How to know when it’s time to sell a stock from your investment portfolio

Julie Brownlee, Fsp Invest, 22 Oct. 2015

Tags: stock, selling stock, when to sell a stock, investment portfolio, long-term investing,

By looking at the performance of the stock market over the decades, the best shot you have of making money is to keep your shares for the long-term.

But along the way, you’ll no doubt invest in some stocks that don’t perform as well as you want them to.

So how do you know when it’s time to cut these stocks from your portfolio?

Let’s take a closer look…

You need to give your investment portfolio a spring clean

Investing for the long-term definitely has its merits, but it’s impossible to always be right about your investments. Every now and then you need to remove the laggards.

This can be difficult. No one likes to admit they’ve made the wrong decision by investing in a stock, but by putting off selling a dud, you’re reducing the chance of your money working harder elsewhere.

It’s important to set realistic goals for the growth of your portfolio. Set a time, perhaps annually, to give your portfolio the once over and check that it’s on track.

For the stocks that are doing well, that’s great. You can leave them ticking along in your portfolio, but for the underperformers, it’s time to take a closer look.

How to decide when to sell a stock

If you’ve had a stock in your portfolio for a year and it hasn’t performed, look to why this is the case. Or if a stock that was a previously good performer has started to drift, try to find out a reason for this.

If you find that the future doesn’t look promising for these stocks, it may be time to sell them. This gives you the chance to free up some of your capital and invest it in other opportunities.

So there you have it. How to know when it’s time to sell a stock from your investment portfolio.

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