Buy and hold is the strategy of purchasing stocks or ETFs and holding them for years regardless of short-term market swings. Warren Buffett calls it the only strategy most people need. Historically, it outperforms the vast majority of active traders.
The US stock market has returned ~10% per year on average since 1926.
$10,000 invested in SPY in 2004 = ~$65,000 today (including dividends).
$10,000 invested in Apple in 2004 = ~$2,000,000+ today.
The math of compounding:
$500/month invested at 10%/year = $1,000,000 in 30 years.
The same $500/month as active trading (8% avg return) = $600,000.
Boredom and consistency beat excitement and trading.
DCA means investing a fixed amount on a regular schedule (weekly/monthly)
regardless of whether the market is up or down.
Market at all-time high? Buy anyway -- you can't time the top.
Market crashed 20%? Buy more -- you're getting a discount.
DCA removes the emotional decision of 'when to buy' and naturally
buys more shares when prices are low, fewer when prices are high.
Best choice for most people:
SPY or VOO (S&P 500 ETF) -- instant exposure to 500 biggest US companies.
QQQ (Nasdaq 100) -- tech-heavy, higher growth potential, more volatile.
VTI (Total US market) -- even broader than S&P 500.
For individual stocks:
Choose companies with strong competitive moats (AAPL, MSFT, GOOGL, AMZN).
Only buy companies you understand and believe in long-term.
Reinvest dividends for compounding.
Hold > 1 year: long-term capital gains tax rate (0%, 15%, or 20%).
Hold < 1 year: short-term rate = same as your income tax (22-37%).
In a Roth IRA: gains are COMPLETELY TAX-FREE forever.
Example: $10,000 profit.
Day trader at 24% bracket: pays $2,400.
Buy-and-hold investor (15% LTCG): pays $1,500.
Roth IRA holder: pays $0.
Related: ETFs for New Traders • Day Trading -- What You Must Know First • How to Open a Brokerage Account • Diversification