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What If You Never Sell?

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What if you never sell?Did you enjoy the rollercoaster ride on the stock market last week? It was pretty crazy. Every time Trump tweeted a threatening message, the stock market dropped. Investors were expecting a deal to be reached, but it didn’t work out. The tariff on $200 billion of Chinese goods increased from 10% to 25% on Friday, May 10th. That’s a huge deal. Now, China will have to retaliate. Who knows where we will go from here. Buckle up because we’re going on a wild ride.

If you’re an investor, you might think it’s time to sell and sit on the sideline for a while. I already changed our asset allocation to be more conservative earlier this year so I’m not worried. Our asset allocation is now about 50/40/10. That’s stocks/bonds/alternatives. With this allocation, I can ride out the volatility without much stress.

However, that’s timing the market. It rarely works out. The stock market was on a tear earlier this year and our portfolio lagged behind. That’s the price of being more conservative. I don’t mind it for the short term because our situation is temporary. My excuse is we’re selling our old condo. Once that’s done, we can use the money to increase our stock position.

Selling has always been painful to me, though. Is it possible to avoid selling completely? Life would be much simpler that way.

Reasons to sell

Let’s examine some of the reasons why we sell our investments. I’ll start from the best reason to worst.

  1. You need the money

The main reason why I invest is to save for retirement. When we’re older and don’t have any active income, most of us will need to sell some of our investment to pay the bills. Personally, I think this is the best reason to sell. It’s why we saved up all these years.

This reason isn’t legitimate when you’re in the accumulation phase, though. If you are earning income, then you shouldn’t need to sell your investment to buy something. The exception is when you need to buy a house. A house requires a big lump sum down payment and most of us don’t have that much cash lying around. I sold some stocks when we purchased our first home. That’s the only time I sold stock to buy something.

Selling to fund your retirement is good, but there is another way. A better alternative is to generate enough passive income to cover your expenses. We’re working on it by investing in dividend stocks, rental properties, real estate crowdfunding, and mutual funds. Once the income from these investments exceeds our expense, we won’t have to sell anything even after we stop working completely.

  1. Rebalance

Another good reason to sell is to rebalance. The idea is to figure out your target asset allocation and stick to it. If you don’t know how about asset allocation, read this post first – How to figure out your asset allocation. The stock market can be volatile and most investors can’t stomach it. You can stabilize your portfolio by adding some bonds to the mix. You’ll still get most of the benefit and your portfolio will be less volatile.

This strategy is also much less stressful for the investor. You can set your portfolio to the target asset allocation and forget it. You just need to rebalance once per year. It’s the easy way to invest.

One way to get around this is to rebalance by adding new money. This is a great way to rebalance. It works well when your portfolio isn’t that big. However, new investment doesn’t change our asset allocation much anymore. Now, we need to sell to rebalance.

  1. Long term business prospect is not good

Our tax-advantaged accounts are all invested in low-cost Vanguard funds. We don’t have to worry about selling there. However, we have individual stocks in our taxable brokerage account. These are our passive income generator. The dividend will help pay our expenses when my wife retires. Generally, I invest in solid dividend growth companies and rarely sell. However, if the long term business outlook doesn’t look good, I’d sell.

For example, we can look at Sears, JC Penny, Macy’s, and other department stores. That business model is done. I’m not sure why anyone would buy these stocks today. Can they really turn it around? I’d sell if I own any of these stocks.

Sometimes, it’s hard to tell when the turning point is. The tobacco companies are still making good money and the dividend is very nice. However, they are also killing their customers. There are fewer and fewer smokers every year. That doesn’t sound like a sustainable business. I still have a few shares of Altria (Marlboro) and probably should sell them.

  1. Capital loss tax deduction

In the US, we can write off losses against capital gains. Sometimes, it makes sense to sell stocks to reduce your tax bill.

I did this a few times in the past, but it never really worked out for me. Last December, I sold Shell to take the tax deduction. The stock went down a bit more, but it doing pretty well this year. That always happens when I sell to take the tax deduction.

I know you can buy the stock back after 30 days, but it doesn’t work for me. I never get around to it. Selling stocks for the tax write off just isn’t a good reason to sell for me.

sp500 tariff
  1. Bad news

Last week was tough on the stock market. The trade deal didn’t work out and the tariff increased. That’s bad news and many investors sold some stocks. That’s why we see these sharp drops. Investors and banks sell their investments when they hear bad news.

