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Two Reasons To Sell Your Shares

HeartIt’s Valentine’s Day so today I am going to look at love or more precisely why you should not fall in love in with a stock.

How many times have you heard someone say: “I love this stock”?

Perhaps it has been one of the best performing shares in their portfolio. Or maybe, it is a share that has delivered the most reliable dividend over the last few years.

Yes, these are valid reasons for investing in a share. But the moment you start getting emotional about a share then that could also be the time to take a step back. Thing is, shares are not your friend. They do not make good buddies. And they definitely have no loyalty.

You may not think that there is anything wrong with getting emotionally attached to your investment. But emotions can make some people do irrational things. And that is when it becomes dangerous.

That’s because your stock does not care about you. Unlike you, it has no feelings.

Therefore, it is important to know when to sell a stock. So here are my top two reasons for selling a share.

Reason Number One  

The first reason is really quite straightforward: When you need the cash. Many of us invest for a reason. Perhaps it is for our children’s education or for a deposit on a house. This is money that has been intentionally put away for a rainy day. So, when the rainy day arrives, be ready to sell your investment. That is why we invest in the first place.

Reason Number Two  

When the story behind the investment has changed. When we first invest in a business we should have examined the company and its strategy. However, if, for whatever reason, the strategy has changed appreciably then we may consider selling. Here at The Motley Fool, we believe that when we invest in a business, we become a part-owner of the company. So, if you are uncomfortable with the business’s new direction then that could a good time to sell.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock — Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock — Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.