Buy and hold forever ETFs: the sleep-easy investment strategy

• Level: For beginners
• Reading duration: 6 minutes

In a turbulent world of flashing headlines, volatile markets, and chaotic change, the idea of simply buying something and never selling it can feel like a fantasy. But for long-term investors, the strategy known as "buy and hold forever" has proven to be a powerful way to grow wealth over time with minimal stress. This article explores how investors can apply that philosophy using ETFs to create a globally diversified, low-maintenance portfolio that delivers returns over the long haul - and maybe even helps you sleep a little better at night.

What does "buy and hold forever" mean?

The buy and hold forever strategy is about buying high-quality assets with the intention of holding them for decades, potentially even for life. It's not about chasing trends or timing the market. Instead, it's about identifying investments that are resilient, globally diversified, and capable of compounding steadily over time. Traditionally, this approach has been associated with iconic individual stocks like Microsoft, Johnson & Johnson, or Nestlé - companies that can point to a long history of stability, profitability, competitive advantage, and durable shareholder returns. Yet there's a more accessible way to pursue this strategy: via ETFs that capture the returns of fundamentally valuable companies, without requiring you to constantly trade or change tactics.

Why use ETFs for a forever strategy?

For investors looking to buy and hold forever, ETFs provide:

• Simplicity: You can hold thousands of global companies in one single fund.
• Diversification: You’re not reliant on the fortunes of one or two companies.
• Strategic: Instead of micro-managing thirty or forty stocks, you can gain exposure to “forever stocks” using just a few ETFs that target the right parts of the economy. Plus, if you want to experiment with a new tactic, you can easily do so by bringing a new ETF into play and tracking its performance.
• Low maintenance: A portfolio of half a dozen ETFs is simple to follow and can be managed with minimal effort.

Choose your ETFs wisely and you can build a portfolio that grows quietly in the background while you get on with the rest of your life.

Key features of "Forever" ETFs

The building blocks of a long-term, hold-forever portfolio are:

• Global diversification: Exposure to both developed and emerging markets.
• High-quality companies: Preference for companies with stable earnings and strong balance sheets.
• Dividend sustainability: A tilt towards companies that can return consistent income over time.
• Low volatility: Stocks that are resistant to economic downturns and deep market slumps.

Depending on the traits you wish to emphasise, you can tilt your portfolio to a greater or lesser degree towards each of these buy and hold forever ETF categories:

1. Global dividend stocks

These are companies with a strong history of paying and increasing dividends. Pros:

• Provides a steady income stream.
• Historically less volatile than growth-focused equities.
• Focuses on financially sound, mature companies.

Cons:

• May underperform during bull markets led by growth stocks.
• Can be concentrated in sectors like utilities and consumer staples.
• Dividend cuts can still occur during recessions.

See our Global Dividend Stock investment guide for more.

2. World quality equities

Quality factor companies are chosen for their high return on equity, low debt, and stable earnings growth. Pros:

• The ETF targets stocks with characteristics known to outperform the broad market over the long run.
• These desirable traits indicate the firm is positioned to reap high profits in the future.
• Combines growth and resilience in one approach.

Cons:

• Quality factor stocks have a history of outperformance, but this cannot be guaranteed to continue into the future.
• These firms operate in some of the most ferociously competitive parts of the economy - thus periods of underperformance are almost certain.
• The strategy requires investors to endure long stretches when quality firms lag the broad market. You will only collect the pay-off if you can stay invested during the soft patches.

See our Quality factor ETF investment guide for more.

3. World low volatility / Minimum volatility equities

These ETFs concentrate on stocks that historically fluctuate less than the broader market. They can smooth the ride and reduce emotional pressure during downturns. Pros:

• Designed to reduce portfolio swings.
• Helps investors stay the course during market stress.
• Adds defensive exposure to stable sectors.

Cons:

• Likely to trail the broad market during strong bull markets.
• Performance depends heavily on specific volatility filters.
• Not immune to losses in major selloffs.

See our Low Volatility ETF investment guide for more.

4. Core global equities

Last but not least, core global equity is the foundation of a forever portfolio because it's always dominated by the market leaders. Pros:

• The market cap index automatically causes global ETFs to own the most valuable public companies in the world.
• Long-term growth engine of any portfolio.
• Also captures the rise of revolutionary new firms as they break through the ranks.

Cons:

• Includes exposure to underperforming regions and sectors.
• Can be volatile during global downturns.
• This is the market, and every investor itches to beat the market, no matter how hard that is.

See our World ETF investment guide for more.

Customise your "buy and hold forever" strategy

How do you choose from this palette of ETFs?

1. Use a core global equities ETF as your baseline. The more you habitually benchmark your performance to “the market”, the more global equity you should hold. That’s to avoid being derailed by “tracking error regret” during the inevitable periods when your other choices trail the market. It happens to everyone!
2. Next: which of the other objectives do you care about most?
   - Having a steady stream of income to spend: Tilt towards global dividends.
   - The chance to beat the market without taking excessive risk: Tilt towards the quality factor.
   - Enjoying equity returns while curtailing your downside: Tilt towards low volatility.
   Of course, you can always split your equity allocation between any combination of these choices.
3. Now choose your equity diversifier - because there will be periods when all stocks are down. Diversify against this risk by choosing a defensive non-equity ETF. Leading candidates for this role in your portfolio are:
   - High-grade government bonds denominated (or hedged to) your home currency.
   - Money market ETFs
   - Gold ETCs

Why people love the “buy and hold forever” strategy

With this equity portfolio, you’ll hold thousands of companies across the globe, from dominant US tech firms to stable European consumer brands and growing Asian businesses. This mix can be held for decades, rebalanced once a year, and built on using monthly contributions. Choose accumulation ETFs to reinvest your income for compounding or, later in life, distribution ETFs to fund ongoing expenses with your dividends. Meanwhile, your non-equity, defensive allocation helps reduce risk and cushion volatility. What’s more, because you’ve tailored the portfolio to achieve your goals, there’s less temptation to time the market or worry about FOMO. Ultimately, the beauty of a buy and hold forever ETF strategy is that it embraces the power of time. By owning broadly diversified, high-quality ETFs, and leaving them largely untouched, you avoid emotional decision-making, cut down on trading costs, and harness long-term compounding. It’s not flashy. It doesn’t make headlines. But it works. As the saying goes: "Time in the market beats timing the market." Choose wisely, keep it simple, and let your portfolio do the heavy lifting for years to come.