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HELP compounding


philshep69

Question

hi guys , i would like to know if it is possible to take the profit i am showing on shares i have bought and use it to buy more please ? if so , pleasecan you give me step by step idiot proof instructions as i am new to this ,,,, any help greatly appreciated 

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Hi @philshep69 - I believe you aren't actually talking about dividend reinvestment but rather you are looking to book profit on your open positions of shares to then buy more? 

Unfortunately this isn't possible. If you have 10 shares which you bought at £20 each it would have cost £200 to finalise the purchase. If the stock then goes up 10% each stock is now worth £22 and your total account is £220 (i.e. showing £20 profit). You can't  'take the profit' on this to buy more shares, because you'd have to sell some of the shares to then buy the same shares back again... 

You can of course sell some of those shares and take the profit on that trade to buy different shares in a different company, however as you can see above it doesn't really make sense to sell shares in one company to simply buy them back again. 

I hope I've interpreted your question correctly, but let me know if I haven't? I appreciate the 'compound' part of the title suggests DRP, however I'm not sure if the body of the text necessarily followed... 

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