Long term investor setting

This might be a bit controversial, but how about this?

Allow for an account setting called Long term investor. When activated it will:

  1. not allow you to sell anything you held for less than 12 (24 or 36) months
  2. allows you to top up any holding you already have
  3. you are locked into this setting for at least 12 (24 or 36) months
  4. you are allowed to withdraw cash or investment income

There is a large body of evidence which suggests that trading in and out of investments is the main obstruction to long term gains, that’s why index trackers do so well. So why not force yourself to be a long term investor? Many of us try and it’s pretty hard to do nothing. I often come up with supposedly good ideas and then battle myself not to do anything.

I think you would need to be able to override it somehow, or you could end up stuck in a failing company that is going bankrupt or into administration. For example Debenhams last year

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I can see the point of the idea for sure but I doubt if many people would use it. It would restrict flexibility and agility to making decisions on a portfolio of shares and tie you in too much.
To overcome that FT would need to provide options to simply switch this ‘mode’ off and that’s what users would do I think…

Exactly. And it’s not even an actual feature. The only thing you need to perfectly replicate it yourself is to not do anything. Change your mindset and this is immediately unnecessary.

Has lots of downsides for freetrade though. People needing the money and suing if they can’t access. Shitstorm on this forum. All for something that everyone already has the means to do themselves :smiley:

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Yes couldn’t agree more.@SebReitz Who needs AA,GA,Therapy etc. Weak willed Bas**rds :beers::racehorse:

I see your point and I agree that many people would benefit from having a long term investment mindset. But being a long term investor doesn’t just mean holding for a long time whatever happens. I think it means intending to hold it for a long time. You might buy a stock intending to hold it for decades but something might change in a few months, for example I bought WORK last year and they announced their acquisition just 3 weeks after, so I sold after only 30 days (but apart from that, my average hold time is 45 months).

In my opinion, learning discipline and controlling emotions is more important, you learn a bit about yourself and helps a lot more in the long run in investing and in other things in life. You can try creating a plan, what you have written is pretty good so can try following it yourself.

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Agree with others - this is part of trading mindset and it cannot be forced from outside.

The closest working incentive which comes to mind, similar to what you propose is the following:

Some countries treat CGT on stocks differently depending on how long people hold them. Say if you held for less than 3 years, you pay 30% tax, but if you held for more than 3 years, you pay 15% tax.

Government can play with the term and the tax rate difference, but you´ve got the idea.

Things like this I actually like and I think they make at least some sense (and I would definitely benefit from it). So when UK Government comes back to idea of changing CGT tax, I would be much happier if they increased CGT only for short term holding.

Nothing of the above is related to what Freetrade should or can do, so it’s just my thoughts on the topic.

For reference - my average holding period is 619 days, longest position - 2084 days, shortest position recently - 63 days (it was BIDU going from 146.73 to 300.0). I usually set price targets for sell points, so the holding period depends on stock performance.

I think what you described it is more like issues with personal control, and researching of stocks rather than needed feature.

There are many reasons why such control of your account would work against you.

1 meme stocks (high volatility needs constant attention. Sell or buy at the wrong time and you might have significant losses)

2 (failed) takeover stocks. Imagine one day you wake up and your stock is up 50% on takeover news. or down because of hostile takeover news. After some time takeover does not happen and stock prices goes to more normal price.

3 I really love to read “risk factors” on financial reports. Basically there are many legitimate factors why share price might go down and at that point all sort of class action suits against the company would be baseless. I am not a lawyer, but I believe the company would certainly get away with something that they have warned you about before hand. So locking your shares from selling would sound like bad idea in case of one of such factors comes to life.

4 Similar to point #3. Poor research situations. Let’s say you buy shares of company xyz and later on you realize that you made a mistake by not researching what company does, how does it generate money or that from time to time it might have unlimited liability. Good example comes to mind Fukushima. No, I have no idea if a company which runs Fukushima plant is public or not, but just want to give an extreme example for illustration. After Fukushima’s accident the liabilities for such company are endless. Radiation, people who lost all sorts of property, contaminated areas, etc etc… Share price of such company would become really volatile and the company might even disappear from stock exchange.

5 your personal circumstances. There are times in life when you might need money. Marriage, divorce, child birth, buying property, sickness, etc etc etc.

I could come up with thousands of reasons why such setting is really bad idea.

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