Definition
Buy and Hold
Buy and hold is a long-term strategy of purchasing quality stocks and holding them for years, ignoring short-term price swings.
The buy and hold investor focuses on owning good businesses for the long run, letting compounding work and avoiding the costs and mistakes of frequent trading. It rests on the belief that quality companies grow earnings over time, lifting share prices despite interim volatility.
This approach minimises brokerage, taxes (long-term capital gains are taxed lower), and emotional errors. Its discipline, sitting through corrections without panic-selling, is hard but historically rewarding for owners of fundamentally strong Indian companies.
Related terms
- Value InvestingValue investing is a style of buying stocks that trade below their intrinsic worth, betting the market will eventually recognise their true value.
- Dividend InvestingDividend investing focuses on stocks that pay regular, growing dividends, aiming for steady income alongside capital appreciation.
- CompoundingCompounding is when your returns themselves earn returns, accelerating growth the longer you stay invested.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.