Long term players here I have one more strategy for you. Basically, this is in line with all other long-term investment strategies as the key factor remains the same. You live fearlessly and risk-free and wait for the overall growth and neglect the temporary fall of price from any profit loss or other factors.
As the economy grow, stock price grows and so is your money.
People who invest in this type are usually long-term investors. Buy and hold strategy combines with all other strategy but not with momentum strategy as it is short term but this is long term. It makes you enter the market and stay for long run irrespective of the fluctuations, in a belief that overall economy will grow with time.
This strategy fails when there is drastic fall in the economy, which takes some time to recover, as total earning gets reduced.
Buy and hold suggests a way buy stocks and hold it for a long period which may be more than 4-5 years. This is pure long-term investment strategy. It reduces continuous buying and selling and hence reduces each time transaction cost like a brokerage.
This is based on the idea that overall the economy will grow and so your investment will. So Instant volatility does not affect, the investment even during down trend investors stay in the market and earn benefits staying in the market from coming years whereas others pull out their money.
This keeps the investor away from regular ups and downs of the market and investor as a whole earns profit from the growing market, as the economy grows so the market grows.
Are you the right person? Who should use this?
If you are not risk lover and want to stay away from the regular stress of market fluctuations this is the right place for you. Regular monitoring is not required and also gives tax benefits.
As an investor you should have a knowledge of which type of stocks to be bought and hold and one should be updated as in the case of drastic fall of the market this strategy fails.
This may help you from tax benefits as per tax rules in your economy, usually, long-term investors get tax exemption for their earned money
- Pure long term investment
- Does not take temporary market fluctuations into consideration
- Low-risk investment strategy and can be combined with almost all other strategies.
- Provides tax benefits and reduces transaction charges like brokerages.
The bottom line is that you need to have the patience to grow with the growing economy. Investing with only this strategy may not help you to grow well. All you need to do is diversify your way of trading and use all possible strategies that can help you earn a profit.
You need to have some kind of backup as whichever strategy fails you will not lose all your cards and still survive in the game.
All you need to do is secure your money from risk as much as you can and enjoy the market which helps you to grow your wealth.