Why ‘Buy and Hold’ is the Strategy of Risk Takers

Some investors will tell you that you shouldn’t keep switching your investments. They say if you buy and hold in the long term you will be better off. While this may have worked in the past a quick look at the last 5 years tells a different story.

Let’s say you had inherited £1 million in April 2011 from a long lost uncle. Rather than paying for financial advice you decided to invest the money in the Top 50 Funds as listed in the Sunday Times, i.e. those funds which were the leading performers and award winners.

Where do you think those Top 50 Funds would have been in March 2016, i.e. how many would still be in the Top 50?

Here’s the Shocking Truth…(Source: Financial Express 5 years to 31 March 2016)

  • 5 years later none of the Top 50 Funds were still in the top 50.
  • None of the top 100 remained in the top 100, 3 of the top 150 and just 4 of the top 200.

Not good news if your strategy is ‘buy and hold’.

At Freedom Financial Planning we don’t believe in leaving your investments to chance – or even entirely to humans!