What is a 'buy-and-hold' strategy?

A 'buy-and-hold' strategy refers to an investment approach where an investor purchases securities with the intention of holding onto them for a long duration, regardless of the inherent volatility of the market or short-term price fluctuations. This strategy is based on the belief that, over time, the value of quality investments will generally increase.

Investors who adopt this strategy often focus on the long-term potential of their investments, rather than attempting to make short-term gains through trading. This can lead to reduced transaction costs since fewer trades are executed, and it allows investors to benefit from compounding returns and long-term market appreciation. The buy-and-hold strategy aligns well with a long-term investment horizon and a focus on fundamental analysis, as opposed to market timing or active trading, which can involve higher risks and costs.