Is it necessary to sell some shares and reinvest profits earned to get the compounded benefit? I.e If today i bought 10 shares at Rs.100 and it’s price increases by Rs.20 every year (which will be Rs.200/share after 5 years). Then my profit after 5 year would be Rs.1000 .But if I sell some shares and reinvest the profit earned then my net profit would be greater than Rs.1000.
So how to get the compounded benefit in stock market? Is it necessary to sell some shares and reinvest the profit?? OR are there any others methods to get this benefit?
Please put some light on my query
There’s nothing guaranteed in the markets, the investments you make from the profits you reinvest are subject to all market risks as is your original capital invested. Nobody can assure you of any returns in the market. I suggest you read through the basics of investments on Varsity before venturing into active investing.
Thank you for your time sir. I understand that the returns are subject to market risk. But provided if the returns are as per my previous query, Is it necessary to sell some shares and reinvest the profit to get the compounded benefits?? OR are there any others methods to get this benefit?
Where you want to reinvest? if it is in the same stock then no need to sell,you can continue to hold. Also you can read more about compound benefits as I believe your understanding on that is not accurate.