Holding stocks for the long term helps with capital appreciation and compound interest, significantly improving investment returns. It reduces market volatility impacts and transaction costs while providing stable dividend income. Quality stocks like Apple and Ping An effectively resist inflation, preserving and growing capital.

**Capital Appreciation**

From 1980 to 2020, the S&P 500 index grew at an annual rate of about 7.8%. If an investor had invested $10,000 in this index in 1980, its value would have increased to about $100,000 by 2020. This growth rate includes the effects of stock price increases and compounding dividends. For individual companies like Apple, the stock price increased by thousands of times from 1980 to 2020, further proving the capital appreciation potential of long-term investments.

In the Chinese market, from 2010 to 2020, the Shanghai Composite Index grew at an annual rate of about 6.2%. If an investor had invested 10,000 yuan in this index in 2010, the value would be about 18,000 yuan by 2020. Blue-chip stocks like Kweichow Moutai increased several times during this period, showing the capital appreciation effect of holding quality stocks long-term.

**Compound Interest**

Assuming a stock has an annual return rate of 8%, an initial investment of $10,000 would grow to $21,589 after 10 years due to compound interest. This growth includes not only the appreciation of the initial investment but also the additional returns from reinvesting annual earnings. For example, Microsoft had an annual return rate of about 15% over the past decade; if an investor invested $10,000 in 2014, its value would grow to about $40,000 by 2024.

If an investor invested 10,000 yuan in a blue-chip stock in 2010 with an annual return rate of 12%, the investment value would grow to 31,058 yuan after 10 years. For stocks like CATL with an annual return rate exceeding 20%, an investment of 10,000 yuan in 2013 would reach 60,000 yuan by 2023.

**Reducing Market Volatility Impact**

For the S&P 500 Index, from early 2020 to March 2020, due to COVID-19, the index dropped about 34%. However, if investors held onto their investment from the end of March 2020 to December 2021, the index increased by 70%, showing that long-term holding smooths short-term volatility and provides stable returns.

In the Chinese market, during the 2015 stock market crash, the Shanghai Composite Index dropped over 40% from its June peak. If investors held their investments during the crash and until the end of 2020, the index rebounded with an annual return rate of 6.2%. For example, investors holding quality stocks like Ping An, despite short-term market fluctuations, saw steady long-term returns.

**Reducing Transaction Costs**

Frequent trading can lead to commission fees, typically around 0.1% to 0.5% per trade. If an investor makes ten trades a year, each with $10,000, and each trade incurs a 0.2% commission, the annual trading cost would be $200. In contrast, holding stocks long-term only requires paying the initial purchase transaction fees, greatly reducing total trading costs. For instance, long-term holding of Amazon stocks avoids frequent trading during market fluctuations, saving significant trading fees.

In the Chinese market, if an investor makes five trades a year, each with 10,000 yuan and a 0.3% commission, the annual trading cost would be 150 yuan. If these investors chose to hold stocks like Tencent long-term, the initial transaction fee of 30 yuan would save 150 yuan annually in trading costs.

**Enjoying Dividend Income**

Assuming a company pays an annual dividend yield of 4%, an initial investment of $10,000 would yield $400 in dividends per year. If an investor held the stock for 10 years, total dividend income would be $4,000. For example, Coca-Cola has a stable annual dividend yield of 3% to 4%, providing steady cash flow through long-term holding.

In the Chinese market, for Kweichow Moutai, the dividend yield has been stable at 1.5% to 2.5% over the past five years. If an investor invested 10,000 yuan in 2018, annual dividend income would be about 250 yuan, totaling 1,250 yuan over 5 years.

**Capital Preservation**

From 2000 to 2020, the inflation rate increased by about 50%. If an investor held a stock like Apple, which appreciated over 3000% during this period, it far exceeded the inflation rate, showing that stock investment effectively resists capital depreciation risks from inflation. Long-term holding not only avoids capital losses from short-term market fluctuations but also uses company growth and profit accumulation to maintain capital’s actual purchasing power.

In the Chinese market, if an investor bought Ping An stock in 2010 at 30 yuan, by 2020, the stock price would have risen to about 80 yuan, an increase of 166%. Meanwhile, the annual inflation rate in China was about 2.5%, with a cumulative increase of about 28%. Long-term holding of Ping An stock not only resists inflation but also achieves capital appreciation and preservation, ensuring that the actual return on investment exceeds losses from inflation.