When to take profits?

MaxiRobriguez

If you're only invested in global index passive funds then, unless you really need the money or your circumstances have changed significantly, there's no need to "take profits". The whole point of these funds are you buy them and then forget about them, as over a long enough time horizon they will go up in value, related to market averages. 

It's a different kettle of fish if you own individual stocks, which can have prices that aren't in line with their fundamental value, in which case, "taking profits" and reinvesting elsewhere is a reasonably sensible thing to do. 

eskbanker

isayhello said:

For my own understanding there is a scenario though where you could take the profit of £400 in expectation that the NAV will drop and then rebuy more units at a cheaper price so you could end up with the same number of units and a "profit". I know it's risky but am I right in thinking it's possible?

If you can predict the market to the extent of knowing when to sell and then rebuy at a lower price then yes, that works well, especially in any environment that doesn't involve dealing costs.  Trouble is, nobody can predict that with any degree of accuracy, so as a method it's highly flawed, and studies have shown that those who tinker like that will typically lose out versus those who genuinely regard their investments as buy and hold....

eskbanker

AsifM068 said:

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.

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?

Just to revisit the start of this thread - at that time Vanguard's Global All Cap had dropped by a mere 3.4% from its high the previous week, but in the subsequent two days it's recovered 2.8%, emphasising that there really isn't any need to (over-re)act on routine low-single-digit volatility....

Edit: and a further update to highlight that today the price is now only 0.17% off its all-time high!

solidpro

I've just checked my Vanguard ISA and it's back to where it was when it was at it's highest. This thread is a perfect example of leaving well alone.

AsifM068

Happy your doing well sir 👍

Spiggle

Thanks for asking this question OP, it clarified some things for me regarding my ACC funds also with Vanguard. May I hijack your thread with a different but similar question regarding Distributing indexes/funds with Vanguard please? 

So I've been watching mine once a week as I'm also relatively new to this (coming up on 3 years) too. Over that time I've invested further in my ISA and small SIPP. I feel I've been a little braver, though you may say risky, investing in a wider range than just the VLS I started out with e.g. VMID.

Am I correct in thinking that the use of distributed funds will not in any way affect my existing holdings please?
Also, if I reinvest these monies in the same index/fund the only negative impact on current holdings would be to raise slightly my average unit cost thus reducing slightly my returns on paper?

Of course, I presume the 'hold for the original goal period' should however produce an overall gain as I would have more units.

If I've got this wrong please tell me.

Thanks in advance.

All the best,
Spigs