Don’t Make These Mistakes in Buy & Hold Investing

December 30, 2019
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There are just two days of trading left in 2019’s stock market, with many investors already looking ahead to the new year. Growth in the last 12 months has been nothing short of phenomenal, with stocks performing their best since 2013. With so much positivity, more private investors are engaging with the market. For people focused on income and retirement, Buy & Hold is a popular strategy.

There’s a lot of value to be gained from holding on to high potential and growth stocks, but there are also mistakes to avoid. Here are two of the most important ones to be aware of in the new year.

Don’t Forget to Engage with Your Portfolio

Buy & Hold doesn’t mean that you should leave your portfolio static. The viability of individual stocks is in a constant state of change. Stocks that you hold for long term growth should be reassessed at least every quarter. It’s also essential to follow the financial news cycle in case company-specific, market, or geopolitical factors could impact your portfolio.

Don’t be afraid to shed previously strong stocks that stop offering returns. The more you manage your portfolio, the surer you will be of its ability to support your income or retirement lifestyle.

You Don’t Have to Buy What You Know – There’s Room to Learn and Grow

Warren Buffett is one of the most successful investors in history. His advice is often seen as the gold standard for people who are new to the equity markets. Buffett tells investors to buy what they know, but this isn’t always the best advice for newcomers.

Companies that you are familiar with may be ideal for investment, but you’ll need to look at past financials and future projections to determine whether your money belongs in their stocks. Don’t be afraid of industries that you are unfamiliar with. If you take the time to learn about individual companies and their business models, you will find opportunities that didn’t immediately occur to you.

Buy & Hold New Year Trading Begins on Thursday

The markets will be closed on Wednesday for the New Year’s Day Holiday. Full trading resumes on Thursday, and there should be plenty of volume as investors move back into full gear.

Research the stocks that appeal to you, and always make your decisions based on sound financial data and projections, rather than emotion and pure speculation. Equities are expected to see continued growth throughout the first quarter, and earnings season later in the quarter will be a good time to start evaluating your holdings for the year ahead.

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