The only people that really get hurt are the once that’s panic sell during a crash and never get back in.
take my Mum for example, she bought into CBA in 1996 for $12.50 per share, did the dividend reinvestment plan,
She has never sold, and Today her shares are worth $80+ and have paid over $60 in dividends as well.
Sure in 2008 they dropped from $50 to $25 and that caused her some alarm, but she didn’t sell and she actually picked up some cheap shares from the dividend reinvestment plan through the crash.
Some people will immediately say she could have made more money selling at $50 and re-buying at $25 which is technically true, but if here strategy was to trade she also may have sold at times when crashes didn’t come, and ended up paying capital gains taxes and had to buy back in higher.
I guess my point is that trading activity isn’t necessary, and neither is trying to time when crashes will happen, you will be wrong just as often as you are right, and suffer higher taxes and trading fees that offset the gains you might make.
Be the first to comment