Visit our COVID-19 site for latest information regarding how we can support you. For up to date information about the pandemic visit www.sacoronavirus.co.za.

bs-regular
bs-extra-light
bs-light
bs-light
bs-cond-light-webfont
bs-medium
bs-bold
bs-black

Community


Share knowledge. Ask questions. Find answers.

Online Share Trading

Engage and learn about markets and trading online

Thoughts on buy-and-hold

Reply
Werner_1
Super Contributor
The longer time horison, the more long term gets beneficial... One cannot look at the average indices and expect to make that, if one selects the very few companies that will totally outperform the market over time, one will get far above average.. Trading reduces the chance of long term compound growth by increasing costs and tax payments. factor that in and you will have to get double the annual profit just to keep up with the long term portfolio. (I didnt actually calculate it but it most probably is something like that).
0 Kudos
louisg
Super Contributor
A long term investor has to contend with an entry and exit expense (fees) of about 0.7% and CGT on profits at 10%. The short term trader (in underlying shares) will have the same entry/exit expenses BUT will pay INCOME TAX of anything from 28% (company/cc) to max 40% if trading in ones personal capacity. TAXES are EXPENSES. Those are serious hurdles to contend with. "I don't try to jump over 7-foot hurdles: I look for 1-foot hurdles that I can step over." - Buffett
0 Kudos
Not applicable
That depends on your strategy. Buy and hold may also not be the most favorable way to invest as the market may crash in year 10. There are more ways to make a profit than just buying a share low and selling at a higher price. Various other options are available, and trust me, you can make a lot of money in a declining market. You should trade according to your plan, stick to it and have dicipline.
0 Kudos
richardw
Super Contributor
Barrie - I'm not suggesting buy-low-sell-high. I'm mostly interested in finding companies that will pay huge divs 10 years and more down the line. Stb 10 years ago would mean huge divs now, almost no matter what the price does. I'm very sure 10 years from now it'll do better because of the exposure to China & Africa.

This week I've made about 14% from SPG. I don't care. If it survives (and I'm pretty sure it will) it'll make me a killing X years from now and I won't need to think about it every day/week/month.
0 Kudos
geordie1
Super Contributor
been doing this since the 1980's.For the last 13 years it is my main source of income.I can assure you a buy and hold of a good company pays rich divs and compounding is indeed very powrefull.My best example would be spur-I invested 100000 13 years ago-my div now is around 60000 a year.However I am not totally passive-I used to be heavy into Liberty but once Donny Gordon sold I sold which has proved to be wise.Also when a share is way overpriced eg your div is down to 1% and pe is around 30/40 I also sell good shares and reinvest in a more reasonably priced 'good' share.Have not got every decision right but over the last 30 years my portfolio has grown to the extent it supports me and my family based mainly on buy and hold.I do not have the right personality or time to be a great trader.
0 Kudos
john_1
Super Contributor
I think that that stratergy is very wise indeed, and and do believe that it is an essential part of long term investing, the evaluation of div yield relative to the market.
0 Kudos
Major
Regular Contributor
I tried trading for 5 years from 98-2003, and spent a lot of time and effort on keeping up with the market for that period. For the last 5 years I've brought and held most stocks. Only rarely will I sell, and that'll be because my valuation is full, management has changed, or I see no further earnings/dividend growth. Result is that I spend relatively little effort managing my portfolio, don't worry about market volatility, have a nice stream of tax free dividends, and have slightly outperformed the market over this 5 year period. so for me, long term investment is the way forward.
0 Kudos
Not applicable
Why not trade to generate capital and thereafter use the capital generated to invest in pref shares and earn dividends?
0 Kudos
Werner_1
Super Contributor
Geordie Lad, excellent, exactly what i aim to do...
0 Kudos
Werner_1
Super Contributor
If one gets the trading part slightly off, you erode your capital which could have been better used in the long term portfolio, my idea is to allocate funds generated from my day-job, etc. to long term portfolio then over time compounding takes care of the rest...
0 Kudos