Buy and hold

Buy and hold describes a strategy in which broadly diversified investments are held for a long time without reacting to short-term price movements. Rather than moving in and out, the investor stays invested throughout.

Avoiding frequent trading saves on dealing costs and, because gains are realised less often, on tax as well. At the same time the approach sidesteps the most common timing mistakes, such as selling into falling markets and re-entering too late.

Buy and hold assumes that the underlying holdings are broadly diversified and that the investment horizon is long enough to sit through interim setbacks. Its counterpart is the attempt to time the market.