The "Buy and Build" mindset for significant wealth creation

In the world of finance, the concept of ‘Buy and Hold’ is a widely recognized investing strategy. It’s about investing for the long term and maintaining minimal activity in the portfolio after the initial decision. This contrasts sharply with ‘Trading,’ which involves frequent, short-term buy/sell decisions - a style far removed from true investing.

Yet, I’ve often encountered skepticism toward Buy and Hold, both from investors and advisors. Investors sometimes perceive it as too static to adapt to their evolving financial needs. Meanwhile, advisors struggle to demonstrate their value within this framework.

While I advocate for the Buy and Hold philosophy, I believe it doesn’t mean doing nothing. Instead, we propose an approach to our investors, which we call ‘Buy and Build’ - a proactive evolution of the traditional method.

The Buy and Build Process

Here’s how it works:

1. Identify and prioritize financial goals: Money is a means to an end, so it’s essential to clarify what that end looks like.
2. Estimate the financial needs for those goals: Understanding your ‘enough’ is crucial.
3. Craft a comprehensive plan: Develop a holistic financial picture and address any gaps in achieving your goals.
4. Assess risk: Understand your need, ability, and willingness to take risks.
5. Choose appropriate financial assets: Align investments with your goals and risk profile.
6. Execute the plan: Put the strategy into action.

From Build to Action

Once the initial plan is in place, the Build phase involves dynamic adjustments based on life and market scenarios. I am considering here only those scenarios that most investors will most likely face in their investing journey -

1. Goal achieved? Redeem and use the money—mission accomplished!
2. Market dips? Invest more, provided you have liquidity.
3. Market peaks? Stay invested or keep contributing until your goals are met.
4. Liquidity changes? Reassess your cash flow. Invest more with surplus funds, pause if liquidity is constrained, or maintain current levels.

Buy and Build adds structure and adaptability to long-term investing. It’s not just about holding investments—it’s about actively building towards your financial goals while staying true to a disciplined approach.

Buy and Build is a mindset every investor should adopt for a fulfilling financial journey.