What Should I Do With These Stocks?
“I’m just as confused as you are. That doesn’t mean I’m wrong!”
- GALAXY QUEST written by David Howard and Robert Gordon, directed by Dean Parisot
(4-minute read)
You decided to dabble in stocks. Maybe this was during the pandemic, and you saw everyone and their mother putting money into the markets. It seemed easy enough. You wanted to put some of your money into a few stocks just in case it took off to the moon! Maybe your goals weren’t so aspirational and you just wanted to invest some of your money because deep down you felt it’s a good idea.
Regardless of your motives, you are now a few years into having this account. You look at the value of your account and wonder if stock picking is your new career. Whether your stocks are up or down, you’re not sure what to do next. Do you leave your money where it is and let it ride? Do you sell your investments and take a gain? Do you sell your investments and take a loss? Do you choose new ones? Do you add to your current shares of company XYZ?
WHAT’S THE POINT?
What was your original intention for buying that stock? This is the real question. It’s okay if you had hopes of getting rich quick. I’m assuming that didn’t come to fruition. I’ve spoken to many novice investors (that’s you!) who stumble their way through this answer. They didn’t really have a plan for that money. “Just to see what happens,” tends to be a common refrain. Again, that’s okay. Don’t beat yourself up.
If you did have a goal of selling the stock after it doubles, did you set a timeframe for that? If you knew it wouldn’t double for fifteen years, would you still have made that purchase? No, you can’t go back and add your life savings in this scenario. If you had invested $5,000 in hopes of doubling it, but it would take fifteen years, would you still have done it? If you never made a goal, now is as good of a time as any to start one.
Perhaps your goal was to make a few hundred dollars and get out. If you’re up a few hundred dollars, why haven’t you gotten out? You’re probably emotionally attached by now. Investing can toy with our emotions, regardless of the amount at hand. Try to separate emotions from your investments.
ASK MORE QUESTIONS
Whatever your goal was, you have a decision to make. Stick to your plan, or abandon it. There are other questions you should be asking yourself though. What was your time horizon with this money? In other words, when did you want to take this money out of the market? If you wanted to invest for your retirement in 25 years, then pulling money out after three probably isn’t the best choice. If you had dreams of making a few thousand dollars, and that dream has come true, maybe selling is your best move. It’s hard to go broke when taking a profit.
The point is to be intentional. If you weren’t intentional before, try to be more so moving forward. You should have an exact plan for what to do with your investments and when. Make that decision now.
BUT WAIT THERE’S MORE!
This still doesn’t cover everything. Risk tolerance, for example, is something to consider. You have to decide how much risk you are willing to tolerate. Everyone is different. If you’re not sure how to calculate that, try THIS HELPFUL QUIZ from Vanguard to begin the process.
What were these stocks you bought? Is the company going bankrupt? Maybe this is one of the biggest companies in the world and you want to hold onto these shares. If it’s a huge company, but the stock price is having a downturn right now, it may be temporary. Maybe this is a stock that has $50 swings up and down in a single day. If you enjoy that wild ride, who am I to tell you to sell it? There is nothing wrong with either approach. These are personal preferences.
The most important part is being intentional. Know what you’re about to do first. Some people simply sell their shares just so they can sleep better at night. If that works for you, then go lay your head on that pillow and drift off. If you still don’t know what to do, it might be time to call in a professional.
If you’d like more information about investing, you can schedule a complimentary meeting HERE. This is not meant to be investing advice. Your results will vary.
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