Buying stocks and shares is the easy part.
But do you know the process for selling them and how long it will take?
When it comes to money, it can be hard not to let your emotion get in the way of making financially-wise decisions.
Our complete guide for beginners covers everything you need to know to make the right decision based on your circumstances, including:
· When to sell stocks and shares
· When not to sell a stock and share
· How to sell stocks and shares
· Where to sell stocks and shares
· How long does it take for shares to sell?
· What are the different sell order types?
· Trade contingencies to consider
· Are there any costs of selling shares?
· The do’s and don’ts of share selling
· Stock and share selling strategies
· Commonly asked questions about selling stocks and shares
This will ultimately depend on the investment strategies that you decide to use, how fast you need them sold and how much risk you want to take.
We’ve listed the most common reasons you may decide it’s time to sell.
When the price reaches your target value
The best reason to sell a stock or share is when it reaches the target price that you had in mind when you originally invested. Now it’s time to reinvest the money you’ve made elsewhere. It can be a difficult decision to make when it appears that the stock price is still rising, however you need to remember that in stock trades, prices can also drop.
When the company has problems
Short-term problems can often be resolved before it causes long-term damage to the value of your share. However, if the demand for a product or service that you have invested in experiences stock drops it may be time to reconsider your investment and sell before you lose too much money.
Better opportunities arise
If you only have a certain amount of money that you want to invest in stocks and shares it’s important to re-evaluate your investment portfolio regularly. If you’re not happy with the return you’re making on a particular stock or share then it’s time to sell and re-invest the money into a more profitable investment opportunity.
If you regret your decision to invest
All investors make mistakes. The important thing is to learn from them and use the lessons to make better investment decisions in the future. If you’ve bought a share that you quickly regret, the best thing to do is sell. You may lose some money immediately but you will minimize the costs of your mistake by acting quickly.
If you’re a young investor, you may decide that you need to use the money that is tied up in your investment portfolio for a down payment on a house or to buy a car.
People that are nearing retirement age could also need to sell their shares to reduce their risk of exposure and use the money to live a more comfortable lifestyle.
It’s also possible that you may need the cash that is tied up in investments for an emergency. Selling your stocks and shares for money is a better way to resolve a financial situation than taking out your credit card and getting into debt.
There are also times when it doesn’t make good financial sense to sell your shares. These are:
If stock prices fall
It can be tempting to pull out of an investment opportunity as soon as there’s a dip in the value. But you should think carefully before selling your share. The stock market will naturally rise and fall due to various reasons. Consider the reason why you invested your money in the first place and whether the issue that has caused the stock value to decrease is a short-term problem that can be overcome or a long-term one.
When you’re told to do so
Listening to stories you’ve heard from family and friends or on social media is a risky move. Make your own decisions and listen to your gut feeling about your investment portfolio. Unless you’ve seen proof that a company is in decline or have done your own research, listening to other people can do more harm than good to your investment opportunities.
When you’re bored
It can be tempting for investors to trade too much, especially if nothing has changed in their investment portfolio recently. If this happens to you, remind yourself that trading results in costs, and the more often you trade the higher the fees that will need to be paid.
There is no right or wrong time to sell but understanding the stock market can help you make wise decisions about your investments. Typically, the longer you hold stocks and shares for, the bigger your investment pot will get.
The process of selling stocks and shares is quite simple. You can list them as a market order online for sale yourself using or go through a broker.
Each method has its own benefits, which we will come on to next.
Once you’ve chosen your selling method, you’ll need to set your stock prices.
Now you know how to sell stocks and shares, let’s look at where you can sell them.
Researching investment opportunities, managing your portfolio and buying and selling shares all via a convenient app is a fairly new luxury. Choosing the right one for your needs can help to maximize your return on investment by reducing the amount of fees you would pay to a broker or financial advisor.
Seven benefits of trading via an app are:
- Cost-effectiveness – trading via an app can save you money because you don’t have the typical fees associated with stockbrokers such as consulting fees and commission.
- Convenience – you can open a trading account easily at any time of the day with a mobile app. All you will need is an internet connection and you will soon be monitoring your investments on the go. You can save time by carrying out trading activities during your daily work and lifestyle patterns.
