The Beginning Investor's Kit

There is plenty of advice floating around about the right time to buy stock. Sooner or later, unless you pass your holdings on to your heirs, you may find it prudent to sell the stock you bought. But when is the right time to do that?

As with buying stock, there is no hard-and-fast rule. Choosing when to sell should be based on your current financial situation, your aversion to risk, and your own investment goals. It should also be based on the goals you have when you make the investment in the first place.

Have a return in mind, such as a 12 percent annual return over a two-year period. If the investment is not part of an IRA or other tax-deferred retirement program, you also need to consider the tax consequences of your investment.

Make the Calculations
How do you calculate those returns or the tax consequences? You can use a pencil and paper, but if you make a mistake, your calculations could take you down the wrong investment path to lower returns or a loss.

Fortunately, there are some calculators right here at ThirdAge that you can use to help prognosticate your investment's future returns, what your return is on current investments, whether you should sell or hold, and more. Having a plan before you invest helps you answer the question, "When should I sell?"

Temptations
Remember, when it comes to stocks, "buy low, sell high." Don't join the crowd of small investors that panic and regularly sell their stocks at every market downturn. In fact, if the price of your stock has fallen recently, this may be a good time to buy more shares. After all, if your analysis told you the stock was valuable at $40 a share, it's probably even more valuable at $30 a share.

Next: Try It >