on. Advertised mutual fund returns also suffer from **survivorship bias**: poorly performing funds are merged or closed and quietly disappear from the record. ## What can wipe out a long-term portfolio? Black-swan events and policy shocks. The crashes of 1929, 2008 and COVID wiped out years of gains in months. Closer to home, company failures, sudden regulatory changes, tax changes and delisting can reset an investment overnight. That is why diversification and position sizing matter more than blind holding. ## What is adaptive, intelligent investing? A disciplined system that keeps you invested but not passive: - **70% in diversified index funds**, rebalanced based on market valuations rather than held blindly. - **20% flexible:** add more when markets are cheap and trim when they look overheated. - **10% risk money:** start-ups, crypto or small caps, accepting it could go to zero. - **A cash buffer of 12 to 18 months' expenses**, so you never have to sell in a crash. - **Global diversification**, beyond India. - **Clear rules** for when to book profits and when to cut exposure, decided in advance so emotions do not decide for you. ![Adaptive investing: about 70% in index funds you rebalance, 20% flexible by valuation and 10% risk money.](https://finniki.com/blog/media/587cb1f20fa73a1056fcb167.jpg) ## Why don't you hear this from the industry? Because the industry earns as long as you stay invested, whatever your returns. Survivorship bias hides the failures, and mass campaigns simplify the story to bring people in. That message is useful for getting people started, but it leaves out the complexity. Fear, greed and overconfidence destroy more wealth than bear markets do. ## FAQs ### Is long-term investing a myth? No, but the idea that holding anything for long enough guarantees good returns is. Returns depend on when you enter, what you hold and whether you stay disciplined through falls. ### Do Indian stocks give 12% returns in the long run? Sometimes, but not reliably. Long-period Nifty 50 returns have ranged from about 7% to 20% a year depending on the entry date. ### Why do investors earn less than mutual fund returns? Because they tend to invest after rallies and sell during falls. That behaviour can cut a fund's 12% to 6 or 7% for the average investor. ### How many F&O traders lose money in India? About 91% of individual traders lost money in FY25, according to SEBI, with an average loss of about ₹1.1 lakh. ### Are SIPs better than lump-sum investing? In volatile or falling markets, usually; in strong bull runs, a lump sum invested early often wins. SIPs work only if you keep them running. ### How should I invest instead of just holding? Mostly in diversified index funds that you rebalance, with some flexible money for cheap markets, a small amount of risk money, a cash buffer and pre-set rules for booking profits. ## Build rules, not hope The right system depends on your goals and how much you can afford to lose. [Book a session](https://finniki.com/book) to set your allocation and rules, or find more episodes on [FinNiki videos](https://finniki.com/videos).