Homework first then Buy and Hold

This proven approach to investing may have a questionable time-range for the impatient, or for those who are trying to catch up from the past few years of recession and unnerving slumps in the stock market, but it remains a solid method of wealth-building. Statistics and charts from all the records of the stock market show that long-term investments, if carefully chosen, hold their value and can grow considerably, when compounded.

Volatility, electronic-trading, and the roller-coaster ride that is today’s stock market is certainly reason for discussion of any one method. Buy and hold investing remains controversial, and a subject of debate, from Reuters to The Wall Street Journal to the contrarians, like Doc Eifrig with Stansberry Associates. Yet, the “Fear and Greed” factors can take over your life. Out-guessing the market takes a constant amount of attention and angst, while buy-and-holders can at least catch their breath. 

The theory of buy and hold remains basically sound. The key is choosing value stocks that are secure and growing in time-honored and diverse industries, the “Dividend Aristocrats” as advisors from Dividend Opportunities newsletter write. Stocks like Coca-Cola (KO) and Johnson and Johnson (JNJ) and a myriad of utilities which are well-funded and who have increased dividends steadily over the years may not be hot high-dividend yielders, but they are steady and solid, and do quite well in a venue like a Roth IRA, compounding and growing over the years. Long-term holdings have tax advantages in the independent individual sector, as well.

And, speaking of long-term, the buy and hold real estate strategy is another perennial, in spite of all the flipping and panics of the last decade or so. Real Estate will always be a precious commodity – we are simply not creating any new land, and homes will always be in demand as our population has not gone backwards one bit. Real estate is its own field, requiring careful choices and sometimes active management, but fortunes continue to be made with it and it can be part of a nice portfolio. 

Stocks will always out-perform bonds, as historically recorded. So, do that homework and consider a down market as a buying opportunity, and then relax with your choices. Wait and see.

This is not to say anyone can stay perfectly static or complacent. Diversity and periodic re-balancing may be called for in any portfolio. You simply must pay attention to your investments on at least a quarterly basis. Reading and comparing the financial news is always advised. If you are having trouble with all the super-hyped trends, check out Stock Gumshoe for a bit of perspective. This fascinating blog discusses all the confusion. It will make you want to just do a bit more homework, then buy and hold.