Top Buy & Hold Brokers UK: Choosing the Perfect Match for Your Investment Goals

The buy & hold strategy is currently one of the most prominent investment styles in the financial market. As the name suggests, this strategy consists of buying and holding assets for a long time, even possibly indefinitely.

This strategy is commonly employed by long-term investors. Read on to discover what it is and how to find the right broker for your needs.

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What is the buy & hold investment strategy?

The buy-and-hold investment strategy refers to buying assets with the aim of holding them in the long term – this typically means 10 years or longer, even indefinitely. The consensus is that a buy & hold strategy should last a minimum of 5 years.

Those who employ the buy-and-hold investment strategy are looking for assets expected to perform well in the future and are quite stable (for instance, mature blue-chip stocks). Also, some investors may seek to buy assets during market downturns, when their prices are at a low point.

Once you buy the assets, the portfolio is passively managed – in other words, you won't place other buy and sell orders, you simply keep your portfolio intact regardless of the market cycle.

One benefit of this long-term strategy is the fact that, as a passive investor, you don't need to always be up-to-date with market developments and you won't incur high transaction fees because you won't be placing frequent orders.

While all investments carry risks, a buy & hold strategy is considered less risky than other types of strategy. This is because, generally speaking, the economies grow over time, and your investments will grow as well.

What features should a buy & hold broker have?

Not all brokers are suitable for long-term strategies. In fact, many are most suitable for trading, or for placing more frequent trades. Here are some of the main aspects you should consider:

Custody fees

Custody fees, for UK investors, refer to charges that financial institutions levy for holding and managing securities, like stocks, bonds, or mutual funds, on behalf of the investor. These fees are common in the investment industry and are typically associated with brokerage accounts or investment portfolios.

Ideally, there should be no custody fees.

Dividend collection fees

As a buy-and-hold investor, your portfolio will most likely include some of the best dividend stocks. Hence, it's ideal to choose a broker that doesn't charge any dividend-related fees. If you are interested in dividend payments, have a look at our best brokers to buy dividend stocks.

Inactivity fee

Many brokers charge an inactivity fee, usually after 12 months of no activity. However, in most cases, if you log in to your brokerage account at least once every 12 months, your account will be considered active and you won't be charged any fee. Make sure you read the fine print to understand how the broker charges the inactivity fee.

Transaction fees

Finally, transaction fees, such as stock commissions, are also noteworthy. Although you won't be buying and selling assets frequently, it's best to check the transaction fees before placing an order. For instance, some brokers may charge you a percentage of the transaction value, others may use a fixed-fee structure – choosing one over the other depends on your strategy and capital. If you have a large capital, you may want to opt for a fixed-fee structure, while a lower budget may benefit from a percentage-based commission.

Real assets

Finally, you will surely want to pick a broker that allows you to invest in real assets, not derivatives. Derivatives are mostly used in trading or hedging, as they come with additional costs (such as overnight fees).

Best brokers for buy & hold strategy

Best brokers for buy & hold strategy for UK assets

BrokerTransaction costCustodyDividendsMore information
 Degiro£1.75 + handling £1FreeFreeDEGIRO review
 Interactive BrokersFrom 0.05% of the traded value (min. £3 per order)FreeFreeInteractive Brokers review
 eToroVariable spreadFreeFreeeToro review

If we replicate the table in this case for international shares, the table would look like this with the inclusion of Ninety Nine only for USA shares, this is how the table would look.

Best brokers for buy & hold strategy for international assets

BrokerCommissionCurrency conversion feeMore information
DegiroUS: €1 + €1
Europe from:
€3,9 + €1
0.25%DEGIRO review
eToroVariable spread, no commissions0.50%eToro review
Interactive Brokers$0.005/share (minimum $1) for US stocksVariableInteractive Brokers review

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Summary

Overall, the buy-and-hold investment strategy is a popular, beginner-friendly, and low-risk choice for many investors. Meanwhile, many prefer to combine it with dividend investing to generate passive income.

FAQs

Is buy and hold a good strategy for beginners?

Buy and hold is a straightforward strategy that doesn't require constant market monitoring or trading. It's suitable for beginners who wish to grow their wealth over time without the complexities of active trading.

How effective is buy & hold in the UK market?

Historically, the buy and hold strategy has been effective in the UK, especially in stock markets. Over the long term, markets have tended to rise, rewarding patient investors. However, past performance is not always indicative of future results.

How long should I hold my investments?

This varies based on individual financial goals and market conditions, but generally, buy and hold investors look at holding periods of several years to decades.

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