INVESTING STRATEGY
Simplifying my investments
When I first delved into investing in shares, I, like many newbies, became allured by thematic etfs and penny stocks. This was prior to becoming fully aware of the fees associated with ETF's or the extreme volatility of penny stocks. I have since thankfully invested in low-fee index funds, however am now left with the decision of selling off and moving my other stocks to consolidate. I realise there is no right or wrong answer without being able to predict the future, but I was wondering if you could talk through the pro's and con's of consolidating my investments. For context, I am looking to invest over a long timespan, however am not sure whether selling my ETF's/paying CGT goes against the adage of 'never sell/never interrupt compounding'.
Dean E
13 February 2024
1 Comments
3 months ago
Hi Dean, good question.
In short, ‘never interrupt compounding’ is basically saying don’t sell unless it truly makes sense. One of the cases where it does make sense is when you’ve decided to consolidate and sell of some not so good investments.
The reason this passes the test is because the money is being put into better quality investments for the long term. It also doesn’t count as ‘taking money out’ because the money is being reinvested basically straight away. Simplifying and/or switching investments makes sense in a lot of cases and I’ve never heard of someone who hasn’t done it at some point!
Sounds like you’ve already passed the decision making stage. But in case you’re wanting to read a bit more about it, I wrote a couple of articles about selling + deciding how to approach it below…
https://pearler.com/explore/learn/blog/should...
https://pearler.com/explore/learn/blog/should...
Hope that helps.
Dave
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