It’s important to give equal thought to buying and selling stocks. It’s important not to let emotions cloud your judgment. You could be emotionally influenced to avoid selling shares, resulting in a loss. Or you could hold on to shares for too long, hoping that the price will improve.

Here are some questions you can ask yourself to help guide your decision.

Has my goal changed?

Have you achieved your goal of building long-term wealth? You may have wanted to save just enough money for a house deposit. Does that still hold?

You may want to sell if your investment goals have changed or if you have reached them.

Has the company changed its course?

Consider changing your investment if the company has changed its core business or direction.

Before you decide to sell, it’s crucial to understand how the company has changed and what impact it could have on your goals and investment.

Has the share price dropped?

Your share price may have dropped, or there may be a general market slump in which many companies are experiencing a decline. You may want to wait or sell your shares in either of these cases.

Keep in mind how long you plan to keep the shares and check if the company’s prospects in the long term have changed. If you are a CommSec customer, we provide access to Morningstar stock recommendations that cover hundreds of stocks.

Is your portfolio balanced?

Think about the impact of removing a company or stock from your portfolio before you do. A diverse portfolio where your money is spread evenly across different companies can help you reduce your risk.

If one company makes up a large portion of your total investments, you may need to rebalance.

Do you want to find a new job?

You want to buy shares in another company. We understand that FOMO exists, but before you do, consider how your decision will impact your long-term investing strategy.

Get Tax Advice

Ask for tax advice if you’re considering selling shares.

If you purchase shares at one price and then sell them at a higher price, your capital gain is the difference.

Capital gains tax may be due if you sell shares at a higher price than you paid. In your tax return for that year, your capital gain will be included in your assessable income. You can get a 50% discount on capital gains if you have held the shares longer than one year.

 

Don’t forget fees

When you buy or sell shares, you pay brokerage fees. Therefore, it’s important to include these costs in your calculation of capital gains and losses.

How to Sell Shares

You can easily sell shares using the trading menu of the CommSec Platform. You will need to know how many shares and the stock code of the company you wish to sell.

You’ll receive an indication of the amount you can get back before the sale.