As an investment strategy, “Buy and Hold” is just what it sounds like: you buy an investment and hold it for an extended period, riding out market fluctuations and selling when the price reaches your target. The underlying logic of this strategy is that investments tend to gain value over time. That long-term gain, along with compound interest, can work to increase your initial deposit and provide you with a valuable asset for your future.
Buy and Hold is a passive investing style used by those who believe that “time in the market” is a more prudent approach than “timing the market.” Among those investors is Warren Buffet, who acquired much of his fortune on the principle of Buy and Hold. “The money is made in investments by investing and by owning good companies for long periods of time. ” Buffett has said.1 “If [people] buy [stock in] good companies, buy them over time, they’re going to do fine 10, 20, 30 years from now.”