There is an oft-cited aphorism: you should sell at prices you would not buy at. Such "advice" has limited utility in practice because it contradicts another frequently-discharged gem of wisdom: let profits run.
Whether one should lock in capital gains, or wait for a multi-bagger, a useful consideration here might be the type of asset you are invested in.
If it is a growth stock, it may be worthwhile to "let profits run".
If it is a blue chip stock like a bank or telco, you may want to lock in some profits and wait for market cycles to work in your favor.
On the other hand, REITs rarely experience explosive share price appreciation by the nature of its business model. Hence, when there is an appreciable capital gain, one may wish to consider recycling the capital to improve overall portfolio yield efficiency.
That said, i have been thinking of replenishing my depleted warchest, while waiting for an appropriate opportunity to load up quality companies.
One particular candidate that kept popping into my radar is Frasers Logistics & Industrial Trust (FLT).
A part of me wishes to retain FLT at least until the June dividend is paid out. But the recent run up of its share price to 1.16 has roused my eagerness to lock in gains. If sold at 1.16, it would represent an approximate 21% capital gain, or around 3-years worth of yield if I had retained the stock. Importantly, I would unlock around 250k of capital for recycling.
I am allowed to be patient and prudent with the recycled capital, especially since it has already earned out 3 years of yield. Looking at it another way, i have a 3 year grace period to find a new home for these funds without suffering opportunity loss.
Alternatively, I could also craft a bond ladder using the SSB for these funds until a suitable investment opportunity presents itself.
Decisions. decisions. decisions.
Onward to FI my brethren!
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| There is no robotic algorithm for selling |
Whether one should lock in capital gains, or wait for a multi-bagger, a useful consideration here might be the type of asset you are invested in.
If it is a growth stock, it may be worthwhile to "let profits run".
If it is a blue chip stock like a bank or telco, you may want to lock in some profits and wait for market cycles to work in your favor.
On the other hand, REITs rarely experience explosive share price appreciation by the nature of its business model. Hence, when there is an appreciable capital gain, one may wish to consider recycling the capital to improve overall portfolio yield efficiency.
That said, i have been thinking of replenishing my depleted warchest, while waiting for an appropriate opportunity to load up quality companies.
One particular candidate that kept popping into my radar is Frasers Logistics & Industrial Trust (FLT).
A part of me wishes to retain FLT at least until the June dividend is paid out. But the recent run up of its share price to 1.16 has roused my eagerness to lock in gains. If sold at 1.16, it would represent an approximate 21% capital gain, or around 3-years worth of yield if I had retained the stock. Importantly, I would unlock around 250k of capital for recycling.
I am allowed to be patient and prudent with the recycled capital, especially since it has already earned out 3 years of yield. Looking at it another way, i have a 3 year grace period to find a new home for these funds without suffering opportunity loss.
Alternatively, I could also craft a bond ladder using the SSB for these funds until a suitable investment opportunity presents itself.
Decisions. decisions. decisions.
Onward to FI my brethren!
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