The decision on what stocks to buy and when to buy can sometimes be easier than when to sell. Should you always wait for your investments to turn a decent profit, or is it ever a good idea to sell a stock that\u2019s lost money? We explore some good \u2013 and bad \u2013 reasons to sell stocks.<\/p>
This question is easy to answer in principle and not quite as straightforward to action in practice. We all know that the idea behind dealing stocks is to make a profit. So, the ideal is to sell when you\u2019ve made as much profit as possible.<\/p>
And there\u2019s the rub. Let\u2019s say the stocks you bought a year ago are on the ascent, and selling now would net you a healthy profit. Unless you\u2019ve got your hands on an uncannily accurate crystal ball, there\u2019s no way of knowing if they\u2019ll continue to rise\u2026or commence a slow tumble (or even a rapid one). So, in a positive scenario, it\u2019ll be a case of deciding to sell when you\u2019ve made a profit that is \u201cgood enough\u201d.<\/p>
And, of course, there\u2019s no iron-clad guarantee that those painstakingly-selected stocks will rise in value at all. That\u2019s simply the risk with investing. So, there may also be times when the best option is to cut your losses.<\/p>
While there\u2019s no way of predicting the future with absolute certainty, there are indicators to look out for to assess whether you should sell at a loss (or, indeed, get out while the going\u2019s good). We\u2019ll further explain this in our tips on good and bad reasons to sell a stock.<\/p>
Sorry, but this is one that there\u2019s no clear-cut answer to. Like any investment, stock values are subject to a huge number of factors. Some are linked directly to the company you\u2019ve bought stock in. For example, if it announces the launch of an exciting new product, that\u2019s bound to be a surefire hit. Others are wider market or economic factors. Nobody could have predicted the coronavirus pandemic and its negative impact on the hospitality industry (and positive, albeit temporary, impact on the tech industry). Big fluctuations can happen even within a single day.<\/p>
So, unfortunately, there\u2019s no optimum timeframe between buying and selling stocks or \u201cbest\u201d time of day for selling. As with most investment decisions, it\u2019s a case of monitoring your investments closely and making informed decisions about the best time to sell. Or paying a professional financial adviser to help you make those decisions.<\/p>
Let\u2019s start by noting that there are plenty of good reasons to sell stocks, some influenced by external factors and some by personal circumstances. But there are also occasions when selling your stocks might be a poor idea. Here\u2019s a quick round-up of some of the motivations that can arise and whether they\u2019re a good or bad reason.<\/p>
Depending on your platform, you may be charged transaction fees<\/a> every time you sell stock.<\/p>