- Keep an eye on the best time to sell – evaluate your profits and losses and the state of the market on your mobile device or tablet. Having access to the information quickly will help you decide when the best time is to buy and sell shares and stocks.
- No middleman – there’s no need to set up various meetings with your broker to discuss your investments. This will save you time and fees. Apps provide detailed research that is available for you to access 24/7.
- Faster transactions – buying and selling shares are done quickly on trading apps, as well as the payment and collection for all transactions.
- Greater control – not having to depend on your broker gives you greater control over your investment portfolio. Investors can make trades, review their options and monitor investments in one convenient place on the app.
- Better understanding – taking a hands-on approach to your investments will help you learn about the stock market and equip you with the knowledge you need to make good investment choices.
Ask yourself the following questions when picking a trading app.
· How user-friendly is the app?
· Do you want to trade in shares, funds or more complex investments?
· Can you practice trading if you’re new to investing?
· Are there any other app admin costs that you need to be aware of?
· Are there any minimum investment restrictions?
· Can the app be used to trade efficiently via a stocks and shares ISA?
· Is the app approved and regulated by financial governing bodies?
· What are the advantages of using the app other others?
Using a financial advisor
Financial advisors can give investment advice on whether it’s the right time to sell your stocks and shares and the price you should list them for.
Other benefits include:
· Personalized plans – professional financial advisors will use their knowledge to help create an investment plan that is tailored to your goals.
· Regularly monitor your portfolio – regular portfolio statements will help you understand how your investments are performing over time and identify areas of improvement.
· Saving you money – poor investment decisions can cost you a lot of money. Getting the expert advice of a financial advisor will not only save you huge amounts of money but also make you some too.
Through a brokerage firm
In the same way that a broker can help with the purchasing of stocks and shares, they can also help you sell them. So how do you choose which broker to use? You can either use an online broker
Benefits of using a broker include:
· Expert advice and guidance – a broker knows the stock market industry well, which means they can suggest which stocks and shares are worth investing in and recommend times to sell.
· Access to company research – brokers have an investment research department that provides in-depth information on a company and how well they are performing.
· Helping you achieve your investment goals – brokers get to know you and your goals and can answer your questions on specific strategies and investment opportunities to help you meet them.
· Making decisions on your behalf – the stock market moves quickly and unless it’s your full-time job to keep an eye on it, you could be missing out on good opportunities. By using a trusted broker you can authorize them to make decisions on your behalf.
Once your share has sold, the funds won’t reach your bank account for at least two-three business days. This is known as the settlement period. If you decide to buy and sell that same share again immediately you will pay interest and capital gains tax, which will affect your profit margins.
What are the different sell order types?
Order types are designed to limit the costs involved in buying stocks and shares.
We explain the different types and when you should use them.
Simple orders that are placed during the opening hours of the stock market are referred to as a market order. The best time to use a market order is during the day because the stock market could change overnight which will affect the price range.
A limit order allows investors to state a buying and selling price so that the transaction only happens if the figures are met.
An example of when you might use this is if you want to buy a share or stock but the current price is too high. If the price decreases to your set range, your purchase will go through.
If you place a stop order you give an instruction to either buy or sell the stock or share at market price, only if a certain price has been reached. Once the stop price is met, the transaction goes ahead.
This is a handy tactic to use to protect your profit margins.
A stop limit order will be fulfilled at the set price limit specified, not the market price like a stop order.
You would use this method if a stock is illiquid. This means that the stock can’t be sold easily because it is not being traded on the public market.
Trailing sell stop order
The process of a trailing sell stop order is similar to a stop order. However, the price automatically moves up depending on the parameters that you set. This approach can improve the sale price significantly if you bracket the prices right.
Trade contingencies to consider
After you’ve decided on the type of stock order, you can also add the following contingencies:
All or none (AON) – sell orders must be filled completely or not at all.
Immediate or cancel (IOC) – if not executed immediately, an IOC order will get canceled.
Day order – stocks and shares bought as a day order means that the transaction must go through on that same day.
Good ‘til canceled (GTC) – stocks and shares bought on a GTC will stay on the stock market books until it is either canceled or fulfilled no matter what day the order was placed.
