The Buy & Hold investment approach is where you invest in the stock market and hold it for a long period of time regardless of the inevitable fluctuations in the market. Many legendary investors such as Warren Buffett and Jack Bogle praise the Buy & Hold approach as ideal for individuals seeking a simple way to accumulate wealth over the long-term.
Fair Share Partners has a Buy & Hold account that we invest $50 into every month. The objective of our account is three-fold:
- to achieve average stock market returns over the long-term, or hopefully even slightly better, in the simplest way possible, while minimising transactions, costs, taxes and administrative burdens;
- to enable parents, grandparents, uncles, aunts etc. of young children to follow and copy our account so that the children may observe and learn from a young age, that despite the ups and downs along the way, the stock market is one of the best, and simplest, ways to accumulate wealth during their lives;
- to ultimately be used by young people for smaller sums of money (e.g. pocket money, cash gifts for birthdays etc.) as a stepping stone to building enough confidence to take full advantage of retirement savings accounts for larger sums of money once they start working themselves.
If you would like an easy way to follow or copy our account, and at the same time help Fair Share Partners to make charitable donations to the school of your choice, go to our School Search page, find the school that you would like to be your nominated school, copy the relevant URL for that school into your browser and proceed by following the instructions here.
Indeed, if possible, if you are a parent, it might be an idea to consider getting your children involved from a young age by perhaps setting up multiple accounts in your own name(s) for the benefit of each of your children. This way they could save a portion of any cash they may receive over the years for birthdays, religious occasions, household chores etc. and they can observe how their ‘own’ investment account progresses over time.
If you set up multiple accounts for the benefit of your children, you should be able to avail of the annual capital gains tax personal exemption and the small gift exemption, to make tax-free gifts to your children of the money they have saved and invested over the years, when they are old enough to be able to open investment accounts in their own name as they continue the habit of saving and investing by themselves. However, to take full advantage of the above exemptions, where there is more than one child, it would make sense to split the accounts that are for the benefit of the children between both parents, where possible.
We have chosen eToro for our Buy & Hold account due to its low costs, its virtual portfolio option, the ability to buy fractional shares, its easy to use software and because it displays the historical performance of an account over time which we think is useful from an educational point of view in demonstrating how you can gradually accumulate wealth over time despite the inevitable bumps and potholes in the road you’ll hit along the way. (eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.)
However, you shouldn’t consider it a recommendation by us and you may of course choose to use an alternative low cost stock broker such as Degiro, Interactive Brokers, SaxoTrader etc., or even use more than one broker. And if you do decide to open your own account with a broker, please consider our words of warning.
Finally, as always, you can use our calculator to help you estimate the range of future outcomes you may expect if you do decide to follow the Buy & Hold approach.
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