The buy and hold strategy is essentially just what it sounds like: Purchase stocks and then hold them for an extended period of time.
The underlying assumption for the buy and hold strategy is that stocks tend to go up in price over extended periods of time. Research supports this trend in a growing capitalist economy and the strategy has made millions rich. There is also something to be said about not having to ride the emotional roller coaster with every increase and dip in the market... just buy the stock and check on it once in a while.
Is a buy and hold strategy right for you? Take this quick quiz to find out:
- You are investing with long term goals in mind.
- You are unlikely to need the additional cash on short notice.
- You would like to reduce commissions and other fees.
- You would like to reduce or defer taxes.
If you answered "yes" to any of the above then a buy and hold strategy might be a good fit for at least a portion of your portfolio.