Sounds like good methods. Can I ask a probing question: have you been successful & made money?
Itās pretty simple, just exponential growth. Stock market increases at an average of 8% a year (S&P 500). Assuming this was fixed you start with Ā£100 and it becomes Ā£108 within a year. The next year that Ā£108 turns into Ā£116.64. You gained Ā£0.64 more because your portfolio value is more. And this just exponentially grows from that Ā£100 turns into Ā£466.10 after 20 years. Not sure if that is what you were asking
But yeah I agree that dividend reinvesting is the safer way for exponential growth, and is one of my points for dividend reinvesting in my recent video:
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Well my T212 ISA that I started in April has Ā£4400 deposited and Ā£1115 return that Iāve taken profits on so about 25% which is ok.
I have a nice amount in GGP still ticking along and Iām waiting before I take profit on it.
I also have some unrealised loss on GNUS after making some profit on it. Got distracted by family life. So Iām now a bag holder on that at 2.4, could average it down but Iām patient.
Ive found myself getting too distracted with swing plays so Iām might convert more into long term investments and only do one at a time.
Thank you and I do understand that far but the question that pickles me every time is: where does the clock restart and start to consider your year one gains as the new value of your portfolio to appreciate in year 2 (does that make sense?)?
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My intended approach once I am better educated in the art of the swing is 3 quarters of my ISA as long hold and the final quarter for swinging.
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I get you. Itās really obvious with bank interest which pays out monthly, but your shares increases inconsistently and non-linearly. Therefore you wonāt really see it happening. But look at the max graph of all growth stocks or even the S&P 500 and youāll see the exponential trend
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If anything, you could always sell the gains and buy into another position (or the reverse, keep the gains invested take out your initial capital to place on a new position almost like getting something for nothing - but not quite)
@pipo What a bollocks. Pipo is talking about me by the way. Heās a buddy of mine in real life and I was texting him this morning about this.
So essentially what I was saying was this:
If the stock is $100 and goes up 10% in an hour it is now at $110. If it goes up another 10% starting from the end of that hour during the next hour, it will be at $121. The total gain for those two hours is 21% and an hourly compound growth rate of 10%. It all depends on what time frame you choose to look at. Doesnāt matter if it is 10 year periods or 5 second periods. When you look at a stock price during the day and see the % increase, what you are seeing is the total % gain for that day since the market open. You could choose to divide that figure up into hours, minutes, seconds of compound growth if you so wanted to.
The stock market more or less grows exponentially which can, by default, be analysed as compounding growth. This makes it easier to compare the growth of stocks to assets that pay interest and also allows you to analyse average growth of stocks over a set number of periods (which would be years if you are doing CAGR, but you can choose any period length you want).
However, not all stocks will exhibit this growth pattern. So if I gain a sudden unexpected 20% in one instance for some reason, I would sell, realise the cash, take the taxable event as a hit, and add the gain to my initial principal as this anomaly is unlikely to happen again.
I think this is also what @Richard.W was explaining a few posts above? I donāt understand how that works. (I understand the compounding growth, but not the reason to take the CGT hit and redeploy into the same instrument)
The clock restarts whenever you want. You can examine stock growth second on second, or hour on hour, or day on day. CAGR goes by year on year.
When youāre looking at a stock price change for a day, what youāre looking at is the total % variance of that day from market open to market close.
However, stocks wonāt always display an compounding growth pattern, but for example, perhaps a more linear pattern, and in this event you might want to sell these underperforming stocks, take the tax hit, and go for higher performing ones (which was the point I made to @pipo)
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The reason is, when unexpected gains come, I think it is best to take the CGT hit, realise the gains and add it to your principal.
Likewise, if a company is likely to go downhill or lose value for any reason, I would sell to realise my gains.
I still donāt get it, Iām not sure my brain is wired for that. Iāll stick to what I know 
(admittedly not much, and far less than I want it to be) as I either pick things up immediately or not at all š¤¦
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It is tricky. Admitted I had to do a lot of research too.
Letās put it this way. Say at 12:00 today you had 1 share of Microsoft @ $200. Between 12:00 and 12:01 it gains 10% so now your share is worth $220. Between 12:01 and 12:02 you gain another 10% so now your share is worth $242. Youāve made a total net gain of 21%. There is no reason however why I couldnāt have picked an example using 1 hour increments, or 4 hour increments, or 6 month increments, or 167.21 day increments. There is a system called CAGR which uses yearly increments.
However, and this is just me, if a company, and thus its stock, is not exhibiting this exponential, compound mimicing pattern, I may choose to sell. Or with say the case of Novavax the other day where it suddenly and briefly dropped something like 50 dollars on fake news. Had Novavax suddenly and sharply risen āaccidentlyā by 50 dollars, Iād have like to sell my shares, realise my gain, take the CGT hit, and add it to my principal. As I said, thatās just me wanting to lock in profit, @pipo and @Richard.W may disagree, and thats fine.
Only if the company grows āenoughā to catch the market, otherwise youāll be better served with VUSA or QQQ-ish ETFs.
There are plenty of high dividend companies that lose the market by far, there is no compounding that āsaves your moneyā in these cases.
Seeing the dividends dropping in our account has a greater psychological effect overall.
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What do you mean by lose the market?
There is a natural trade off generally between dividend paying companies and growth. Generally when a company pays their dividend, stocks will decrease by the value of the dividend, making it harder for a stock to grow. e.g. if a company pays $1 per share quarterly and their stock is currently worth $100 dollars, the stock should fall to $99 on the dividend payout.
Edit: just saw the blue line at the bottom of your chart. Yes, issues do arise when youāre talking about a company on an 8 year long streak of a downward trend!
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True, but I donāt chase dividends, just strong stocks, dividend preferred.
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Iām still struggling here 
please donāt explain it anymore itās exposing my lack of intelligence.
Iāll stick with shares in companies that pay dividends and have a potential for some amount of growth. At least I can understand that, they make money and then pay out of profit to shareholders. I get cashflow and donāt diminish my % ownership in the company. Fancy math just isnāt for me 
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S&P 500ā¦ as Buffett is used to sayā¦ the majority of people will be much better served just buying a market index than picking stocks, and yes, you will also beat the majority of fund managers and magicians.
In theory, yes, but the real world market is not perfect, some companies will fall that $1 while others will gain $2ā¦ that why many āpapersā about the stock market just do not reflect the reality.
You can check by yourself a few companies over some years, also sometimes they drop $1 and then re-gain it the next day, not a big deal when talking about years.
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Buyers just arenāt always rational. Sure the values went down technically but whoās going to sell because of it? It was an expected change. So youāre right, in reality the price wonāt really move.
