First principles of investing

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17. When to sell

Deciding when to sell a share can be every bit as tricky as deciding when to buy. Again, there are no fixed rules but you may wish to lay down some guidelines at the outset to avoid panic reactions.

Price alone is not a good guide. It is usually tempting to sell when a share price starts to fall, on the assumption that gravity is at work and what goes down must keep on going down.

What you may want to avoid is either holding a share so long that it has outgrown its usefulness, or selling a share at the drop of a hat before you have fully investigated the information. Good shares can, over time, either turn into mediocre shares or grow so much that they knock your portfolio out of balance.

It can be argued that if you research a company thoroughly and buy for the long term then there is no need to change your selection on a regular basis.

While it may be a very sensible approach for the private investor, it can be important to review your shares regularly and to ensure that your original assumptions still apply and that your choice of shares meets your specific requirements, particularly when your financial circumstances have changed.

1. Five steps to establish your investment goals 2. Your attitude to risk and reward 3. The major asset classes 4. Which type of manager? 5. Your investment assessment kit 6. Is past performance a guide to the future? 7. Easy access deposits for emergencies 8. Fixed income products 9. A rising income 10. The choice of collective equity funds 11. Pensions and ISAs 12. Tax efficient but may be very risky 13. Selecting your shares 14. Your stockbroker 15. Buying your shares 16. Ethical Investment 17. When to sell 18. How to keep your portfolio on track 19. Do you need an adviser? 20. Conclusion

• First Steps in Shares
• How to Read the Financial Pages