Buy-and-Hold
Buy-and-hold is a long-term investing strategy: buy diversified investments and hold them through market ups and downs, rather than trying to trade in and out based on short-term market moves.
Why it matters
- Buy-and-hold avoids the difficulty (and cost) of consistently timing market entries and exits correctly.
- It typically involves lower trading costs and fewer taxable events than active trading.
- Investor-behavior research (like DALBAR's) suggests frequent trading tends to hurt, not help, average investor returns.
Simple example
- An investor buys a diversified ETF and continues holding it through a market downturn instead of selling at a loss.
- Periodic rebalancing is often paired with buy-and-hold to keep the portfolio's risk level on target.