Investors commonly wonder when the best time to sell a share is. That is because it is a lot easier to buy a share rather than sell a share due to the long-term nature of investments and how does an investor know that the gain in share price has come to an end or that it won’t rise again in the future? These tips should help investors figure out when is the best time to sell shares:
- Admit defeat – if a share has continued to fall and its prospects look bleak (e.g. a major scandal has hit the stock or its business model has been significantly made difficult due to regulatory changes) then it may be time to move on and sell the stock. An investor should take a look at the fundamentals at the make the call. If the share is in an irreversible decline, then that should seal a sell decision.
- Capital requirements – an investor may not need the money from a share sale immediately. If an investor has belief that a share’s performance will continue to improve or begin to improve in the future, then it may be wise to hold onto it if there is no immediate need to realise the profit.
- Target price achieved – if a share price has hit the target price that an investor had in mind, then it may be a good time to sell, especially if the investor is more cautious in their approach.
- Merger – a merger will give the share price of the company that is being acquired a significant boost. Mergers tend to have a record of performing out-of-line with expectations and thus it makes sense for investors to cash in if they are lucky enough to own a share in a company that has been acquired.
- Opportunity – a better opportunity may have popped up for investment, which may make sense for an investor to sell a share that isn’t do as well as expected and invest in the one that they expect to have better prospect.