Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
The following is a guest post by Tony Chou from Investorz’ Blog, where he teaches both novice and pro investors how to invest in the stock and commodities markets. Enjoy and be sure to get involved in the discussion by commenting below!
How about you all? Do you have any buy-and-hold investments? How have they done over the years? What investing strategy do you generally use to save?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- Howdy folks! Jacob here! Sorry I’ve been a little elusive on the blog as of late. I’ve been busy getting ready for my PhD Qualifying Exam next week (the report was due today, and currently, I am running on 2 hours of sleep).
- Great topic here Tony! I absolutely agree that buy and hold only really works if you’re not directly depending on the money you’re holding to meet your living expenses or other near-term financial goals.
- @ Confusion between the differences of buy-and-hold and a prudent passive retirement investing strategy –
- I think that often, people confuse the overly-simplified buy and hold investing strategy with passive investing.
- Although technically, buy-and-hold is a form of passive investing because it doesn’t involve timing the market, the proper way people are supposed to perform passive investing is through careful selection of an appropriate asset allocation coupled with periodic rebalancing.
- Because of the rebalancing, passive investing, in the correct sense, is much better than buy-and-hold.
- @ Getting sucked in to the excitement of selling during market downturns – I definitely agree with the statement above that the majority of investors lack (and lacked during the 2009 financial crisis) the resolve to hold on to their investments through big dips in the market. Many people I know sold up to half of their holdings at the very bottom of the market, causing them to lose much money. In my mind, this just further affirms my belief that people should avoid risky individual stock selection, choose an asset allocation that will allow them to sleep at night, rebalance periodically, and stick to it!
***Photo courtesy of http://www.flickr.com/photos/sercasey/324341982/sizes/l/in/photostream/