Two benefits of selling shares at the right time

Julie Brownlee, Fsp Invest, 30 May. 2014

Tags: selling, selling shares, shares, stocks, sell your shares, stop loss, investing strategy, share, why sell shares

The majority of investors spend a considerable amount of time researching shares before ploughing their money in. But when it comes to selling shares, the majority of investors don’t spend the time they should. This can lead to you losing money. So what should you do when you want to sell shares? Let’s take a closer look…

Admitting defeat to a share isn’t easy

No investor wants to make a loss on a share. Selling a non-performer means you’ve admitted defeat. So to avoid that, it can be easier to just hold on, David Thornton in Penny Sleuth explains.

But that’s the completely wrong way to approach selling a loser from your portfolio. After all, chances are you’re just going to lose more money as time goes by,

Instead you need to go against your gut and sell your losers at an early stage.

Here are two reasons why you should do this…

Reason #1: There’s a psychological benefit
Holding onto losing shares isn’t good for your esteem or investor confidence. It removes the drive you have for investing, putting a damper on your whole portfolio.

It’s something to worry about that you can easily remove.

Reason #2: There’s the practical benefit
By holding onto losing shares, you’re preventing yourself from putting your money to work elsewhere. You could invest your money in other shares that could go on to perform well.

It’s important to take time and weed out the losing shares in your portfolio. Your portfolio will benefit in the long-term.

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How to know when to sell your shares

And if you don’t know when it’s time to remove the losers, ensure you have a strategy in place to guide you and remove your feelings from the decision. For example, use a stop loss. As soon as you buy a share you should know when you’re going to sell it too.

Knowing when to sell is just as important as buying a share.

So there you have it, the two benefits of selling your shares at the right time.

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