However, bad news is not a good reason to sell as long as the companies you own still have a good long term business model. Apple products will become more expensive if this trade war continues. Their numbers might worsen for a while, but this trade war isn’t permanent. Eventually, it will be worked out and Apple will continue to make a ton of money. Their business model is still fundamentally sound.

What if I never sell?

Those are all the reasons why I sold stocks in the past. Selling is stressful for me and it rarely worked out well. What if I just stop selling? Is this a way to make life easier and improve the performance of our portfolio? Let’s see if it’s possible.

  1. Money – We don’t need to withdraw from our portfolio yet so we still have time to build our passive income. I’m pretty sure our passive income will exceed our expense when we’re 60.
  2. Rebalance – Unfortunately, I don’t see a way around this. I have to sell to rebalance, right? I guess I could go to 100% stocks until we’re 60. That way we won’t have to rebalance for a while. I’m too conservative to do that at this point, though.
  3. Business going bad – I think I might be able to live with this. Even if a few companies crashed, it would be okay if my dividend portfolio is diversified. We’ll lose some money, but not a big percentage. It’s not ideal, but I probably can handle it.
  4. Tax deduction – I could live without the tax deduction. It’s never that much anyway.
  5. News – This one is tough. I try not to pay attention to the news, but it’s not easy. I think one way around this is to have a range on my asset allocation. So our bond/cash allocation can be between 20 to 40% of our portfolio. This gives me a little room to react to the news.

Ugh! It seems my attempt to move from “buy and hold” to “never sell” isn’t going to work. I still think rebalancing is a good idea. I could limit the rebalancing to the retirement account. It’s easy to rebalance there because there are no fees.

Our dividend portfolio is a good candidate for the “never sell” strategy. It will take a while to execute, but I will go through our stocks and see what companies don’t make sense in the long run. I can get rid of those and diversify the portfolio. Once that’s done, I can just focus on buying good stocks and don’t worry about selling. Alternatively, I could just invest in a good dividend growth fund. That’s a much easier way to go.

Anyway, this post was inspired by Jason’s post – Why I will never sell another stock. I believe all his investments are in a taxable brokerage account and the allocation is 100% stocks. He doesn’t need to rebalance so this strategy is a good fit for him.

What do you think about the never sell strategy? Can you do it?

*Sign up for a free account at Personal Capital to help manage your net worth and investment accounts. I log in almost every day to check on our accounts. It’s a great site for DIY investors.

Image by Priscilla Du Preez

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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{ 54 comments… add one }
  • Bob December 18, 2019, 12:44 pm

    I buy only dividend paying stocks and always have. Im older ( pushing 60 ) and have been at it a looong time. My portfolio generates just over 8.2% ( Ahhh yes the power of cost avg and time ) I can count on one hand the stocks I have sold through the years and I would say now I regret 3 of 2 sales.
    I dont rely on dividend increasing companies as a rule I buy best value.
    I take 4% and reinvest the remainder so every Quarter I actually get a pay increase … Life is good.
    If you have to sell an asset to pay bills you dont have enough to “retire” kind of JP Morgans famous quote ” If you have to count your money your not rich”

  • Julian May 15, 2019, 5:37 pm

    If only it was easy like you put to select companies that have a business model that will work in the future. Altria is still doing great in spite of the all the worries since 1990 and pay filth dividends. Sometimes what appears to be will not be. Like Apple appears to be solid now but I have my reasons to believe it might not be around in 30 yrs.

  • Sport of Money May 15, 2019, 5:39 am

    I tend to hold stocks for a long time. However, in my situation, it is hard to hold stocks using the never sell strategy. There are many reasons to sell and you have listed a lot of them.

    But unlike real estate investments in which I do try to have the never sell mindset, I do not generate cash on my stock investments. I generally invest in non-dividend yielding stocks, opting for growth stocks instead. Given there is no cash flow stream, I will eventually need to sell in order to monetize my investment.

  • Little Seeds of Wealth May 14, 2019, 1:07 pm

    I like having a large cash balance esp during uncertain times. That way I know that if my investment goes down 30-40% I can still pay my living expenses and not go into panic mode.

  • Doug May 14, 2019, 1:01 pm

    I am generally a buy and hold guy but some cuts generate a sell or if the company isnt raising its dividend enough. right now I am relocating some stocks to give me better dividend growth going forward. hopefully hit a point where everything is good and then the portfolio will just need some capitol added to it lol.

