Is Buy and Forget a Myth?

Buy and Forget

It is not a myth but it might not be suitable for everyone.

There are few factors that need to be looked into for this strategyto be successful.

a) Kind of companies that you select ( Hitesh sir has given a great insight for the same)

b) Your age – if you happen to be young and have some disposable income,you have years on your side and you can go through the market-volatilities more easily as compared to a person who is above 50 and has started building the retirement-nest .

c) Your allocation % to equities out of your total netwroth – if your equity allocation is in the range of 5%-30% of your total networth , the market’s ups and downs may not disturb you much and you can let the market compund your money without disturbance. Higher the allocation % , bigger the worries and more propensity to enter/exit and thus leading to the failure of this strategy.

d) Your aptitude and conviction : We all have have different behavioural patterns . Some people can sit through draw-downs whereas others loose sleep even in a one week -long correction. So but and hold may be suitable for one person while other may run away.
And aptitude , many a times,is also determined by your conviction .Your knowledge of your selected companies, your knowledge of the markets . Better the conviction, better the results of B & H strategy.

e) Market -cycles :This is another important factor. When you enter the markets ?
If you enter the market at the start of a bull cycle and your experience is positive , you might stick to B & H even in a bear-phase. But if someone enters during a bear-phase , he would always be doubtful of the markets and he may ditch B & H in between .

In short, money-making is not that simple.We should choose what suits us depending upon our age, risk-aptitude , conviction/knowledge levels. And apart from that understanding market-cycles is also important to decide your allocation % ge.