The Sell Decision: How Do You Know It's Time to Sell?

Many people hop in and out of investments all too frequently. The widespread use of mutual fund supermarkets at discount brokerages makes a switch to a hot performer in a different family just a phone call away. However, impulsively jumping in and out of funds is not a sensible approach.

Equally dangerous is the attitude that, once bought, mutual funds can practically be held for a lifetime. You really must rethink your portfolio periodically. Investments that once were suitable may no longer fit with your objectives or perhaps a top performer has become lazy.

While it's generally best to avoid the extreme of holding forever, there are exceptions. For example, a good index fund could be a lifetime core holding because it likely will stick to its style and there is no danger of a star manager leaving.

Most mutual fund literature is concerned with the buy decision, which is certainly important. But knowing when to sell is at least as important.

This checklist should serve as a focal point when evaluating your funds, and walk you through 10 considerations when selling.

First some questions about the fund