  • Abigail @ipickuppennies May 14, 2019, 9:49 am

    Interesting stuff. It seems like a bad idea to never sell, since there are so many legitimate circumstances where selling is a good idea. (Though I’m iffy about selling to help build a down payment for a mortgage.) But that’s coming from someone who doesn’t understand much about investing and lets Vanguard do all the heavy lifting. So… You probably shouldn’t listen to me, I guess.

  • Jim @ Route To Retire May 14, 2019, 7:25 am

    It’s always easier to say you won’t ever sell investments, but if they ever hit the toilet and lose 40% of their value, that’s when the panic could set in. I plan to only sell only as much as we need for withdrawal to cover our expenses (and hopefully only when the market is good). I think I’ll be just fine and won’t do anything stupid, but I’ll probably still start pacing when the downturn happens.

    In the meantime, we’ll rebalance once or twice a year and that should help make sure we’re not too heavy in equities when the @#$% goes down, so to speak.

    — Jim

    • retirebyforty May 14, 2019, 10:50 am

      Even if a business drops 40%, like Boeing. They’ll probably come back up. Would you sell BA if you have some?
      I don’t know… I’d be tempted to sell unless I use this never sell policy strategy.

  • Buy, Hold Long May 14, 2019, 1:53 am

    You’re better off leaving it in the end. Unless the main business changes then there is no reason other than you need the money to fund another purchase haha.

    Cheers

  • CheapPig May 13, 2019, 10:05 pm

    We invest in mostly in european and american dividend stocks and rarely sell. However, when you enter the high yield corner of the stock market, there is cause for a bit of vigilance. Sometimes a company faces legal matters, their market is under political pressure (like tobacco, gambling etc) that might cause a business model to crash and a company to stall dividens for maybe a long time.

    My history of “timing the market” is horrible. I bought a lot of stocks just days before the Trump tweet, which caused our portfolio to drop 2% in a matter of days. Why not wait!? Lol.
    We have quite a number of preferred stocks, which are not as volatile as others, so it helps to ease the rollercoaster-trip 🙂

    One other reason for selling is rebalancing. Sometimes when the financial climate changes, we might want to rebalance a bit. We are still in the accumulating phase, and will be for maybe 5 more years, so for now it is best just to sit back, reinvest and let the dividends keep on coming.

  • MC4H May 13, 2019, 6:32 pm

    With growth fund not selling or re balancing has worked pretty well for me so far.

  • mary w May 13, 2019, 3:19 pm

    Once your portfolio is too large for “new money” to get asset allocation back in line, set your taxable funds up so internal capital gains and dividends are paid out rather than automatically reinvested. That way you can choose how to invest the cash. That’ll help a bit…for awhile. Also do as much as possible within your IRA/401k so that taxes aren’t due.

    • retirebyforty May 14, 2019, 10:46 am

      That’s a good idea. I should do that in my tax sheltered account.
      Although, rebalancing is pretty easy and doesn’t cost anything in my 401k.
      I’ll have to think about it more.
      Thanks!

  • Penny Pinching Ninja May 13, 2019, 1:50 pm

    Great points on the reasons to sell. We keep our investments at 90/10 stocks to bonds. I do not mind fluctuations and have a high tolerance for risk. The news does not affect the long term strategy put in place. With that said, I do not sell other than to rebalance back to that 90/10 allocation. I have considered going 100% stocks which would eliminate any selling, but that 10% is enough to help me sleep at night 🙂

    • Sam May 13, 2019, 7:36 pm

      If you never sell, then are you just investing for money’s sake?

      The whole purpose of investing is to pay for a better lifestyle. I would find some particular things you’re investing for and sell to buy those things.

      Gotta live it up as we age!

      • retirebyforty May 14, 2019, 10:47 am

        Well, if we can live off passive income, then why sell? We’ll probably live it up a bit when we’re older.
        It’ll be hard to change.

    • retirebyforty May 14, 2019, 10:45 am

      90/10 is pretty high. That’s good if you can stomach it. You never know until you go through a big recession…

  • Money Ronin May 13, 2019, 10:42 am

    I’m a few dollars and years head of Joe in FIRE and still in the accumulation phase.
    I employ the never sell practice which I apply to stocks and real estate. The wealthy hold on to their assets in perpetuity and live off the dividends, rents, leases, loans, etc. When they pass on their wealth the the next generation, the cost basis is stepped up allowing their heirs to re-balance without tax consequence. Rinse and repeat.

    Most people on the FIRE path avoid debt like the plague, but I have found low interest loans an important tool in my wealth accumulation and never sell strategy. I spend a lot of time managing cash flow and debt much like a business. Many times it is preferable to borrow money to invest vs selling a position and losing out on the potential gains or incurring the capital gains taxes.

