The conclusion of our 4-part series on ‘How to invest in shares—tips for beginners’
Buy-and-hold
A buy-and-hold strategy is when an investor buys a share with the intention of holding it for a while without selling it, usually for the medium to long term regardless of the market fluctuations. The aim is to buy shares in companies that promise strong earning potential.
The reason behind this idea is that profits will keep expanding as the economy grows and both dividends and the share price will increase as a result. There may be short-term market fluctuations (e.g. rising inflation, different business cycles) but in the long-term many risks will be smoothed out.
Advantages
Taxes are reduced.
Fewer worries about the economy and market fluctuations.
Trading costs are reduced.
The hassle of buying and selling is avoided.
There is a probability of high returns without significantly increasing your risk…