There are many young investors who have started investing early, but,do not know when to sell a stock. Selling your stocks or investment is equally important as only then will you higher fetch superior returns.
It usually happens that individuals buy stock and hold it for a long time until they realize that the stock has gone done tremendously lower.
Here are 5 reasons to keep in mind when to sell a stock:
1) Unfair Trade Practice
It is time to sell your stock or mutual fund when there is light on any unfair trade practice doing by the company in order to make quick profits. Reduce your investment in such companies who have indulged in any fraudulent activities.
2) Low Credit Rating
If you have any investments in debt instruments. Keep a track on credit rating on the instrument. It is better to lower your risk exposure in such instruments.
3) Inadequate Returns
Stocks which you have brought are consistently not doing well and generating poor returns. In such cases it is better to sell the instrument before you incur more losses.
It usually happens, individuals hold the stock in hope that it will recover one day and make huge losses.
4) Market Conditions
As investment in equity are subject to market risk and is sensitive to other various macro-economic, industry, etc factors.
Selling your investments when markets are high will give you better profit on your investments. However, it is not advised to time the market.
5) Change In Investment Objective
As you grow older your investment objective will change. You may want to sell shares and invest the same in fixed income securities.
For example, a retired individual needs fixed interest income. He may thus sell his shares and place them in fixed deposit, so as to earn regular income for his sustenance.