Reinvesting Gains

Hey Richard. One thing Im finding difficult to evaluate is where my initial stake value is. Say a stock is at £1000 and has gained 10%. In green it shows £1100. My account is worth £1100.

Id like to cream off that £100, and invest it elsewhere, and let the original stake hopefully grow to from £1000 upwards again, and the £100 grow also.

What Im finding on the 212 app is that that information isn’t displayed clearly. I dont want to sell any of my original stake, and only want to sell profits, but the way 212 displays it is unclear. If I take out that £100, it still shows the profit on whats left. So it might show +£90 after I take out the £100. Thats not clear at all where each of my stocks are to me.

In my actual account, I have £1400 profit, and I want that profit working, not sitting idle. But Im wary of selling any original stake, and 212 doesnt show me clearly how to manage this.

It’s not exactly doing nothing.

If you sell that £500 unrealized profit, you are selling £500 worth of shares. So you end up with less shares to get future gains from.

Anyway I’m not getting into this lol

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first rule of compounding is to never interrupt it
unnecessarily” -Munger

— Morgan Housel
(@morganhousel) October
8, 2018

You’re only selling the shares you bought originally that have increased in value. Since Im not talking about dividends, the amount of shares you own doesnt matter. Where the stock value goes once you invested is all that matters. If I have 1 share and the value goes up 100% I make 100% gains. Its the value change that is important in this instance.

So my initial stake has increased in value, but the “froth” on the account is sat idle. I need that to be put to work.

Currently I dont see a clear way of that being displayed on 212.

If you own 20 shares with total value £1100 you could cream off £110 by selling 2 shares for cash, which you could then invest elsewhere. The remaining 18 shares would be worth £990 and could be left to grow some more, But there is no “froth” sat idle. All the increase is contained in the present value of your shares.

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What would your opinion on this strategy be? (Withdrawing profits from a high performing stock to use to buy, hopefully more high performers) Considering the fact that the ISA is capped at 20k and is full.

Say all companies grew at 10% a month, it would make no sense to move money around. Might as well stick it all in one company. But since they fluctuate, does is make sense to take profit, and invest it back into new stocks to add more diversification and spread the risk?

I guess what Id like to know is if this strategy is likely to harm overall growth and profit. Im buying lots of value stock (Capita, BP, RDS etc etc) Theyre all doing very well, and Im using profits to buy more so when oil does badly, construction is ok, or banks are ok etc.

Here we go again…

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:popcorn::popcorn::popcorn::popcorn: I’m looking forward to this one :joy: