I choose stocks with the intention of holding them as long as possible. This in particular makes my husband give me funny things — I think he wants to code up some sort of fancy algorithm that will optimize our investment strategy.
This strategy is how I handle my business, too. I’m constantly writing up new business plans for the ideas that pop into my head. None of my business plans have exit strategies, though. The closest I come is writing out how to systemize a business idea so that I can hand off most of the hard work to someone else.
I could justify this strategy with all sorts of data. The real reason I go with ‘buy and hold,’ though, is that it’s a socially acceptable form of hoarding.
Gotta Catch Them All
There are a wide variety of saving and investing strategies out there. I’ve written enough about personal finance that I could actually discuss them in some depth. But for the purpose of this post, you just need to know that ‘buy and hold’ is a legitimate strategy.
The general trend for the price of everything seems to be upwards. Provided you can hold out through the ups and downs of the market, buying in early and waiting as long as humanly possible to sell will usually get you a decent return. Bubbles can throw a wrench in the works, admittedly. The real estate market will probably reach the same levels it hit before the bubble burst, but it won’t be for years — maybe even decades. If you can afford to hold all the way through the down cycle, great! Otherwise, tough luck.
But by investing early and often, you can also wind up with a more diverse strategy. I invest in my own business as much as possible, albeit in a variety of different sub-businesses that can make money independently. There are also plenty of other investments that are in my portfolio now or will be in the future, all of which I plan to hold on to as long as possible.
There is a side benefit to the ‘buy and hold’ strategy. I do plenty of due diligence before making a new investment, but I virtually ignore it afterwards. For each bit and bob in the old portfolio, I make sure that I know what I need to watch out for, like a stock hitting a certain price. I have automated tools that notify me when such things happen.
Stop Holding, Eventually
Of course, some day, I’ll stop holding on to all of my investments. They may have to yank my business from my cold, dead hands. For everything else, though, I will sell. I’ll drag my heels, but I’m not too emotional about stock certificates and other investments. I may feel like I need to collect the whole set when it comes to my preferred investment vehicles, but half the fun of a good collection is taking it out and playing with it. Since you can’t exactly do that with a stock or a bond, it becomes a lot easier to let them go, provided the money is right.
So, I heartily endorse ‘buy and hold.’ I’m not a financial planner or any other type of financial profession. You shouldn’t take my advices on investments, by any means. But my approach has worked out pretty well for me so far.
This post is a part of Women’s Money Week 2012. For more posts about saving and investing, see womensmoneyweek.com.