Market on close (MOC) – if the stock market fails to meet certain criteria by the end of the day, it turns into a market order that will be executed at market close times.
Market on open (MOO) – buying and selling stocks starts as soon as the stock market opens.
Trading costs eat into investment profits so it’s important to understand what they are.
Broker fees – these fees are charged to your brokerage account to manage your investments. This could include market research, selling stocks and shares on your behalf and inactivity fees if you don’t trade regularly.
Capital gains tax – when your investment is sold, you will be expected to pay tax on the profit that you make. This is typically no more than 15% for most people. If your earnings are less than or equal to $40,400 for individuals, you won’t pay any tax on your investment profits.
Keep your investment selling fees down by:
· Partnering with a company that charges little or no commission on your stock sale. Small companies in particular won’t charge as much as larger organizations.
· Use automated investment platforms to assess the market and advise decisions based on your risk appetite and investment goals.
To summarise our advice on when to and when not to sell your stocks and shares, we’ve put together this handy list.
· Research company valuations to help you make an informed decision on which price you should sell your stocks and shares for.
· Consider if the reason you bought stock still stands. If not, it may be time to reconsider your investment.
· Pull out of investments if your financial situation changes and you need the money.
· Try to predict when your shares may reach their peak in value. Instead, do some research as to why the price is particularly high or low.
· Let your emotions affect your decision. Selling out of fear or boredom could lead to a decision that you regret.
· Sell just because the stock market is having a bad period. Politics, exchange rates, interest rates and current events all affect the stock market. If these are short-term factors you may find that leaving your investment is the better option.
Ask yourself the following seven questions before deciding on your strategy and listing your stocks and shares for sale.
1. Is there a better investment opportunity available?
There may not be anything wrong with your current investment, however selling it may open doors to new investment opportunities that are more profitable. If there is not anything out there that you’re interested in then you need another good reason to sell.
2. What was your original reason for investing?
It can be easy to lose sight of what attracted you to a stock or share in the first place. Remind yourself of that reason, whether it was to witness long-term growth in a company or see how a market would react to new trends, chances are you won’t meet your long-term investment goal by backing out too early.
3. What does the company valuation tell you?
Stocks that have a low price-to-earnings ratio can be a worthwhile investment if the company goes through a growth period and starts to maximize its profit margins. On the other hand, low price-to-earnings could mean that the company you hold shares in is in financial trouble. It’s important to know which reason it is before acting.
4. Is the stock within your target price?
Actually, it’s best not to set a target price for your stock and shares. That’s because the stock market doesn’t know what your target is and certainly won’t get you anywhere in achieving your investment goals. A much more effective way to determine when you should sell your shares is by using valuations.
5. Are the market conditions giving you a reason to sell?
The stock market determines whether the value of stocks and shares go up or down. Positive conditions are when the economy is strong. In fair conditions, there is no growth or loss. This is the time that most investors will decide to move their money as the market could go either way. In poor market conditions, stock values are falling. It’s a risky time because you could lose the money you invested.
6. Do you want to simplify your investment portfolio?
A large investment portfolio can take a lot of time to manage because you’re juggling lots of individual stocks. If you don’t have the time to properly manage a growing portfolio, simplifying it could be beneficial. You could even consider bucket investments such as index funds, mutual funds of exchange-traded funds (EFTs).
7. Have you received professional advice?
After asking yourself the six questions above, you’ll likely have a better understanding of whether you should sell your shares and stocks. If not, don’t worry. Shares and stocks can be complicated. Now is the time to get some professional advice from a financial advisor. Investment decisions have the ability to change your life for the better or worse, so it’s important to make the right choices.
Even if you’re slightly doubting your plans, it’s best to pay some fees and check with a professional.
Smart stock selling strategies that work
1. Buy late and sell early – it can be tempting to try to get the lowest price for stocks and shares, but it’s not realistic. Instead, focus on identifying opportunities that give you a good return on your investment. To achieve this you may have to miss other opportunities and pay slightly higher than other people if the value falls. However, investing is all about making as much money as possible.
