Q: What’s the best stock to hold forever?
A: Investors are always looking for a way to simplify their investing. What’s better than a single-stock portfolio? And thanks to innovations in finance, it’s actually possible.
Choosing individual stocks confuses investors for good reason. If you’re buying individual stocks you not only need to pick the right stocks, but buy them at the right time and sell them at the right time. The difficulty of that task cannot be underestimated. Even most professional money managers are unable to beat the market.
And that’s the secret. If you’re looking for a single stock to buy and hold forever, just buy the market. There are a variety of exchange-traded funds that own all 500 stocks in the S&P 500. Once choice is Vanguard’s S&P 500 ETF, which trades by the symbol VOO. If you’re willing to put up with a second stock, a good choice would be an ETF that owns a basket of bonds. One example is Vanguard’s Total Bond Market ETF, which trades by the symbol BND. Owning an S&P 500 fund will give you essential stock exposure and the bond ETF will give you essential bond holdings. With that said, there are other types of stocks you can add when you’re willing to optimize returns by adding a bit of complexity over time.