How to Decide When to Sell Your Shares

Image courtesy of 401kcalculator.org
Image courtesy of 401kcalculator.org

It can always be difficult to know when to sell your shares. You may see the stock market moving and wonder whether you need to take advantage of those movements or wait and see whether things get better in the future.

People do have different approaches to selling shares and obviously it is up to the individual what they will want to do. Some people buy shares with the intention of selling them really quickly as soon as the price goes up. They try to take advantage of a temporary fall in market prices to make a quick gain. This can work out for some, but as there are fees associated with buying and selling shares, you will need to buy a lot and see a significant price increase to make it worth doing.

Most people see investment in shares as a more long term thing. They buy shares with the intention of holding on to them for at least five years so that they can have chance to increase in value over the long term. Often it could be for longer, perhaps because they are being bought to be used to pay off an interest only mortgage or as a retirement fund. However, it can still often be tricky knowing when to sell them, unless there is a very specific date as to when you need the money. Even then though, it could be tempting to sell them in advance of that date in certain circumstances.

To know the best time to sell, you have to be able to predict the future and no one can do that. You want to sell when the shares are at their best possible price so that you get the most money that you can for them. It is impossible to know when this will be. If the value is rising you may be tempted to sell, but you could find it will continue to go up and then regret selling when you did, Some people panic as the price falls and sell because they worry that they may lose even more money if they do not. This may be something the regret as prices will often go back up again, although there will be some companies that will not recover.

It is usually much more sensible to sell when the share price is high so that you get a good profit from your shares. If you panic and sell when the stock market falls, then you could end up making a loss and regretting doing so when the prices pick up again. Obviously, you may see that a company seems to be doing badly and worry that it could collapse and feel that cutting your losses is best. However, you need to be sure that it is not just a normal fluctuation of the stock market.

One way to help you to make the right decision is to use a financial advisor. They should know more about how to follow the markets and how to tell whether it is worth selling shares or not. They will know what investigations to do in order to find out whether shares are likely to increase in price again in the future.

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Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process http://www.turnonepoundintoonemillion.com and sells her books through http://www.bowbridgepublishing.com.

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