Angel investor and business mentor Mark Lyttleton has extensive experience of supporting early-stage businesses created to impart a positive planetary impact, supporting both private and public organisations. This article will look at stock market investing, providing pointers for novice investors to develop their own investment strategies and helping them to decide when to sell or hold stock.
For those interested in investing in the stock market, formulating a strategy for selling or holding stock is crucial. Investors need to weigh up several factors before either buying or selling, including how much risk they are prepared to take on, as well as deciding an investment timeframe. The attached video takes a closer look at the topic of risk tolerance and how this correlates with potential rewards.
Savvy investors enter the market armed with a sound financial plan, providing an overview of their investment and overall financial goals in both the short and long-term. The attached PDF takes a closer look at stock market investment strategies, providing pointers to help investors develop the right investment strategy for them.
Learning to recognise the optimum moment to buy or sell a holding can be a challenging and potentially costly process. In reality, there is no one-size-fits-all approach to buying and selling stock. Rather, it comes down to the investor’s individual investment strategy, which is based on many factors including financial goals, time horizon and risk tolerance.
Although there are no concrete rules on when to sell shares, there are several indicators that suggest it may be an opportune moment for the investor to review their portfolio. Signals that it may be an appropriate time to sell include:
- Long-term problems arising with the company
- The share price reaching the investor’s target value
- The emergence of more advantageous investment opportunities
- Changing investment priorities
Where an investor holds an investment in the short-term, i.e. less than a year, they may be tempted to sell the stock as soon as it realises a capital gain or they need the cash. Nevertheless, buy-and-hold is a popular investment strategy where the investor buys stocks and holds them over a sustained period of time. Less concerned with short-term stock market fluctuations, buy-and-hold investors typically invest in companies based on their long-term financial fundamentals. In addition, buy-and-hold investors tend to focus on companies with a strong management team, as well as a consistent track record.
The attached infographic contains some statistics about stock market investment in the UK today.