Often, there are questions as to whether an equity portfolio held for long term can really beat expectations and what does long-term mean? A quick look at the data put out by Fundsindia.com has some key takeaways. This is the data on probability of different levels of returns over different holding periods. Here data has been taken into account for a period of 26 years from 1999 to 2025. The question is what does equity portfolio here refer to? Here, the reference is to Nifty 50 TRI, but as a practical proxy, investors can consider a diversified mutual fund portfolio of large cap stocks or preferably multi-cap stocks. Again, this data refers to the past, and may not be true for the future. 

There is nothing special about the 7-year holding period. What this table tells us is that if you hold the equity portfolio for a period of at least 7 years, you start to see the real signs of risk-return trade-off playing in your favour. Here 7-year holding period refers to any continuous period of 7 years between 1999 and 2025. By holding the equity portfolio for 7 years, the probability of negative returns is zero, so you make positive returns for sure. Also, there is a 98% probability that you will earn over 7% CAGR with a 7 year holding period. However, minimum-maximum return variance is still quite high. 

While 7 years is the cut-off to almost eliminate the chance of negative returns, let us look at the key benefits of holding for a longer period than that. 

1.  When the equity portfolio is held for 10 years, there is a 99% probability of earning over 7% and a 70% probability of earning over 12% returns. There is also a 38% probability of earning more than 15% CAGR on the equity portfolio over 10 years.
2. When the equity portfolio is held for 12 years, there is a 98% probability of earning over 7% and a 72% probability of earning over 12% returns. There is also a 31% probability of earning more than 15% CAGR on the equity portfolio over 12 years.
3. When the equity portfolio is held for 15 years, there is a 100% probability of earning over 7% and a 79% probability of earning over 12% returns. There is also a 32% probability of earning more than 15% CAGR on the equity portfolio over 15 years.
4. However, if you look at shorter holding periods like 1 year, 3 years, or 5 years, the probabilities are quite volatile. That is something to be cautious about. 

It appears that a 10-year holding period is good enough to get best benefits of long term. Beyond that, it lead to risk substitution, hence at that point, let the goals drive tenure.