cash management – limited investing budget

Hi Hunter,

Many questions in here and difficult to break them down. First off - don't overthink it. Judging by your questions, you may be over thinking the general thesis about investing which is buying good companies, at good prices to get good returns.

When we buy stocks, we do so with the intention of holding them for years. I have some that I've held for close to two decades and have never sold - and don't intend to sell either. If you buy a good stock, then why sell? Unless you are trying to trade or time the market, and the latter has proven to be a losing proposition.

I've mentioned this in another Q&A. I have two philosophies - 1 for my core holdings with makes up about 70% of my portfolio and another for my growth portfolio. My core portfolio is centered around good quality dividend growth companeis - think companies like those that are on our foundational list or dividend lists. I hold these companies indefinitely. The only time I will sell is if the investment thesis changes, or if I need to rebalance for any reason. Typically however, i just rebalance with new money and I don't rebalance by buying and selling stocks. It works for me.

Also worth noting, I've done this with very little money at the start. I started with 25 a month...slowly investing in good quality dividend stocks that would pay me $$ and slowly with new money, that built up over my decades of investing. Investing is not a race - its a marathon. I say this without knowing your investing horizon, but if you are new and have plenty of years ahead - slow and steady will win the race. You don't need large sums of money and making 10% a year - you would beat the markets. 2020 was an aberration - investing is not that easy and there will be many investors who will find that out the hard way that these types of returns we've seen are an aberration, not the norm.

In terms of my growth portfolio, I usually have an exit strategy where i look to recoup my initial capital. Typically, i'll do that after triple-digit gains and I'll sell a portion of the stock to lock in profits then reinvest that into something else. I let the remainder of my position ride for the long term. I say long-term because once again, whenever I buy something I have the long term in mind. What happens over the week, month, quarter or year means little to me UNLESS there is something that would fundamentally alter my investment thesis.

So bottom line, know why you invested in a company and if that still holds true, then there is no reason to sell it.

Mat