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What is Long Term Capital Gain?

A long-term capital gain (LTCG) is a gain stemming from the sale of investment held in a range of 1-3 years. The period for investment varies for different asset classes.

This time horizon for debt funds is three years, for a house or property it is two years, while for equities it is one year.

Let's consider this long-term capital gain example... you bought some shares of xx company at Rs 10,000 in 2011 and you are selling the shares for Rs 25,000 in 2020. The gain of Rs 15,000 made on this investment is treated as LTCG.

Since 1 April 2018, LTCG on the sale of equity shares has been made taxable by the Indian government.

'The stock market is designed to transfer money from the active to the patient' - Warren Buffett.

This quote effectively captures the benefits of long-term gain.

Success in investing does not come overnight. It requires discipline and patience.

One should not purchase stocks at any cost, even if he/she is prepared to wait out a few years to make significant gains. Always demand a safety margin in values when making long-term investments.

Re-evaluating the portfolio is a must, even if you're investing for the long term.

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