    How to avoid selling:
    1. Money – If the need is for a permanent draw down of principal, then sell. If my need for money is temporary (e.g., less than a year before another cash infusion is received), I borrow it against a low cost brokerage equity line or I refinance a property with cash out.
    2. Rebalance – I use new funds from income to reinvest in stocks or real estate. I will cash out refi real estate and invest in stocks as needed. Conversely, I have also temporarily borrowed against my brokerage equity line to acquire a piece of real estate.
    3. Business going bad – I own few individual stocks; I let the ETFs and mutual funds pick (and sell) the stocks. I can only think of one situation when the entire mutual fund went bad and I had to sell because the fund manager irresponsibly invested 40% in one losing pharma stock.
    4. Tax deduction – If you’re doing things right, you should have mostly capital gains and few capital losses, especially over the long run. I’ve sold many losing stocks in my time but those were eliminated from my portfolio years ago.

    • retirebyforty May 14, 2019, 10:44 am

      Thank you for your input. Using debt to invest is hard for me. I’m too risk averse for that.
      I might use HELOC if the rate is low when I need the money.

  • Done by Forty May 13, 2019, 10:21 am

    We definitely sell to rebalance and, when there’s an opportunity, to harvest some losses for tax purposes. I don’t really view them as true ‘sales’ in that case though: in both scenarios I’m buying an equal portion of some other investment, and staying (or even getting closer) to my goal asset allocation.

    Today’s volatility certainly has me trying to buy what I can. So I like the wild ride for now.

    When I no longer have an income from my day job…I bet my perspective changes. 🙂

    • retirebyforty May 14, 2019, 10:42 am

      I guess we shouldn’t count rebalance as a sell if you don’t pay tax. That works for me.

  • Young FIRE Knight May 13, 2019, 10:14 am

    Never sell is an interesting strategy. I’m not sure I’d ever have it that way, as I think rebalancing your portfolio to your preferred allocation can be pretty valuable. That being said, I don’t plan on rebalancing for quite some time, and the only time I would sell is through my brokerage for a down payment on a property (could be potentially coming soon!)

  • Ellen May 13, 2019, 9:01 am

    Tariffs on the Chinese are long overdue. Can’t let them take advantage of the USA anymore. I sleep well at night since I’m a long term investor. Only short term and day traders are against the tariffs.

    • retirebyforty May 13, 2019, 10:26 am

      I agree with you somewhat about the tariffs. We can’t let them keep stealing our IP.
      The trade deficit is another story. It’s not relevant.
      Also, there must be a better way to do this. Going at it unilaterally isn’t good.

    • jim May 15, 2019, 1:52 pm

      ” Only short term and day traders are against the tariffs.”

      Well thats very wrong.

      Farmers are in the news just this week about how unhappy they are.

      2x more Americans think the tariffs are bad than think they help.

      100% of economists polled think they’re bad.

      • retirebyforty May 15, 2019, 10:11 pm

        There must be a better way to work with China, but I guess the tariff is a convenient stick for the president. I don’t like the tariff because it’s a consumption tax and the poorest people are hurt the most. But if China will play better with us, it might be worth it.

        • jim May 16, 2019, 12:41 pm

          Yes there must be a better way to work with China.

          Trade wars are an awful way to work with China.

  • FJ May 13, 2019, 7:22 am

    Like most of the readers here, I am dividend growth investor as well. I rarely sell stocks. When I buy a stock, I plan to hold it forever and collect its growing dividend. However, in some cases, I had to make the hardest decision to exist some of my positions (dividend cut or changing business model, etc).

    Since I am still in accumulation stage and I have very longer time horizon, I do not hold bonds positions at this time. I may consider buying and do some assets allocations once get closed to FIRE 🙂

    • retirebyforty May 13, 2019, 10:24 am

      Good call going with 100% allocation. It’s great when you’re young.

  • xrayvsn May 13, 2019, 7:06 am

    I also try to rebalance while I can by directing new money in to top things off and get my allocations more in line with what I want.

    I have done tax loss harvesting in the past and it works well, especially with index funds. There is really not much difference between the vanguard total index and the vanguard 500 for example so I sell one and immediately put it in the other. It avoids the wash sale rule so I don’t have to be out of the market for 30 days. I have basically created a list of mirror funds that I can do this for whenever I do want to sell at a loss. At my tax rate of 37% it is nice that Uncle Sam is willing to pay more than a third of my losses given that he takes 23.5% of my gains.

