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August 16, 2021

How to Know When to Sell Your ASX Shares



If you are new to investing, you may be relying heavily on the advice of others. While it’s essential that you get the guidance that you need when putting your hard-earned money into the ASX (Australia Securities Exchange), it’s also important that you have an understanding of how your interests are being protected.



While most investors remain focused on what shares to buy, it’s just as crucial to understand when it’s time to sell. If you don’t have an exit strategy for certain stocks, you will need to know the right time to get out. While playing the markets is often profitable, it also includes strategic decision-making to help you build your portfolio. Along with knowing what and when to buy you will need to know when to sell your ASX shares to be successful.

Selling Strategies

Reevaluate Your Investments

  • Most stocks are purchased based on more than just their return promise. Investors consider the whole picture to help them make investment decisions. Take the time to reevaluate your investment thesis to see if the reasoning still holds. If a company has changed its fundamentals then it may be time to sell your shares.

Target (News - Alert) Price Reached

  • Tracking your investment through its targeted price is essential. Most projected earnings and target pricing are subjective and if reached it may be an indication of a share that’s potential is stretched.

Takeover Uncertainty

  • It’s hard to navigate a corporate takeover situation when it comes to your stocks. When a takeover bid is announced, it’s likely that your stocks will enjoy a bit of a rise in value. The question is whether or not you want to wait for the closing of the deal before you sell. For conservative investors, selling prior to the closing date is a safer option than waiting just in case the deal falls through and the stock prices begin to plummet.

           

When Should You Keep Your Stock

Upward Movement

  • As your share prices continue to rise, it can be tempting to cash it in while the numbers are high. However, relying on your analysis and evaluating the potential target price value, it could be a profitable decision to hand onto your interests.

            Tax-Loss Selling

  • To reduce your capital gains tax, this strategy can be an effective way to thin out your portfolio of underperforming shares.

            Downward Movement

  • Resisting the urge to panic-sell when your shares drop in price can be a challenge. However, holding on to shares that have been shown through analytics still has potential value. Taking a wider look at the markets and what fields are being affected by downward trends can help you to make a decision about selling.

If you are relying on your investment portfolio to increase your personal capital, it’s crucial that you gain a working understanding of the markets. Work with a professional broker to help you manage your accounts and follow these recommendations to help you decide when it’s time to sell your ASX shares.



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