Buy and Hold

What is Buy and Hold?

Buy and hold is an investment philosophy centered on purchasing quality assets and retaining them for years or decades, ignoring short-term price volatility. The approach rests on the premise that markets grow over the long run; when that premise does not hold over an investor's own horizon, a long holding period by itself does not undo a loss.

Costs, Taxes, and Compounding

The strategy benefits from compound growth, lower transaction costs, and reduced tax drag. Active traders who frequently buy and sell pay short-term capital gains taxes (up to 37% in the US), while long-term holders qualify for lower rates (0-20%).

Key Considerations

Buy and hold does not mean buy and forget. Periodic portfolio reviews ensure your asset allocation remains aligned with your goals. The strategy works best with broadly diversified holdings rather than concentrated positions in individual stocks, where company-specific risks can permanently destroy capital.