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How to Be a Buy-and-Hold Investor

March 13, 2006
In investing, patience is more than a virtue, it's a necessity. If you trade a lot, you will run up increased costs such as commissions and taxes, thus driving down returns. In addition, you risk messing up your long-range plan by altering your portfolio's diversification among asset classes and sectors.

Yet, being patient and sticking to your plan is pretty difficult emotionally. I think the main reason is that we can't control our investments' returns, so trading them makes us feel like we're doing something and are really in control. In fact, making a lot of trades is a sign that you're letting the markets drag you around by the ear, but it feels better than sitting on your hands.

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