Hi everyone. I am new member here and would like to open a debate for something that I believe is in everyone’s interest, after all everyone wants to get the best income from their shares. Currently, as a member of Freetrade informed me, if you liquidate one or more of your shares the brokerage system will sell your oldest shares. So, for example, if you own two Shopify shares, the oldest being the lowest value stock, you will have after the sale the highest value stock and, of course, the lowest yield on the stock that was sold. As an investor I think that in this way we not only lose yields, but we are also stuck to the possibility of selling some shares when the oldest is the lowest value, so I believe that the best for everyone would be the system would always sell the stock of higher value, because this way we would preserve the high yield.
Finally, I would like to hear everyone’s opinion and ask Freetrade to evaluate a possible change in this sales system.
Sorry if the topic title got weird it’s my first time.
If you think about it, then it doesn’t matter which share is sold. If you own 2 shares and you paid £100 for the first and £200 for the second you have a £300 holding.
Now suppose you sell one share after the share price doubles to £400 a share. You sell one share for £400 and the other is worth £400. As you paid an average of £150 for the shares you have made £250 profit on that sale. Regardless of which share you sell first the money you’ve paid is the same and your return is identical.
Shares are generally considered fungible. it doesn’t matter which one you sell, they are interchangeable and identical. It makes no difference to your overall loss or gain
Hi everyone. Thanks for sharing your opinions . Explaining my reasoning otherwise, if you have, for example, two stocks of different values, your lowest value stock is what will keep your average price low. Right? So once you sell it (for being the oldest), the share value goes up and you get more exposed to market swings. But if the higher value stock is delivered to the market, then you keep the value low and get less exposed.
Your suggestion just seems to be about what makes your decisions look good on paper.
I don’t really have an answer for your actual question but let’s take an extreme example… I have previously bought 1 share at £1 and 1 share at £1000, and I sell 1 share at the current price of £100. You seem to be suggesting that if I sell the share bought at £1000, my average price goes back to £1 and then it shows your return at +9900%. But if you sold the share bought at £1, the average price paid for the remaining shares is £1000 and your return is -900%.
Both scenarios are identical. You can try and present it however you like, it’s your own money, but in terms of what you are left holding in terms of money and shares, it’s the same.
If you bought the stock for £1 and another for £1000, then your average price would be around £500. Then you sell the stock for £1 and from then on there would be no more average price, but its value would rise to £1000, which is the value of your most recent stock.
I suppose you’d have to test it out in the app and see what average is displayed. But i’d assume if your average between the £1 and £1000 shares is 500 then that would be your final average regardless of which share is sold?
Why are we treating the two separately when they are of the same value when sold? I think this is the same issue people are having in their reaction to fractional shares. Of course we like whole numbers and lower averages but ultimately what you’re paying for is a ‘share’ of the company, be it 1/10 or 0.001.
There is only one average price because you have two shares of the same company of different values, but if you sell one of them, then there will be no more an average value, but the remaining stock value plus (or minus) the market oscillation.
Apologies, just using an example used earlier.
I meant to say the average you will have paid for the remaining share would be roughly £500 rather than the £1000 you paid for it due to you having bought the first share £1.
On the loss this would depend on the quote but in the case of selling the one you paid the least probably not. I know this sounds weird but I’m referring to how much I could get from a stock keeping the one of lower value. If I had kept Shares of Amazon that I paid $1, then today my winning would be $2199 and not $1199.
My thinking is that the only thing this scenario affects is your average cost per share. I feel as if this is implying that the shares i buy all remain at the same value regardless of any price movements because they were bought at different times/ prices. For me its the average cost between the two that matters, because they’re both the same value, regardless of how much i pay for each.At any given price the share bought at $1 is worth the same value as the one bought at $1000. The hypothetical Amazon share winnings of $2199, and not $1199 you mentioned are diluted the minute you choose to purchase another share at $1000.
So again 'id say this is about the average displayed in app and perhaps one that could be answered by purchasing shares at two different prices, noting the average, then selling one, and seeing what the average is after.
I doubt it’d go up simply because the older/ cheaper share is the one being sold and the one bought at a higher price is the remaining one as previously i would have been the owner of two of those shares at an average price of around $500, right?
it’s my first time.
. Explaining my reasoning otherwise, if you have, for example, two stocks of different values, your lowest value stock is what will keep your average price low. Right? So once you sell it (for being the oldest), the share value goes up and you get more exposed to market swings. But if the higher value stock is delivered to the market, then you keep the value low and get less exposed.
in this case you would have a huge loss on the action of £1000 if it fell to £100.
