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Anonymous
If i keep the capital gain in the portfolio, it does not increase the unit of stock, the capital gain might become $0 in one day.
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Tan Choong Hwee
18 Nov 2021
Solutions Specialist at Providend
Lets say you invested $10k in a robo-advisor portfolio. The portfolio grows +10% to $11k, so your capital gain is $1k. You sell $1k worth of your portfolio, your "unit" in that portfolio actually decrease. Lets say you immediately invest this $1k capital gain back to the portfolio, you are now buying at the new price and therefore get back the exact number of "unit" you have just sold. In the end, it still holds the same number of "unit" as you first started.
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Wdym by capital gain become $0~
Do you mean unrealised gain, capital gain mean the profit after you...
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Assume u 1st invest $10k, when price increase to $11k. U sell $1k, 90.9units of stock. Now you left with 909.1units of stocks.
Then you buy back 90.9unit again?
It make no different actually. Your portfolio value will still remain $11k. Same number of units