Technicalities of Selling

I had a huge property in a small town which was famous when I bought it. But after few years the town’s popularity was the same as it was earlier, but the other places in the city were developing at a rapid speed and were on their success note. So, I thought why not sell my property which is in small town and invest the proceeds of that amount in buying a highly-centered quality flat in the main city. And so I did.

But I also own some shares and investments. And whenever there is bad time running on the board of the markets or whenever I feel that the market conditions are tough, I think of selling it. And like me, many other investors would be thinking. But make sure, that this thought can cause a huge loss in future.

Always Remember!! Never sell your investment for an odd reason.

Never sell your investment because there is some bad quarter running in the markets or a rough year. It would be the worst reasons to sell an investment. Bad quarter is nothing but when there are huge dips in the price of a solid company. Remember! When there is tough time running and the investment is sound, bad quarters are when you should be buying more.

Reacting after the bad quarter is like you are reacting to old information and the damage has already been done.

Technicalities of selling

The first thing to look at when selling an investment is the fees you are going to have to pay. If you use a broker or hold the shares at a high-end brokerage firm, there is nothing stopping you from transferring them to a discount brokerage firm to limit your fees and increase your gains.

Taxes are your next concern. Sales are FIFO or first in first out, unless otherwise stated. For an investor with a stable portfolio, the FIFO method of selling can be disadvantageous from a tax point of view. You always want to sell the shares that you paid the most for and defer realizing the larger capital gains on cheaper shares for as long as you can.

Conclusion:

Selling an investment is like buying one - you have to make sure it is in line with your investing goals. Once you have decided to sell an investment for the right reasons - either to balance your portfolio or free up needed capital - the challenge becomes minimizing fees and taxes. Your fees are best dealt with by finding a good discount brokerage to work through, and your taxes can be kept in check by simultaneously realizing gains and losses as well as specifying shares. Investing is not just about knowing when to sell, but why and how to sell.