When to Sell Your Stock Knowing when to sell a stock is a major decision investors must make. While there's no one correct answer, we look at some best practices here.

 

When to Sell Your Stock

Knowing when to sell a stock is a major decision investors must make. While there's no one correct answer, we look at some best practices here.

Buying a stock is relatively easy — but knowing when to sell? That’s where many investors struggle. Whether you're a seasoned trader or a beginner, deciding when to part ways with a stock can make a significant difference in your overall returns. While there’s no one-size-fits-all rule, there are several best practices that can guide your decision.

1. Your Investment Thesis Has Changed

One of the clearest signs it’s time to sell is when the reason you bought the stock no longer holds true. Maybe the company has lost its competitive advantage, suffered a major leadership change, or entered a market downturn it can't seem to escape. If the fundamentals that made the stock attractive have deteriorated, it may be wise to move on.

2. The Stock Has Reached Your Price Target

Smart investors often set a target price when they first buy a stock — a level at which they would be happy to sell and lock in gains. If your stock has hit or exceeded your target, selling at least part of your position can be a disciplined way to realize profits rather than letting emotions like greed or fear cloud your judgment.

3. You Need to Rebalance Your Portfolio

Over time, certain stocks or sectors may grow to represent a much larger portion of your portfolio than you intended. Regular portfolio rebalancing — selling some investments that have grown disproportionately and buying those that have lagged — helps maintain your desired risk level and investment strategy.

4. Better Opportunities Exist

Sometimes, selling a good stock isn’t about something the company did wrong — it’s about what else is out there. If you find a new investment opportunity with greater potential and you need to free up capital, it can make sense to sell a current holding to fund the new one.

5. You Need the Money

Life happens — and sometimes you need to access your investments for major expenses, such as buying a home, paying for education, or covering an emergency. While it's ideal to let your investments grow undisturbed, practical realities may require selling.

6. Tax-Loss Harvesting

In taxable investment accounts, selling underperforming stocks to realize a loss can offset gains elsewhere and reduce your tax bill — a strategy known as tax-loss harvesting. While it’s never fun to sell at a loss, doing so strategically can provide a silver lining at tax time.

Common Mistakes to Avoid

• Selling based on emotions: Fear during a market dip or greed during a surge can lead to poor decisions. Stick to a plan.

• Chasing recent performance: Just because a stock has been hot lately doesn’t mean it will stay that way.

• Ignoring fundamentals: Always ground your decisions in research, not rumors or headlines.

Final Thoughts

There’s no perfect formula for knowing exactly when to sell a stock, but using a disciplined, thoughtful approach can greatly improve your results. Regularly review your portfolio, stay true to your investment goals, and don't be afraid to take action when the evidence tells you it’s time. After all, making smart selling decisions is just as important as picking the right stocks to buy.