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Originally Posted by Stu from NYC
I have a different opinion on dividend distribution in taxable accounts. As you get them and reinvest you are also doing dollar averaging for the dividends. Better way to increase investments more efficiently.
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It’s dollar cost averaging and yes, you reinvest your gains and you can be buying shares at their lowest price or at their highest price, or somewhere in between. When I was working and couldn’t spend more time playing with my portfolios, I would buy and hold. Now retired, I’m much more hands on. If I owned any of the top 7 high tech stocks, I would not be reinvesting my gains because it would buy much less since they are at their highest value, I would take these gains and buy shares in companies that were hit hard last year that still have room to grow.
When we all worked and contributed to our 401k plans each month, that was dollar cost averaging and we didn’t need the money plus we had time on our hands for the market to recover, which is old folks don’t have much anymore.