eToro
- Trade stocks and ETFs for $0 and no annual fee
- Minimum deposit of $10 required
- Get $10 when you sign up and deposit $100
Finder makes money from featured partners, but editorial opinions are our own. Advertiser Disclosure
Buy-and-hold is a great long-term strategy that comes with many advantages as opposed to frequent trading. That’s because it’s incredibly hard to time the market and pick the price tops and bottoms. Plus, you won’t pay fees for multiple transactions and could save yourself some frayed nerves from watching short-term volatility.
Buy-and-hold is an investment strategy in which the investor buys the stock — or any other financial instrument — with the intention of holding it long term regardless of short-term price fluctuations. This strategy is popular with cryptocurrency investors, which is also known as “hodling”.
In buy-and-hold, investors typically buy financial instruments they believe will appreciate over time, often time-tested companies with long track records. Also, they generally don’t try to time the market or sell high with the intention of buying back low. This strategy is a form of passive management recommended by Warren Buffett, Jack Bogle and Peter Lynch.
We don’t know what will happen in the future, so we’ll look at past examples where a buy-and-hold strategy has made some investors rich.
Company/Ticker | IPO date | IPO price | Early 2021 value if you’d invested $10,000 investment at the IPO price |
---|---|---|---|
Tesla/TSLA | June 2010 | $17 | $529,410 |
Alphabet/GOOG | August 2004 | $85 | $299,050 |
Netflix/NFLX | May 2002 | $15 | $394,660 |
The Direxion Daily Semiconductor Bull 3x Shares (SOXL) is a buy-and-hold ETF to consider. It’s an ETF that tracks semiconductors and is triple-leveraged, meaning it moves three times more than the price of all the stocks in the ETF. If you bought $10,000 worth of shares at the lowest 2011 price, your investment would now be worth $15,950,000.
eToro
SoFi Invest
The main risk of a buy-and-hold strategy lies in the company you invest in. If it goes bankrupt, you could lose all of your investment.
Luckily, this rarely happens overnight, so you would likely see the red flags long before it happens. Large, established companies do go away, but not overnight. This can give you more than enough time to sell your stock and pick another one. Likewise, the stock price may go down, but the bottom won’t fall out overnight.
The reward comes when the stock makes gains over time. Beyond this obvious reward, you’ll also save money on trading fees. Buying and holding means you only pay fees once to buy the share and then a second time to sell them.
Another benefit is that you get to pay a lower capital gain tax if you hold a stock longer than a year.
For the buy and hold strategy, you’ll need a broker that doesn’t charge inactivity fees because it’s implied you won’t trade often. Most brokers today don’t charge such fees, but make sure to read the fine print and avoid surprises.
*Signup bonus information updated weekly.
Buy-and-hold is a solid long-term investment strategy. You don’t have to do a lot of research to see that it works — simply check any price chart of successful companies and see how it performed in the past. Despite short-term volatility, great stocks will usually outperform in the long run.
Information on this page is for educational purposes only. Finder is not an advisor or brokerage service, and we don't recommend investors to trade specific stocks or other investments.
Finder is not a client of any featured partner. We may be paid a fee for referring prospective clients to a partner, though it is not a recommendation to invest in any one partner.
Find out how long term investments work and how to use long term investments to build your wealth.
Your guide to the best investments you can make as a college student.
We bring you six alternative investing platforms worth trying to diversify your portfolio.
Finder’s Retail Investor Sentiment Report polled 39,573 Internet users across 26 countries to see how they’ll be investing their money in 2022.
Portfolio management is important for beginner and advanced investors alike — here’s how to get started.
7% of American adults — the equivalent of 18.7 million people — are investing under the influence of alcohol, according to a new report from Finder.com.
We bring you five tech stocks that have had a rough ride in the past month but are still up year-to-date. These undervalued companies are definitely worth a look.
What is good and bad investment advice?
47% of American adults currently own shares and an additional 15% plan to invest by the end of this year.