Buy and Hold
A passive long-term investing strategy of purchasing securities and holding them through market cycles rather than trading actively.
What is Buy and Hold?
Buy and hold is an investment philosophy in which an investor purchases securities — typically diversified index funds or individual stocks — and holds them for years or decades regardless of short-term market volatility, corrections, or bear markets. The strategy is based on the historical tendency of equity markets to rise over long time horizons despite periodic downturns. Buy-and-hold investors benefit from compound growth, avoid transaction costs and short-term capital gains taxes from frequent trading, and sidestep the behavioral pitfalls of market timing. Academic research consistently shows that most active traders underperform simple buy-and-hold strategies over 10-year periods after fees and taxes.
Example
An investor who put $10,000 into an S&P 500 index fund in January 2003 and held through the 2008–2009 crisis, the 2020 COVID crash, and the 2022 bear market would have seen that investment grow to approximately $75,000 by end of 2024 — a 7.5x return over 22 years.