    I hopefully get my passive income stream to cover my desired withdrawal rate and not have to touch anything and leave it as a legacy.

    • retirebyforty May 13, 2019, 10:24 am

      That’s a great idea. Moving money between similar funds would work really well. Most of our after-tax investment is in individual stocks, though. It’s much more difficult to do that.

  • GenX FIRE May 13, 2019, 6:29 am

    Every time I try to time the market, I mess it up. It never fails. For me, the lesson is stick to a plan and ignore the timing bit. This puts me in the category of never sell with the rebalancing caveat. Periodically, like 1x or 2x a year we reevaluate our risk tolerance and goals, and then make adjustments accordingly. Generally, nothing changes.

    I heard Cramer say something to that effect, but to have up to 5% in a play area if you are so inclined. I do that to some degree, and continue to learn my lesson. Only the value picks there work for me; the good dividend stuff generally speaking.

    • retirebyforty May 13, 2019, 10:22 am

      I like the 5% play area. That’s a great idea. My play area is 20% so I guess that’s a bit too large. We’ll see how it goes.
      I’m not good at timing the market either.

  • The “never sell” part is definitely a big part of why I love our real estate checks. I also don’t rebalance, but I like Paula Pant’s strategy (or at least I think that’s where I heard it first) of just funding the correct bucket to balance things out. Of course, that only works in the accumulation phase.

    • retirebyforty May 13, 2019, 10:21 am

      I’m really stressing out about our condo now. The big problem with rentals is liquidity. Now that I want out, it’s hard to sell. It’s annoying. I might have to continue being a landlord until the market picks up.

  • freddy smidlap May 13, 2019, 5:26 am

    we just sold a taxable brokerage fund last month when the market was very high. We had owned it a long time and we’re going to use the money to fund part of our lives this year. it’s part of our retirement glide path where we invest less new money and enjoy some of the fruits of our labors. i’ve said it before but i don’t want to save a million bucks in order to live off the crumbs and die with a million or two in the bank. i’m trying to figure out how to die broke but it isn’t easy.

    • retirebyforty May 13, 2019, 10:20 am

      That’s great timing. Congrats! You’ve got a point about retirement savings. You don’t have children, though. It’s a whole different ball game when you have kids. I’m okay with using up all our money, but I don’t mind leaving some behind too.

      • freddy smidlap May 14, 2019, 7:02 am

        that’s 100% correct in the big difference. i listed a couple of best friends as beneficiaries. i tell them if there’s anything left for them i screwed it up!

  • Tom @ Dividends Diversify May 13, 2019, 4:46 am

    As a dividend growth stock investor (like you Joe), I prefer to buy and hold forever. After all, you have to stay invested to collect the dividends. But never selling is just not realistic. And you do an excellent job of laying out appropriate reasons for selling. Just like having buy criteria, a good investor has sell criteria. The most important thing is to have an overall plan and stick with it! Tom

    • retirebyforty May 13, 2019, 10:18 am

      Thanks for your input. My sell criteria is too strict. So I usually sell too late. I’ll need to improve it.

  • Lazy Man and Money May 13, 2019, 3:33 am

    I believe there’s strong academic work behind pairing asset allocation to market valuation (using metrics like Shiller/PE). It is market timing, but my research of the experts is that it is market timing that works and that makes sense. I should be publishing an article on it sometime within the next month.

    I do some minor speculating in individual companies (mostly for fun) when I think they are very, very cheap. I bought Chipotle about a couple of years ago and sold it when it doubled. The business is fine, but it felt like it was time to take the profits and pour it into bonds. I’ve been doing that with my new money and these speculative picks.

    I may get to a point where selling becomes rare (probably never going to get to never), but I don’t think it’s a bad thing.

    • retirebyforty May 13, 2019, 10:17 am

      That’d be great. I need a better guideline than just strict allocation like 60/40. I’m looking forward to your post.
      I should open a speculative account too.

  • Pennypincher May 13, 2019, 2:35 am

    I rode out that last big drop/correction/crash, whatever you call it. I just don’t touch that money. And I’m afraid to look! What are you going to do? I mean, you need growth somewhere.
    When I first saw the title of this post, I thought you were refer-ing (help me spellcheck!) to selling real estate, ha,ha. I am having a heck of a time figuring out how to lower my property taxes that shot up over 30%! Hire a lawyer to appeal these taxes?? Help!
    Joe, if you could do a post on fighting property taxes sometime, it would benefit us all. It’s the first thing buyers look at and the taxes need to stay withing reason to sell one’s property. Would love to hear from other readers as well. Thanks!!!

