Friday, December 24, 2010

How to Know When to Sell Your Stocks by Ravinder Tulsiani

How to Know When to Sell Your Stocks by Ravinder Tulsiani

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.

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

About the Author: Ravinder Tulsiani is a published author who has
written about personal finance, real estate, self-help and online
marketing. For details visit: