When to take profits?

AsifM068

Good evening forum,

Once more I find myself a tad confused....

My Vanguard Global Index tracker was doing fairly well up to about a week ago however with the advent of Omicron (I guess) the price of the fund has subsequently gone down which I fully accept as that is what these passive trackers do; however I was very tempted to cash in some units when the price was up yet decided against but now I feel that I have lost those profits because to my mind those gains are gone now. I understand that I would have been left with less units had I cashed in and as a long term hold as in my plan (10 years or so) am I suppose to just leave the investment alone until that time to fully realize total returns ? and what has happened to those price gains when the fund price was up?

Many thanks.

eskbanker

If you hold this for the long term then its price will fluctuate significantly in both directions over many years, and certainly by more than it has recently, so what makes you think of selling?

Prism

Over the next 10 years the price will go up and down. After 10 years it is likely that the price will be higher than today but also possible it will be lower. By advice would be to leave it alone.

london21

Short term looks like a loss, but over time will be in profit. 

If you need the money then might be worth selling but if long term investment then leave. 

NedS

When you make any investment, you should have a very clear idea of the objectives of that investment and the timescales. What were your objectives and timescales when you made the investment? Has it met those objectives yet? Once it's met the objectives, that's probably the time to cash it in.

AsifM068

eskbanker said:

If you hold this for the long term then its price will fluctuate significantly in both directions over many years, and certainly by more than it has recently, so what makes you think of selling?

I just wanted to cash in a few units as the fund was doing well to my mind. There's about 11K invested under an ISA and it went up by about £400 pounds so was tempted to take that profit and leave the original 11K to do its thing again. Made sense to me at the time. What's wrong in doing that or am I missing a point?

Alexland

AsifM068 said:

I was very tempted to cash in some units when the price was up yet decided against but now I feel that I have lost those profits because to my mind those gains are gone now.

Investing is a bit like climbing up a big mountain - sometimes you have to go sideways or down a bit before making progress back up again. You did the right thing by staying invested as keep quitting isn't the way to get to the top. Companies like Dalbar have published long term studies that show most investors damage their own return by messing about so don't get sucked in. Just buy a suitable investment, do nothing other than maybe rebalance or derisk closer to withdrawal and get the return the market will naturally provide with time.

AsifM068

NedS said:

When you make any investment, you should have a very clear idea of the objectives of that investment and the timescales. What were your objectives and timescales when you made the investment? Has it met those objectives yet? Once it's met the objectives, that's probably the time to cash it in.

Here's my confusion. Those gains are gone now and when I ask where are those gains I think? I'm asking / wondering whether those gains are reinvested if I don't take those gains. If they are not reinvested then those gains are gone  / wasted to my mind when I could have enjoyed a little profit; please forgive me but what am I missing?

AsifM068

Alexland said:

AsifM068 said:

I was very tempted to cash in some units when the price was up yet decided against but now I feel that I have lost those profits because to my mind those gains are gone now.

Investing is a bit like climbing up a big mountain - sometimes you have to go sideways or down a bit before making progress back up again. You did the right thing by staying invested as keep quitting isn't the way to get to the top. Companies like Dalbar have published long term studies that show most investors damage their own return by messing about so don't get sucked in. Just buy a suitable investment, do nothing other than maybe rebalance or derisk closer to withdrawal and get the return the market will naturally provide with time.

But why can't I take a little profit when the fund is doing well and leave the original investment to do its thing again. If I don't take those gains to my mind they are wasted for they are not reinvested back into the fund if I just sit tight. I understand I will be left with less units if I sell some but is that the only reason to leave the fund alone in good times? Shoot straight sir if I'm missing something as it's all part of my learning 👍🙂

ChesterDog

The thing you're missing is that by not taking the profit, you own more units/ shares (OEIC/ETF) than if you did.

In taking the gain out as cash, you'd be selling units and therefore reducing the value of your holding and reducing the potential for future growth in terms of total value.

tebbins

So... You want to sell £400 out of an £11,000 investment inside an ISA, because you can?
What do you mean by take a profit? Why did you want to take a profit? Did seeing your investment rise make you think "ooh I'll have that £400". What were you going to do with it?
If every time your fund goes up you take a profit, eventually you'll run out of units to sell and have an account full of cash. That would have meant you went from a 100% equity investment to a 3-4% cash, 96-97% equity one. Tiny daily/weekly/monthly wobbles in the price of your holding should not make you change your original investing objectives.