How To Make A Buy and Hold Strategy Work For You
Record a purpose sentence stating why you are investing in the first place
“Remember, remember why you quit” was the simple message I recorded of myself washing cars on a freezing Saturday morning. After 5 years of university studies, I found myself having to wash cars. A decent graduate salary couldn’t stop me hating my job, so I quit.
The following months were a living hell. I had to contend with unemployment, job rejections, criticisms from those who saw me as a quitter. What kept me going was that simple video recording, reminding me of why I quit in the first place.
I want to encourage you to record a selfie video, stating in simple words the reason for why you are investing in the first place.
If you are unable to do this, you need to take some time to consider the purpose and motivations of why you are investing. Please complete this exercise before committing any more money to investments.
This selfie video will see you through Market sell-offs, economic and political upheaval, your own mistakes, fears, greed, etc.
Buy & Hold Is Easier Said Than Done
Most will agree that the best way to stay physically fit is to eat healthily and exercise regularly. Yet, most find it near impossible to do. This is the same as long-term investing. Most people know that ‘time in the market, is better than timing the market’. Historical data has shown that missing 10 best days over 20 years from Jan. 1, 1999, to Dec. 31, 2018, would have halved your returns.
Yet it’s still an upward struggle for most, who end up trading in and out of assets, leading to selling low and buying high.
Why are you Investing in the First Place?
The apparent reason for why anyone would invest is to make more money. No-one should be ashamed of this. You are in the investing game to make more money. This is the metric to measure your progress. How much money you make or lose is what counts.
However, making more money is an abstract purpose. It’s not specific enough. It will not sustain you through Market sell-offs. Often it will lead you into making reckless decisions.
A better reason to focus on what you intend to do with the money.
These might include: buying a house, retirement, children university tuition, financial independence, family vacations, charity etc.
Below I detail my 3 main reasons for why I’m investing. This will undoubtedly be different for you, and that’s okay. The main thing is that you are clear in your mind about your own reasons for investing.
“If you don’t find a way to make money while you sleep, you will work until you die.” — Warren Buffett
Life is too short to have someone else dictate how I spend 50% of my waking hours. I want to break out of trading my time for money. I want financial freedom to travel the world with my family and help others along the way.
“The world is a book and those who do not travel read only one page.” — St. Augustine
Before my children reach adulthood and leave home. I want to enjoy their company and prepare them for adulthood. Part of the lesson I want them to grasp is empathy for other people. This is where travel comes in, I want them to observe and experience how other people live. I want to take them outside of their comfort zone. Variety really is the spice of life.
On a recent visit to my birth country, Zimbabwe, I was met with much poverty. The few US dollars I gave to people barely made a difference. I kept thinking to myself, I would love to start projects that benefit people beyond just one meal.
Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime — unknown
Image by Author — Rural Zimbabwe
The reality is I do not have the financial resources to make a lasting difference. I would love my investing journey to change that equation.
I invest to achieve Financial Freedom, so I can enjoy travelling the world with family and help others less fortunate along the way.
This is my investing purpose sentence, what’s yours?