Importance of Free Capital | MoreDividends.com

Importance of Free Capital

We have all seen or heard this many time but recently I truly experienced the importance of having free capital on hand. Midway through the month of August, the market took a big turn south. When the Chinese government devalued their currency it sent ripples around the world and all of its markets. Stocks took a nose dive and it created a great buying opportunity.



Unfortunately for me when this happened only .8% of my portfolio was in cash. A great buying opportunity had been created and I had no cash. It would have been a great time to strengthen some of my positions or to establish some new ones. I attribute this mistake to my impatience as a new investor. If I had been patient and slowly just adding more cash to my brokerage account and waiting for this opportunity, the pay off would have been so much better than the way I had decided to do it.



Although I feel like I missed out on a great opportunity this time, I am not going to sulk about it. I am going to consider this as a great learning opportunity and try to use this experience to make better choices in the future. Since it appears that we could be embarking on the beginning of a bear market, there will be plenty of more chances to acquire some good stocks at some good prices.



If you have any comments please feel free to leave them below.

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge