Is it best to take profit and re-invest or leave it sitting?
Since I am not a math wizard I am having trouble coming to grips with this scenario below. Have 6000 SEK in portfolio with a holding cost of $1.90 and current SP of $5.30. This represents 20,000 in un-realized gains. As a dividend yield it is returning approx. 1700 gross per year. which is close to 15% gross. I cannot figure out what is best from a financial viewpoint. For example if I leave it as is its pretty much a growing gold plated dividend earner but a part of me is saying but if you take the profits out and spread them elsewhere it could compound faster. So if I sell 3800 I get my 20000 current profit out and this leaves me with 2200 shares which will return 630 gross a year which is a reduction from 1700 per year so a loss of 1070. To make up that loss I only need to get something like 5.35 from the 20,000. I'm pretty sure I can get several % points better so on the face of it I think I will be better off. However I don't trust my analysis or math skills to be sure. Any suggestions or formulas that can be applied to test similar situations?
I find this sort of stuff trival but I may be a Tiger Savant
Quote:
Originally Posted by
FIsaver
....e.g. if you bought the shares at $1.9 a year ago and they are now worth $5.30 thats a great annual return of 279%pa average. But if you bought them 10 years ago its 27%pa average....
OK so while we are doing basic maths and stuff.
If you bought them at $1.90 and now they are worth $5.3 then they are worth 2.7895 times what you paid for them (278.95%).
If that is over one year then the [compound] annual return is 178.95%
[ Excel formula =POWER(5.3/1.9,1)-1 ]
If that is over ten years then the [compound] annual return is 10.80%
[ Excel formula = POWER(5.3/1.9,1/10)-1 ]
Adding in the dividend yield complicates things depending upon whether you re-invest said dividends or spend it on sharesight subscriptions.
Best Wishes
Paper Tiger