Would it be more advantageous to invest, divest, and then reinvest in the S&P 500 daily for compound gains rather than simply leaving it invested?

Investing in the S&P 500 or any other index involves several considerations. The strategy of investing, divesting, and then reinvesting daily with the aim of achieving compound gains involves a few important factors:
Transaction Costs: Every time you buy or sell securities, you incur transaction costs. Frequent transactions can lead to significant costs over time, which may erode any additional compound gains you aim to achieve.
Tax Implications: In many countries, selling investments can trigger capital gains tax. Daily transactions could lead to high tax liabilities, especially if the investment is held in a taxable account, thus diminishing overall returns.
Market Timing: To effectively benefit from daily trading, you would need to accurately time the market, which is notoriously difficult. Even professional traders find it challenging to beat the market consistently. The risk of mistiming your trades could negate any potential benefits.
Compounding Effects: The inherent power of compounding comes from letting your investments grow over a long period. Constantly moving in and out of the market might interrupt this growth trajectory and could result in missing out on dividends and market upswings.
Volatility and Stress: Daily trading requires constant attention and involves dealing with short-term market volatility. This can be stressful and may not align with long-term investment goals or strategies, which typically advocate for a buy-and-hold approach to ride out market fluctuations.
Empirical Evidence: Historically, a buy-and-hold strategy with the S&P 500 has been shown to yield substantial returns over the long term. This approach capitalizes on market growth, dividends, and the reducing transaction costs and tax implications compared to more active trading strategies.

In conclusion, while the idea of frequent reinvestment to capture compound gains might seem appealing, the downsides often outweigh the potential benefits. A long-term, disciplined approach, with fewer transactions, tends to be more cost-effective and less stressful, and generally results in better financial outcomes for individual investors.