Are There Really Stocks You Can Hold FOREVER? (3 Long-term Stocks I Own)

Hey guys, welcome back to the channel! In this video, we're going to discuss whether it's possible to buy some stocks now and be able to hold these stocks for the rest of your life and still do quite well in the process. So, we're gonna have a look at a lot of different variables and see how we can account for them, if we can account for them, to see literally is there a stock we could buy right now, hold it for our whole life, and make a lot of money. Plus, at the end of the video, we're also going to have a little bit of a look inside my own portfolio. So, with that said, leave a like on the video if you do enjoy it, but for now, let's get started.

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So, is there a stock you can buy and hold forever? Well, let's take this as a task that we have to do. So, what characteristics would we want to see in an investment that we have to hold for a long time? Well, the first thing that springs to mind to me here is I wouldn't want the investment to be actively managed. I wouldn't want people running the ship because people make decisions, and yes, sometimes they can make good decisions, but in the same veins, sometimes they make bad decisions. And even if you know you found this stock and you're like, "Oh yeah, but the management consistently makes great decisions," yes, but if we're holding it for a long time, there are going to be multiple management teams over decades and decades that are going to run this company. It's only a matter of time before some self-serving manager comes in and makes decisions that are not in the best interest of the long-term shareholders, and they stuff everything up.

Now, you might happen to hit great management team after great management team after great management team, but the point is you don't know. If you're just going to buy something and hold it for say 40, 50 years, you don't want your investing success coming down to the decisions that someone else is making. So, if you're going to buy stock and hold for the rest of your life and hope that you make money in the process, really it can't be actively managed. So, that means it has to be, on the flip side, it has to be passively managed, aka the decision-making is on autopilot.

Now, moving on, the next characteristic that I would want to see in this investment that I'm going to make, that I'm going to hold for my whole life, is I'd want it to be very widely diversified. I wouldn't want this investment to have all of its eggs in one basket. But furthermore, I wouldn't be comfortable holding any one business for a time span of say 50 years, just going to sleep, waking up in 50 years, and I've still held this stock. There's not a company right now on earth that I would be comfortable holding for that length of time. In fact, if I was to make this investment, I wouldn't even want my investment to be reliant on 2, 3, 4, 5, 10, 20 businesses because in that case a bad thing could happen to any one of those companies, and it could have a very real impact on the success of your stock portfolio.

So, if I was following this strategy, I'd want to go very wide. I'd want to try and own a little bit of everything because, yes, in the long run, that means your returns are going to be limited to the average of the bunch. But in the same vein, your losses are also going to be limited to the average of the bunch. So, that's really the second key characteristic I'd want to see: wide diversification.

But then from there, the third key characteristic is I'd only want this investment to invest in very large companies. Because you think about it this way, right? You could, if you saw a bump in the road up ahead, what would you rather go over that bump: in a go-cart or a truck? It's the same idea with businesses, right? The large companies can generally ride out the bumps in the road because of their size and scale, whereas the small companies sometimes can be completely derailed by what seems to be just a minor problem. They just don't have that size; they don't have the assets; they don't have the funding to be able to ride out even what seems like small problems.

So, with those three characteristics in mind, what would then be the best investment that covers all three of them? Well, in my opinion, probably the best one would be an ETF, an exchange traded fund, which tries to mimic the return of a major index. Aka, you might want to buy an ETF that tracks the S&P 500. What this means is it means that your investment in the ETF represents the 500 largest companies in America, and as the S&P 500 changes over time, so does your ETF. In that case, you've got passive management, you've got wide diversification, but you're still holding very large companies—it's only the 500 largest companies in America.

So, that's the way that I would potentially approach it. I feel like now we've found our investment vehicle, but I think there are still two key characteristics that we need to consider if we're going to buy something now and hold it for the rest of our life and still make money. Firstly, you'd want to make sure that any ETF you did buy tracks the market and tracks a very well-established market. Secondly, you'd want to make sure the ETF you bought is one that is provided by the biggest ETF players in the whole world.

Now, on that first point, there are obviously, in 2021, many very well-established markets: Australia, where I'm from, obviously, America, Europe, China—really, the list goes on. There are a lot of well-established markets now in 2021. But secondly, thinking about the ETF providers, really when we talk about the big behemoths, there's two that spring to mind immediately. The first is Vanguard; Vanguard has 6.7 trillion dollars in assets under management, and then there's BlackRock; BlackRock has 8.7 trillion in assets under management.

So, in my opinion, I think that there definitely are investment options that you can buy and literally hold for your whole life and still end up making a decent amount of money. I think it's just important to remember, firstly, it needs to be passively managed. Secondly, it needs that wide diversification, so you're looking at the ETFs that track the market and track the largest companies in a well-established market. And then third of all, you need to make sure that the ETF is offered by the really big, stable, behemoth ETF providers.

But then, for the last part of the video, I wanted to talk about, okay, well, how have I applied this kind of passive investing thinking to my own investment portfolio? And so, when I look at my own portfolio, I hold three ETFs: I hold one called VAS, one called IVV, and one called IO. Now, VAS is simply the Vanguard Australian Shares ETF, and it tracks the 300 largest companies here in Australia. And then moving on to IVV, that is the BlackRock S&P 500 ETF, so it tracks the 500 largest American companies. And then lastly, IO is again another BlackRock ETF, but this one tracks the 100 largest companies globally.

So, in having these three different ETFs, I've got wide diversification. They're all ETFs, they're all passively managed, and they're all offered by either Vanguard or BlackRock, the big behemoth ETF providers. But I've also got diversification across different markets. They're all, all three of those obviously well-established markets: Australia, where I'm from, and in the U.S. U.S. is probably, well, yeah, it is the most well-established market in the world. And having this diversification means that I'd be confident that if I just left this portfolio alone for 40 years, I would come back and I would have made money.

And I would even hazard a guess that along the way, I would probably have averaged out to about a seven percent annual return each and every year. Now, I do have to say there that, of course, seven percent doesn't mean you're going to get that every single year. And in owning an ETF, there are still going to be some periods where you're probably going to be up and then some periods where you're probably going to be down; you probably would have lost money. But the point is, if you zoom out and if you look at, say, the past 100 years of history, most major markets average out to roughly seven to eight percent returns per year. That's the long-term average annual return. It doesn't happen every year, but that is what the data shows us is likely to happen as a long-term average annual return.

So, in my opinion, there are definitely some stocks that you could hold for literally like your whole life and still make a decent amount of money in the process. It's just about thinking about the issues that are going to arise from holding a stock for a very long period of time and then thinking about how do you negotiate each one of those issues? What characteristics do you need? For example, the wide diversification or the passive management, that sort of stuff.

So, I hope that helps. I also hope it kind of informs you guys. I've seen a lot of videos going around at the moment for other people. It's like, you know, five stocks you can hold forever or ten businesses I'm going to hold for the rest of my life. And I hope this video kind of shows you that there really is an issue: no business lasts forever. If you think your business right now is going to last for the next 100 years, it's probably not. Very, very few individual businesses actually last that long.

So, there are definitely problems with trying to hold any single company for your whole life. You might strike gold and find one, but in reality, like the components of the S&P 500 now versus 50 years ago are completely different companies. So, I hope that kind of shows you through the actually thinking about the process and the problems that, yes, there are stocks that you could hold for that length of time without really thinking about it too much. However, it's really if someone stands up and says, "I'm holding this new tech IPO for the next 40 years; you should trust me," definitely avoid that sort of content.

But anyway, guys, I hope you enjoyed this video. I hope it helped you. Leave a like on the video if you did enjoy it or if you found it useful. If you're interested in how I go about my investing, you can check out my business Profitful down in the description. That'll take you over to Profitful, where I've made two in-depth courses about my investing strategies. One of them is about passive investing, and the other one is about active investing.

But that'll do me for today, guys. I hope you enjoyed the video; leave a like if you did. Subscribe if you want to see more, and I'll see you guys in the next video.

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