    • retirebyforty May 13, 2019, 10:16 am

      I was planning to work real estate in as well. But it was getting too long already. Never selling works with real estate too. Just trade up.
      You should file an appeal if you see your property tax increase too much. Bring in some comparisons to show them. If your neighbors are paying less, then you have a good case. Just keep appealing. Our panel is made up of regular citizens and they will try to be sympathetic. It worked for me a couple of times, but YMMV.

      • Pennypincher May 13, 2019, 4:48 pm

        Thank you, Joe. This is helpful. I’m going to sell the dang house and move around the country in a new Airstream or 70’s RV instead. My money is so much better off in the stock market!

    • jim May 13, 2019, 11:05 am

      Like Joe said fighting property taxes really only has one option that I’m aware of which is go through the process to file an appeal. This is really only feasible if the government has incorrectly assessed the value of the property too high.

      If the increase is due to new levies and/or valid appreciation then thats just how taxes work.

  • Dave @ Accidental FIRE May 13, 2019, 1:36 am

    I’ve been sloooowly upping my bond & cash allocations and lowering my stock. But then the market goes on a tear and flips it back. So like you I’m in a way doing some timing, but I just consider it rebalancing for age.

    • retirebyforty May 13, 2019, 10:12 am

      That’s appropriate. When I in my 20s and 30s, I was 100% in stocks. I never thought I’d have bond allocation until I’m in my 50s. However, we are in a really good position now. Having less gain is okay, but losing big would hurt a lot.

  • David @iretiredyoung May 13, 2019, 1:16 am

    It’s going to be interesting for me because I only got into the buy and hold low cost ETF’s a couple of years back, so the next downturn is going to be the first time that I’m put to the test of holding while I watch the value reduce. I think the saving grace for me is that I shouldn’t need to withdraw funds from the ETF’s for a long time, so I can wait out the storm and still be in the same ETF’s when they go back up. Well, that’s the theory!

    • retirebyforty May 13, 2019, 10:11 am

      It’s good that you don’t have to withdraw yet. I think it makes a big difference. It’s much easier to sit tight when you don’t need the money.

  • Mr. Tako May 13, 2019, 1:15 am

    I sell very infrequently. Only when it becomes clear that an investment will no longer be able to compound cash at reasonable rates of return do I sell. Usually this happens because of changing business economics, but occasionally it’s bad management too.

    There’s also another kind of selling to consider — Selling to reinvest capital into a better investment. Say for example — I could find a investment that compounds cash at twice the rate of another investment. They’re both good investments, but one is just better than the other. That might be worth selling one investment to buy another.

    I’ve done it once in 2019 already, but usually I just buy and hold. Funds with very little turnover are also a good idea.

    For the most part, I think this trade war nonsense is mostly noise. When your opponent in a trade war is a known currency manipulator, it matters very little how big your tariffs are.

    • retirebyforty May 13, 2019, 10:10 am

      You’re right about reinvesting into a better investment. However, you have to pay capital gains tax (assuming there is some.) That’s a big drag. It rarely works out that well for me when I tried to reinvest like that. I’m not a great analyzer so it’s not obvious to me which investment is better.
      Good point about the trade war. How does manipulating the currency help China in this case? The one paying the tariffs are the American consumers, right?

  • Jason Fieber May 13, 2019, 12:55 am

    Hey Joe,

    Awesome stuff. Thanks for the shout-out. Much appreciated. 🙂

    That data seems to show that never selling is better financially. The less you handle your portfolio, the better off you’ll likely be. I included some relevant data points in my post showing why that is.

    However, it’s more about LIFE performance than FINANCIAL performance for me. The whole point of saving, investing, and financial independence was always so that I could go about my life as I please and enjoy myself. Sitting hunched over by a computer screen and watching stocks isn’t my idea of a good time, but to each their own. Eliminating the “sell button” from my life has been an incredible relief. One less thing to think/worry about. The fact that I’ll probably end up richer because of it is just icing on the (already delicious) cake.

    Best regards!

    • retirebyforty May 13, 2019, 9:28 am

      You’re 100% right about maximizing LIFE performance. It’s always stressful when I sell stocks. I’d keep checking the price and double guessing myself. That’s the most stressful part of investing for me. If I can remove that, investing will be much easier.

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