“Buy-and-Hold” is an investment strategy that involves purchasing financial assets, such as stocks or bonds, and holding them for an extended period, regardless of market fluctuations. This approach relies on the belief that, over time, markets will generally move upward, allowing the investor to benefit from long-term capital appreciation and potential dividends.
The relevance of the Buy-and-Hold strategy in finance lies in its simplicity and effectiveness. Investors who choose this method typically aim to minimize transaction costs and avoid the stress of attempting to time the market. By focusing on long-term growth trends, they can often achieve better returns compared to active trading strategies, which may entail frequent buying and selling based on short-term market movements.
Moreover, the Buy-and-Hold approach aligns well with the philosophy of compounding returns. By reinvesting any dividends or interest earned, investors can enhance their overall returns over time. This strategy is especially popular among individual investors who prefer a passive investment style that requires less active management.
