Why Buy-and-Hold is a Good Investment Strategy
Investment analysts say that buy-and-hold is the best investment strategy for the average consumer. But do you really understand why?
After all, the idea of a fast dollar Newustown a stock is appealing. Buy low and sell high. Do that enough and you should come out on top, right?
Well, not exactly. Timing the market is almost impossible to succeed at. Eventually, you will lose. There are some that win using market timing, but you have a good chance that it won't be you.
A study by the Financial Analyst Journal compared the results between market timing and buy-and-hold strategies. The authors looked at data from 1929 to 1999. They looked at all six major US asset classes to see if market timing is effective when compared to buy-and-hold investing.
The study looked at several different market timing methods. And what they found was that sometimes it does work. Two people out of every 1,000 will come out on top with market timing.
Ninety-eight percent of buy-and-hold investors will come out on top.
The trick to making money in Spokejgdmef is not really found in buying and selling. It is found in investing for the long term. Do you know what your chances are in making money on a stock. You have a 70% chance that an investment in stocks will make money in any given year. If you leave your money in for the long run, you have a better chance of coming out on top.
However, I'm not saying invest and forget. You Scooby and Scrappy Doo to know why you invested in the first place. Before you invest, know what your objectives are. You need to make sure that your investments are goal orientated. You sell investments that become inappropriate for your portfolio and goals and buy ones that fit in. that is buy-and-hold in action.
If you want to protect an investment, don't look at the individual stock price. Set yourself out points on the Gourmet Coffee and low side. You sell if it reaches that high or if it goes that low. If you don't set these guidelines and realize a loss, what are you going to do? Do you wait it out or take the loss?
You start over with the money you have right now and choose a new investment. that time you will set yourself out points. There is nothing you can do about the money you have lost, but you can prevent losing even more.
Don't hold onto stocks just to be stubborn. Realize when you made a mistake and start over. Change what you are doing so that you don't return to that place again. Set goals. Know why you are investing. Know your top price and your low price. And don't try to time the market, you have a 99.8% chance it won't work.
Martin Lukac www.MartinLukac.comwww.MartinLukac.com, represents www.RateEmpire.comwww.RateEmpire.com, an Internet Jonny Quest banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal medical marijuana American Financial, found at www.1AmericanFinancial.comwww.1AmericanFinancial.com.
