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While quite a bit
of time and research goes into selecting stocks, it is often hard to know when
to pull out – especially for first time investors. The good news is that if you
have chosen your stocks carefully, you won’t need to pull out for a very long
time, such as when you are ready to retire. But there are specific instances
when you will need to sell your stocks before you have reached your financial
goals.
You may think that
the time to sell is when the stock value is about to drop – and you may even be
advised by your broker to do this. But this isn’t necessarily the right course
of action.
Stocks go up and
down all the time, depending on the economy…and of course the economy depends
on the stock market as well. This is why it is so hard to determine whether you
should sell your stock or not. Stocks go down, but they also tend to go back
up.
You have to do
more research, and you have to keep up with the stability of the companies that
you invest in. Changes in corporations have a profound impact on the value of
the stock. For instance, a new CEO can affect the value of stock. A plummet in
the industry can affect a stock. Many things – all combined – affect the value
of stock. But there are really only three good reasons to sell a stock.
The first reason
is having reached your financial goals. Once you’ve reached retirement, you may
wish to sell your stocks and put your money in safer financial vehicles, such
as a savings account.
This is a common
practice for those who have invested for the purpose of financing their
retirement. The second reason to sell a stock is if there are major changes in
the business you are investing in that cause, or will cause, the value of the
stock to drop, with little or no possibility of the value rising again.
Ideally, you would sell your stock in this situation before the value starts to
drop.
If the value of
the stock spikes, this is the third reason you may want to sell. If your stock
is valued at $100 per share today, but drastically rises to $200 per share next
week, it is a great time to sell – especially if the outlook is that the value
will drop back down to $100 per share soon. You would sell when the stock was
worth $200 per share. Learn how to invest like Buffet.
As a beginner, you
definitely want to consult with a broker or a financial advisor before buying
or selling stocks. They will work with you to help you make the right decisions
to reach your financial goals.
Disclaimer: The information provided
here is only for informative purposes and nothing more. It is not in any
way to be construed as authoritative. Always consult your financial advisor
before taking any decision. It is informed to the people that this
information that is provided here is not to be acted upon. In spite of our
advise, if any person acts upon the contents of this web site and incurs a
loss, they do it on their own risk. We are not to be held responsible for
any loss, incorrect information etc.
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