01-29-2021, 10:56 AM
Thinking about making a big change to my approach with the portfolio and was wondering your thoughts.
I've automatically reinvested dividends back into companies that paid them since starting the portfolio in 2013. However, when I did that there were monthly cash contributions coming into the account and there was an $8.95 commission per trade. When my company was acquired in 2017, cash contributions to the IRA stopped, but I've continued with the dividend reinvestment.
In the past few years, the only way to rebalance or buy new stocks is to sell or trim other positions. This has caused me to sell a few winners to free up capital, only to see them continue higher. I've made some good moves as well, but it seems lately everything I've trimmed has done better than what I bought with the proceeds.
With zero commissions, I can pool dividends and use them to add to underweight or new positions at zero cost. This will take away adding to all stocks over time through reinvestment, but also frees me up to be fairly active with trades and will help keep me from selling off existing positions.
I think most of the hesitation comes from making a change after seven years and having to come up with a new way to report results. No longer reinvesting back into the company that pays it muddles up the total return picture and tracking the real results for each position. It will have a negative impact on returns for some stocks because I will no longer be adding to them but probably fits my personality better because it will let me make monthly buys on what I want.
Thoughts?
I've automatically reinvested dividends back into companies that paid them since starting the portfolio in 2013. However, when I did that there were monthly cash contributions coming into the account and there was an $8.95 commission per trade. When my company was acquired in 2017, cash contributions to the IRA stopped, but I've continued with the dividend reinvestment.
In the past few years, the only way to rebalance or buy new stocks is to sell or trim other positions. This has caused me to sell a few winners to free up capital, only to see them continue higher. I've made some good moves as well, but it seems lately everything I've trimmed has done better than what I bought with the proceeds.
With zero commissions, I can pool dividends and use them to add to underweight or new positions at zero cost. This will take away adding to all stocks over time through reinvestment, but also frees me up to be fairly active with trades and will help keep me from selling off existing positions.
I think most of the hesitation comes from making a change after seven years and having to come up with a new way to report results. No longer reinvesting back into the company that pays it muddles up the total return picture and tracking the real results for each position. It will have a negative impact on returns for some stocks because I will no longer be adding to them but probably fits my personality better because it will let me make monthly buys on what I want.
Thoughts?