Skip to content

Wealth destruction effect of frequent activity.

The attached pic via @awealthofcs while meant to show power of compounding also shows that frequent churning of investments leads to wealth destruction and not creation. Keep in mind that returns are same for both options and the only difference is the taxes paid once every year vs once after 20 years. If we assume that due to frequent selling and buying we lose more on transaction costs, opportunity costs etc the returns would be even lower.

Charlie Munger, told that one of best traits is to determine  progress apart from activity, Everyone wants to be active but only few progress.

So, to become rich keep investing and stay invested, you will be progress and be richer.



Post a Comment

Your email is never published nor shared. Required fields are marked *