2. Sell gradually – a great way to potentially make more money from stocks and shares is to sell them gradually. For example, if you own 500 shares at $27 per share and the share value reaches $30 per share, sell 200 shares and watch the market. If the stock value increases, sell 200 more.
3. Create target prices and percentages – creating a target is a great way to take the emotion out of the buying and selling process of stocks and shares. As an example, if you bought a stock at $50 per share, you might be happy to cash it in at a $55 target price.
4. Sell losing shares quickly – keeping hold of stocks and shares that are losing money will leave you wondering where your gains have gone. Price and percentage your winning and losing shares so you know the best time to sell and cash in. Brokerage firms and some trading apps enable you to set alerts so you know when a price or percentage has been reached.
5. Cash in profits regularly – if you’re serious about maximizing your investment profits, use some of the money you make from your bigger investments to diversify and experiment with other financial products.
6. Have a solid plan – having a documented approach to your investments can help you keep any emotional decisions from affecting your stocks and shares. It’s also a great way to avoid panicking when the market changes.
Got questions about the stock and share selling process? Take a read through this commonly asked questions section.
Is it easy to sell stocks and shares?
The process of selling stocks and shares is quite straightforward. It’s often the decision as to whether to sell that is more difficult. Selling your sticks too early means you could miss out on some profit and selling them too late means you’ve missed a good financial opportunity to make money.
Can I sell stock on the same day?
Yes, it’s definitely possible to buy and sell stock on the same day, but it’s also risky. That’s because it’s impossible to predict if the stock market price will go up or down during such a short amount of time. Most traders that buy and sell on the same day will lose money, so deciding to use long-term investment strategies may be a more profitable approach.
The Financial Industry Regulation Authority (FINRA) also set restrictions on people that take this approach (also known as day traders), which can restrict your activity as a trader. The purpose of the FINRA is to ensure that any financial transactions that are made between investors are not fraudulent.
Ultimately, there is no limit to the amount of times that you can buy or sell stocks and shares but you need to operate within the rules set by FINRA.
Can you buy and sell the same stock more than once?
In theory, yes you can. But in reality, this will cost you more in extra costs than the money you make from reselling stocks. It’s also a waste of time when you could be focusing on new investments.
What times can I sell my stock?
The New York Stock Exchange is open from 9.30am to 4pm, Monday to Friday. You can sell your stocks and shares at any time during these hours. Research suggests that the best time to sell stock is in the first few hours that the stock market is open. If you list your stocks and shares for sale outside of market hours, the transaction won’t go through until the next working day.
How long should you hold shares for?
On most occasions, the longer you hold on to your stocks the higher the chance of a profitable return. Typically, this would mean holding stocks for a minimum of five years.
How do I sell shares with no buyers?
When there are no buyers, you can try lowering the selling price or selling in smaller stock quantities at different rates.
Can I sell shares without a certificate?
No, unfortunately you won’t be able to sell your shares and stocks without the relevant certification. This is because shares need to be endorsed in order to sell. If you have lost the paper copy of your certificate, you can request one to be reissued to you.
What happens if no one buys my shares?
Unsold shares will stay in your order book and will be automatically canceled at the end of the market day.
How much should I sell my shares and stocks for?
There are several factors that determine the re-sell value of your stocks. These are the:
· Initial sale price
· Current valuation of the business you have shares in
· Market strength
· Health of the economy
Can a share sale be rejected?
A sale can be rejected if there are not enough buyers in the stock market, but this is rare. Another reason is if the value of the share order is not high enough to cover the costs involved in selling the shares.
How do I transfer money from stock to a bank account?
Simply access your brokerage account and use an ACH transfer to move the money from one account to another.
Can I avoid paying capital gains taxes on stocks and shares?
Yes, it is possible. You can either donate your stock shares to a charity or hold your stocks in a tax-advantaged retirement account such as an IRA. This means that when you withdraw the funds during your retirement it won’t be subject to taxes.
Enhance your investment knowledge
Sometimes, deciding the right time to sell a stock or share is more difficult than deciding whether to buy them.
Hopefully, the tips in this article have given you all the information you need to make an informed decision about your investment portfolio.
Are you keen to learn more about investing money?
Our personal finance blog contains all the information you need to make wise decisions about how best to invest your money.