Holding Period

Meaning: 

The Holding Period is defined as the total time an investor retains an investment before selling it. It starts from the purchase date and concludes on the sale date. Essentially, the holding period indicates how long an investment is held. 

Example:

The holding period is crucial for determining tax implications, as different holding periods  lead to different tax treatments.

A longer holding period can reduce the volatility of an investment, leadin g to potentially more stable returns.

Uses of Holding Period: 

Investors use the holding period to calculate returns on investment, decide on taxation, and plan their investment strategies.