What is the principle of “buy and hold” investing?

The principle of “buy and hold” investing refers to a long-term investment strategy in which an investor purchases stocks or other securities with the intention of holding them for an extended period, regardless of short-term market fluctuations. This approach is based on the belief that, over time, the market tends to rise, and investments will appreciate in value, benefiting from growth in the underlying companies and overall economic conditions.

Investors who adopt a buy and hold strategy typically focus on selecting quality investments that they believe will perform well over the years. This strategy minimizes the impact of market volatility on investment returns and reduces transaction costs associated with frequent trading. It often results in a more stable investment journey and can lead to significant long-term wealth accumulation.

In contrast, options that imply frequent trading, timing the market, or seeking short-term gains do not align with the buy and hold philosophy, which emphasizes patience and a long-term perspective. Thus, the correct choice highlights the strategic commitment to hold investments for the long run, leveraging time as a critical factor in realizing returns.