3 reasons why I’d buy stocks now and hold them forever

An investment strategy that seeks to buy stocks now and hold them for the long term could be more profitable than a short-term plan, in my view.
The post 3 reasons why I’d buy stocks now and hold them forever appeared first on The Motley Fool Australia. –

asx shares to buy and hold represented by man happily hugging himself

A strategy to buy stocks now and hold them over the long run has been relatively successful in the past. Although this does not mean it will necessarily be profitable in future, providing holdings with time to deliver on their potential could be a shrewd move.

Furthermore, the potential for a long-term economic recovery could lift the performances of many businesses in the coming years. This could lead to rising stock market valuations from which short-term investors do not fully benefit.

Buy stocks today to benefit from a potential economic recovery

An economic recovery from today’s challenges cannot be guaranteed. However, the past performance of the economy suggests that it is likely to take place in the coming years. After all, no recession or depression has ever been permanent in nature. As such, a plan to buy stocks now could be a means of benefitting from a potential improvement in operating conditions for many businesses.

Of course, some companies and sectors may respond more positively than others to an economic recovery. Therefore, it is important to reduce risk through diversifying across a wide range of companies. In doing so, it may be possible to harness a long-term recovery that also leads to improving investor sentiment and rising stock prices.

Providing time to deliver on strategy changes

The coronavirus pandemic has caused many companies to experience disruption and change within their industries. For example, retailers may need to shift additional resources online, while hospitality companies may need to service consumers at home to an increasingly large extent.

As such, a plan to buy stocks and hold them for the long run provides businesses with the opportunity to put into effect their revised strategies. They may take time to develop and implement, and even longer to make a positive impact on financial performance. While there is no guarantee that strategy change will lead to a rising share price, allowing a company the time to grow could be a prudent move.

A short-term focus may cause additional challenges

A long-term focus when buying stocks may also be beneficial because of the potential for high volatility in the stock market. Even though there has been a market rally since the 2020 market crash, an uncertain economic outlook may mean there is scope for further ups-and-downs in future.

This could negatively impact both long and short-term investors. However, investors with a long-term focus may be able to capitalise on it through buying shares when they trade at lower prices, with the aim of experiencing a recovery over the long term. Furthermore, they may be less concerned by the performance of their portfolios in the short run, in terms of experiencing paper losses, if they are focused on valuations over a long time horizon.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 reasons why I’d buy stocks now and hold them forever appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!