Both short term investment and long-term investment can be effective investment strategies, however, long term investment has several significant advantages. These include the effect of compounding, the opportunity to earn from dividends, reduction of the impact of price fluctuations, the ability to make corrections in a timelier manner, less time spent monitoring stocks. 

1.      Compounding: Time can be investor’s best friend because it gives compounding time to work its magic. Compounding is the mathematical process where interest on your money in turn earns interest and is added to your principal. 

2.      Dividends: Holding a stock to take advantage of pay outs from dividends is another way to increase the value of an investment. In mutual funds, you can invest in a scheme which reinvests dividends towards making additional purchases in the units of the scheme. In case of shares, you can also purchase additional shares of the same company with the dividend received from that company. The quantity of the additional shares or additional units can be small but when coupled with compounding factor, it works wonders in the long run. Additionally, dividends are more a reflection of a company's overall business strategy and success than volatile price fluctuations based on market emotions. 

3.      Reduction of The Impact Of Price Fluctuations: In the long term investment the persons is less affected by short term volatility. The market tends to address all factors that keep changing in the short term. So, a person involved in long term investment or investment will not be affected as much by short term instability due to factors such as liquidity, fancy of a particular sector or stock which may make the price of a stock over or undervalued. In the long term, good stocks which may have been affected due to some other factors (in the short term) will give better than average returns. 

Long-term investors, particularly those who invest in a diversified portfolio, can ride out down markets without dramatically affecting his or her ability to reach their goals. 

4.      Making Corrections: It is highly likely that you could achieve a constant return over a long period. The reality is that there will be times when your investments earn less and other times when you make a lot of money in short term. There may also be times when you lose money in short term but as you are in quality stocks and have long perspective of investment you will earn good returns over a period of time. 

There are always times when some stocks do not perform and it is the wise choice to pull out of an investment. With a long-term perspective based on quality stocks, it is easier to make decisions to change in a timelier manner without the urgency that accompanies short term and day investment strategies chasing volatile changes. 

Investors that begin early and stay in the market have a much better chance of riding out the bad times and capitalizing on the periods when the market is rising by taking a longer-term view using long term investment strategies.