Selling investments are not as simple as selling cookies to your neighbors. In fact, a hasty decision to sell might cost you money. So, before you sell an investment (stocks, real estate, or any other valuable), consider the following tips.
Consider the Taxes
When you sell something, the government will undoubtedly get its share through taxes. When you sell something at a price that is higher than the original price, then the IRS will also profit because of the capital gains tax.
Capital gains tax is determined according to your income tax bracket. It also considers how long you have kept an asset. Long-term gain for asset saved for more than a year has a lower tax than a short-term asset.
Scrutinize the Broker
When hiring a broker to sell on your behalf, ask for the fees right away. The broker either gets a commission from the sale or he might ask for a flat rate for his services. Brokerage experts say it is better to ask for a flat rate.
Those who work for commissions are likely to sell an asset for a price that benefits them, not the owner of the asset.
Consider Your Selling Price
When you buy stocks, it is better if you have a pre-conceived selling price. When their value reaches it, sell them. Sure, signs are there that they may be still going up, price-wise. But, remember: It’s better to realize profit than to imagine one.
Are You Selling This Instead of That?
You’re cash-strapped or possibly heavily in debt. Of course, the best option is to liquefy your assets. But be sure to sell the right ones. Or at least, know the consequences of selling them. For example, selling a bond before it matures could mean losing not just your profit but selling it for a much lower price.
Improve Your Financial Literacy
Sometimes, business goes bankrupt because the person in charge has not even managed to install fundamental business factors such as an efficient accounting system. The same goes with selling investments. The person must have a good knowledge of company stocks before even selling them.
There could be Something Better
A reason for selling an investment is when you know that you will have more to gain by selling it and using the proceeds from the sale to buy a new one. For example, disposing of company stocks for a better competitor could be a possible move.
Perhaps, Don’t Sell Just Yet
Maybe, the instinct to sell might be an overreaction on your part. For instance, the price of the stocks you bought has suddenly decreased in value. So, you panic and sell them right away. It is important to remember that the decrease might just be a temporary one or a natural effect caused by market forces.
All these tips indicate one thing: you should be as informed in selling as much as you were informed while buying. Know you can always contact experts from a well-established accounting firm such as MKS&H to help you make the best decision.