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5 Reasons why buy and hold investors use Sharesight

by Doug Morris, CEO, Sharesight

Sharesight is useful for all investors because we automate admin, provide clarity across how you’ve performed, and produce tax reports. If you’re a buy and hold investor, an active trader, or even a professional wealth manager, Sharesight has features for you - Try Sharesight for free to find out for yourself.

Long term investors buy stocks they believe will provide a good return over time. For some, this means investing in a company that shows early promise, but will pay off sometime in the distant future, a technology company, for example. Others looks towards buying high quality companies today with the belief that they have an economic moat - a unique competitive advantage - for the long haul. Another reason people tend to hold stocks for a long period of time is due to their healthy dividend yield.

I’m a long term investor myself. If I find a company trading at or near its fair market value, even better. This also gives me the opportunity to think like a business owner by following a company’s development and taking deep dives into their annual reports.

All long term strategies, however, are equally vulnerable to complacency and disorganisation - something that is bound to creep into your investment life if you don’t make a commitment to using the right tool for the job.

The risk of not staying on top of your portfolio or acting too late can lead to serious financial mistakes. A successful long term investor isn’t a lazy investor. Quite the opposite.

Buy and Hold Bull Market

Be ready when markets move (and they will!)

We’ve all enjoyed this nine year bull run, but it won’t last forever. When the market does turn, successful long term investors are organised and ready to take action.

  • What is my exposure and duration for each investment I own?
  • Have I made or lost money on each position?
  • What’s the combined value of my assets across portfolios and accounts?
  • What are my tax liabilities if I need to sell?

The answers to all of these questions are available (and up to date) at the click of a mouse for the organised buy and hold investor.

Yes, Sharesight is a performance and tax platform, but in order to do those two things properly, we need your data. So we’re a portfolio admin platform too. We’ve put thousands of development hours into making it easy for investors to add their data to Sharesight.

There’s not always a silver bullet solution to getting up and running on a new system, but it’s absolutely worth it when the value of your investment portfolio (and your next move) is at stake.

Quantify your gains - properly

Long term investors can easily quantify their gains using Sharesight. This is essential for deciding whether or not to take money out of the market.

The Sharesight Performance Report displays portfolio returns over customisable date ranges and factors in the impact of dividends, corporate actions, and foreign currencies on each holding.

Importantly, our performance engine uses annualisation. This is critical for investors who’ve held positions for more than one year because it normalises returns and makes them comparable to other investments (and areas of your life in general).

If the market does go south, benchmark your portfolio to determine how you compare against major world indexes. Dig even deeper with the Contribution Analysis Report to determine performance of underlying industries and sectors.

Examine your performance as an investor by looking at your portfolio’s open positions only or factor your historical sells into your return calculation.

Quantify the impact of potential sells

Most investors have a rough idea of whether or not a particular investment has made money, obviously. Many longer term investors, however, top up their positions over time or use dollar cost averaging. This creates a complex history of buying different amounts of stock at different prices.

The Sharesight Unrealised Capital Gains Report (Applies to Australia only) will demonstrate the hypothetical impact of sells on your portfolio in real time. Plus, it will show you the tax impact of those trades. Sharesight automatically captures the date of each trade so it knows if something is considered a short term or long term position.

Unrealised Capital Gains Tax Report Australia

If the Performance Report is the historical record of your decisions as an investor, then the Unrealised Capital Gains Tax Report is the potential record of the investment decisions you could make.

Keep an eye on proxies & opportunities

A buy and hold investor will be making a large bet on a company and might also be systematically investing more over time. This amplifies the risk to their portfolio should the company or market move against them.

Smart investors maintain a plan B.

Upgrading to a paid Sharesight plan allows you to create multiple portfolios. Many clients use these to keep tabs on other stocks, indexes, or to build watchlists. Since each additional portfolio is fully featured, investors have the opportunity to build hypothetical portfolios alongside their real holdings using the same values and dates. This provides the ultimate modeling tool for your bear market portfolio.

Track dividend income & future dividends

If you’re an income focussed long term investor, dividend yield makes up a significant portion of your overall gain. Sharesight’s inbuilt methodology factors in the impact of those dividends, not to mention dividend reinvestment plans (also a pain to track).

Sharesight’s Taxable Income Report will capture all dividends paid by the companies you own, including franking credits (Australia) and other local components.

Taxable Income Report Sharesight

Dividends are paid to both short and long term investors to be sure, but dividend payouts are susceptible to company performance and the resulting share price movements. Long term investors using Sharesight are able to dig into their history to examine the performance of underlying share prices and values with the dividends received.

Should a market event cause one of your portfolio companies to slash a dividend, you’ll know about it using Sharesight’s Future Income Report which lists expected upcoming dividend and interest payments already announced by companies you hold.

Sharesight, the best platform for buy and hold investors

If you’re a buy and hold investor looking to understand the true performance of your investments, track dividends and corporate actions you need a full featured share portfolio platform like Sharesight. To stay on top of your portfolio sign up for Sharesight today.

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