Buy-And-Hold Investing—Is It A One-Size-Fits-All Solution?
The comments below are an edited and abridged synopsis of an article by Lance Roberts
Is buy-and-hold investing a one-size-fits-all solution to the investing conundrum? Or are there other considerations that would make such a solution less optimal?
Since 1900, the markets have averaged roughly 10% annually (including dividends). However, that figure falls to 8.08% when adjusting for inflation.
By looking at the chart included, it seems that you should invest heavily in the market and forget about it… If only it was that simple.
Up for discussion: Two important problems; the problem with long term; timing is everything; buy and hold works—until it doesn’t; and important points to consider.
In conclusion, Roberts says there is no one way to invest. Every investor must account for the many variables that will affect their investment returns and financial goals over time. Most importantly, investors must realize that surviving the eventual bear market is more important than chasing the bull market.
Roberts says the best way to invest is by navigating the entire market cycle between when you start investing and when you need your capital.
Buy-and-hold strategies are the best way to invest until they aren’t. Just make sure you know where you are within a given market cycle to increase your odds of success.