• Buy and hold strategy
• Bottom up investing
• Top down investing
• Defensive investing
• Dollar cost investing
• Contrarian investing strategy

All these strategies are different and have their advantages as well as disadvantages. In this article we would talk about the most commonly used strategy which is buy and hold strategy.

Buy and Hold is a basic investing strategy where investors buy and hold a security for an extended period of time. It is a known fact that stocks give a better yield in the long run than any other investment avenue like bonds, CDs, real estate etc. And this principle is being followed in the investment strategy. Investors believe that if they can find a good security and keep it for an extended duration of time they will get better results than other investments. The belief is that it is better to allow a security the opportunity to grow over time, versus attempting to trade in and out of a stock for quick gains.

However, it is very important to invest in the right stock in this strategy. To do this, first the right sector or index needs to be identified. Once that is done, target the strongest securities within that index. This basic top down approach will ensure that the trader is purchasing into a stock with the greatest chance of growth potential.

Advantages of Buy and Hold strategy

There are various advantages of this investment strategy. Some of them are:

1. Savings on commissions – Since the stock is not being traded actively, you save on the commissions which can be pretty costly. A Buy and Hold strategy can allow a trader to invest large sums of money with minimal costs.
2. Savings on taxes – Since this is a multiyear strategy, you save on the long term gains which keeps you on lower tax bracket. This is again a major advantage.
3. Less stress – Most investors can take it easy once they buy the stocks in this strategy. They don’t have to worry about every price movement since they are pretty sure that they will make money in the long term. This gives them peace of mind.

Disadvantages of buy and hold strategy

As mentioned earlier, none f the investment strategies is without any negatives. Even in buy and hold strategy, there are some disadvantages. Though it looks like a safer bet, it may not give you the best returns possible. Also, bear markets are not good for this strategy since it can take years to get to a break even point. Another major point against this strategy is that you can never be sure of the stocks you have picked especially in current market when a lot of blue chip and reputed companies are going bankrupt overnight.

Related posts:

1. Stock trading Strategies – Listen to the experts and devise your own strategy
2. Long term stock investments – Some tips to get better returns
3. Forex Trading Strategy – Different forex trading strategies used by forex traders

Dummies is kind of a way to tell that we all start investing with absolutely “no idea” kind of thing and late on what we do is that we get to all sorts of special ideas and we kind of become the experts.

The idea behind dummies to experts is stock market investing is no different.

Step by step if start following a path you will reach your target.

Making money in the stock market is no different and it always helps to get some insight into what other beginners feel before you take the plunge.

The basic of stock market are:

What is an exchange?

What is a share?

How does the Stock market work?

What are different kinds of trading strategies?

Which is the best online brokerage firm?

What do you understand by a stock Market quote?

What do you mean by P/E and eps?

And lastly when to buy or sell?

All these above are the question that needs to be answered by an expert if you are looking at stock market investing and making money online with the stock market.

Related posts:

1. Stock investing for dummies – How to invest in IPOs
2. Stock market for dummies
3. Reading stock charts for dummies