Buying stock is exciting. Whether it’s for your eventual retirement or its something you’re trying to make money on now, there’s so much potential in every purchase.
Most people have strategies for buying stock. Maybe they’re like me and have a list of index funds (stock, bond, etc) that they want to be invested in. Buying could be as simple as adding more shares to a preselected portfolio.
Others like to chase the next big winner and spend their pre-buying time doing research. Some just buy based on CNBC or Mad Money.
You’ve got some sort of buying strategy or philosophy. But do you have a selling strategy?
Right now, my selling strategy is “This is all for retirement, so we’ll work it out about 10 years before that, get everything straight.” Of course, if I decide to invest for anything else, I’ll need to work out a selling strategy for those purchases.
Why have a selling strategy? Because you don’t actually make any money until you sell the stock. You’ll want a good plan so that you don’t find yourself selling randomly, without consideration because you need the money now. Instead, you want to sell when the stock reaches your goals or comes back down to $3 above what you paid for it (so you can still get out with a profit).
Do you have an exit strategy for your investments?