Buy and Hold

A buy-and-hold strategy is a classic that’s proven itself over and over. With this strategy you do exactly what the name suggests: you buy an investment and then hold it indefinitely. Ideally, you’ll never sell the investment, but you should look to own it for at least 3 to 5 years.

Advantages: The buy-and-hold strategy focuses you on the long term and thinking like an owner, so you avoid the active trading that hurts the returns of most investors. Your success depends on how the underlying business performs over time. And this is how you can ultimately find the stock market’s biggest winners and possibly earn hundreds of times your original investment.

The beauty of this approach is that if you commit to never selling, then you don’t ever have to think about it again. If you never sell, you’ll avoid capital gains taxes, a return killer. A long-term buy-and-hold strategy means you’re not always focused on the market.

Risks: To succeed with this strategy, you’ll need to avoid the temptation to sell when the market gets rough. You’ll have to endure the market’s sometimes-steep falls, and a 50 percent or greater drop is possible, with individual stocks potentially falling even more. That’s easier said than done.