COMMENT
Tips For Selling Shares

Buying shares is simple. That's because it is very easy to make a case for buying almost any share – sometimes even rubbish ones! However, once you've bought a share, it can be difficult to let go. But knowing when to sell shares is an important part of investing. Here are some tips on selling:

Be prepared to take a loss

According to some professionals, the common mistake made by many novices is the failure to contain their losses. If you believe that you made a wrong decision in buying a share, then don't be afraid to sell just because it will mean taking a loss. Even the most successful investors have lost money on some of their purchases.

Don't get emotionally involved

Peter Lynch once said that if you can't summarise why you should own a share in four simple sentences, then you shouldn't own it at all. Consequently, you should not get emotionally involved in a share but learn to be critical about its prospects at all times. Learn more in this article.

Never rely on hope

If you ever find yourself saying that you "hope" a share will return to profitability, then sell straight away.

When a better investment can be identified

Finally, my favourite reason for selling concerns the allocation of resources. One professional investor who regularly upgrades his portfolio said that by continuing to hold a share you preclude using those funds to buy other shares. Consequently, he advises investors never to ask whether a share will move higher, but whether better investments are available elsewhere.

In my view, investing is about putting your funds to the best possible use at all times. Consequently, you should be looking for a better home for your money. Therefore, if you believe that your money will generate better returns elsewhere then you should not hesitate to sell and reinvest the proceeds, even if this means taking a loss.