Just discovered you and signed up my email and looking forward to read more from you.
I have a question, though. I'm a beginner investor with the goal of having my dividends to support my lifestyle by the time I retire (which, according to past ages of retirement every year in my country, will be at 70 yo in 40 years time). Coincidentally, I'm now 30 yo and will retire at 70 in 40 years.
Now to the question: you mentioned "I let my winners run and add to them where I can. " I struggle at adding to my positions that are already running, due to that leading to higher average cost, even when I really really like them. Is there some mantra or tip that could help me get over that issue?
Thanks a lot, looking forward to read a lot more from you ;)
Thank you very much, I am glad to hear that you find my content useful.
Adding to your winners is definitely a psychological issue that many investors struggle with. We all want lower cost averages but ultimately it is relates to past activity so we shouldn't let it influence future decisions.
One way to overcome this is to actually look at the fundamentals of the company. For example, if the PE ratio or the P/S ratio has decreased now compared to when we first bought the company then the company has actually improved so we can be happy to pay a higher price. As a dividend investor another one to look at could be the dividend yield, has the yield improved now compared to what it was when we invested previously.
I have always look at dividend yield as one of the criteria to decide if I should increase position or not (for example, most of the time I avoid stock with yield less than 3% on cost), but I would still focus too much on stock price and average cost. ;) Thanksfor the advice, it does help.
Hi Wolf ;)
Just discovered you and signed up my email and looking forward to read more from you.
I have a question, though. I'm a beginner investor with the goal of having my dividends to support my lifestyle by the time I retire (which, according to past ages of retirement every year in my country, will be at 70 yo in 40 years time). Coincidentally, I'm now 30 yo and will retire at 70 in 40 years.
Now to the question: you mentioned "I let my winners run and add to them where I can. " I struggle at adding to my positions that are already running, due to that leading to higher average cost, even when I really really like them. Is there some mantra or tip that could help me get over that issue?
Thanks a lot, looking forward to read a lot more from you ;)
DV
Hi Diogo,
Thank you very much, I am glad to hear that you find my content useful.
Adding to your winners is definitely a psychological issue that many investors struggle with. We all want lower cost averages but ultimately it is relates to past activity so we shouldn't let it influence future decisions.
One way to overcome this is to actually look at the fundamentals of the company. For example, if the PE ratio or the P/S ratio has decreased now compared to when we first bought the company then the company has actually improved so we can be happy to pay a higher price. As a dividend investor another one to look at could be the dividend yield, has the yield improved now compared to what it was when we invested previously.
I hope that helps in answering your question
I have always look at dividend yield as one of the criteria to decide if I should increase position or not (for example, most of the time I avoid stock with yield less than 3% on cost), but I would still focus too much on stock price and average cost. ;) Thanksfor the advice, it does help.