facebookDoes it make sense to withdraw daily earnings from my investments? - Seedly

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Anonymous

14 Jan 2021

Stocks

Does it make sense to withdraw daily earnings from my investments?

What do you think of withdrawing daily earnings, let’s say today it increases $100 from the total investment, so i make that $100 withdrawal. And consecutively with small earnings. Can it work?

Discussion (12)

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Doesn't make sense, cannot compound if you do that, will hurt your returns in the long run. Need to separate between investment and trading, if it's investment then keep it there long term. If trading then by all means take profit

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Chris

12 Jan 2021

Owner and Writer at Tortoisemoney.com

You can but it also means that you're preventing your money from compounding. Compounding works because your money can keep growing on itself and the gains with compound on themselves as well. By taking our your returns every day, you're hindering this process.

Take an example of $10,000 in a fund growing 10% per year for 40 years.

If you take the profit out every day, your investment will end up at $50,000 ($10,000 10% 40 years + initial $10,000).

However, if you allow your investment to compound for 40 years, your investment will total $452,592.56!

Don't unnecessarily interrupt the process of compounding. Compounding and time is the secret to building consistent growth in wealth.

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