Investments: When It’s Time to Hold — & Time to Sell

Many investors put a lot of importance on understanding where and when to buy. It’s no different with alternative investments. You need to learn which alternative investments look promising.

Many people often realize they don’t know what to do after they’ve bought into an investment. Do they hold onto the investment? For how long? How will they know when it’s time to sell?

Here’s a quick tip you may not know: selling an investment is often not the way to go. Any time you hang on to an investment over a longer period, you’re able to compound from capital gains or interest. There are, however, a few cases when selling is the right way to go.

When to Sell

Getting out when the going is good doesn’t necessarily apply to alternative investments. The “going” should be good over time, and you should expect little dips and fluctuations in the market. If you get out any time things look good out of fear of dips, you could miss out on a lot of success in the future.

Here are a few scenarios when selling is a good idea:

You’re Losing Sleep

Many people get caught up in the excitement of taking charge of their financial situation through alternative investments. That excitement can lead them to buy big. Later, they realize they’re spending a lot of their time worrying about the investment. Investing should help you with your financial worries, not keep you up at night with anxiety. If all you’re doing is worrying, the investment isn’t actually helping you to improve your lifestyle. If this sounds familiar, think about getting out and finding something more suitable.

Retirement

You’ve been investing money all through your working years, and now you’re ready to retire. Perfect! That’s what this is all about. You can divest, sit back, and enjoy the money you worked so hard to invest in a lower tax bracket.

Adjusting Your Portfolio

We change a lot throughout our lives, and our investments need to adjust with us. If you’ve recently gotten married or expanded your family, you need to keep these significant life changes in mind. They’re generally the cause for some re-shuffling when it comes to your investments.

You may also need to adjust your portfolio if you’re heavily invested in one particular sector. Every portfolio needs some diversification, so you should keep regular tabs on it.

Large Purchases

Selling is essential when you need a large amount of capital. Perhaps you’re buying a home or going on a trip. Just make sure you plan for these expenses over a few years so that you can sell the right investments at the right times to lower your potential for loss.

So When Do You NOT Sell?

Most of the time, holding onto an investment is the way to go. These are the two main reasons we see people selling for the wrong reasons:

Knee-Jerk Reactions to Poor Performance

Chances are that we’ve all experienced, in some form, an unexpected loss. There’s a sudden dip in the market, and we sell to mitigate any further damage. These instinctual actions come from a place of fear. But often, when there’s a dip in the market, the time for action has already passed. Instead, wait it out. If you’re invested in sound companies, things should balance back out.

Inherited Investments

Just because you didn’t pick them doesn’t mean inherited investments are poor performers. Take the time to make an educated decision about the performance of these inherited investments. Don’t sell just because they’re unfamiliar.

Why We Urge You to Hold

When you sell an investment, there’s that initial rush of making a profit or, in some cases, avoiding a more considerable loss. However, this money is taxed, and often, there are fees associated with the actual sale of an investment. These fees and taxes add up and can put a dampener on any sale. Make sure you’re selling for the right reasons. Take the time to calculate how this sale will affect you financially after taxes.

At Cooper Pacific, we’ve been in the business of mortgage investment for decades. When you purchase shares, they’re invested for a term of one year. After that year, it’s up to you to decide if you’re going to hold, or sell and get out. If you’re still unsure, talk to someone on our team about mortgage investments. Jordan would love to hear from you and help you decide what strategy is right for your portfolio and goals.