If you’re a long-term investor, when should you sell?

Julie Brownlee, Fsp Invest, 19 Jun. 2015

Tags: shares, selling shares, long-term investing, when to sell shares, holding shares,

When you buy and sell shares, the prices you buy or sell at matter.

You don’t want to pay over the odds for shares and you don’t want to sell at a lower price than what you bought at.

It can be difficult knowing what to do.

So if you’re investing for the long-term, when should you sell?

Read on to find out…

The impact of the price of shares to a long-term investor

If you invest for the long-term, you shouldn’t become too concerned about what share prices are doing right now.

For instance, if you’re investing in dividend paying shares for the long run, should it matter what the share price does in the interim? Short-term movements shouldn’t be a worry.

There are two times when share prices matter, Marc Lichtenfeld in Investment U explains…

  • When you’re buying shares or adding to a current holding; and
  • When you’re selling shares.

When to sell shares

Many investors let the market dictate when they should sell their shares. For example, when the market falls, many investors start to worry and end up selling their shares, usually for a loss.

Then when prices rise, they buy more, paying higher prices in case they miss out.

Fidelity Investments recently released a study of what investors should do in these sorts of scenarios. Their research showed you should do nothing.

Fidelity found that their most profitable accounts were of investors who’d forgotten about their investments. They performed significantly better than those where the investor tried to manage his holdings.

Bottom line: Don’t be in a rush to sell if you’re investing for the long-term. As long as the fundamentals for investing in a company are strong, you should hold on. You’ll make more money over the long run holding onto your quality stocks than trading in and out of the market.

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