I seem to be quite good at deciding when to buy. With selling, though, I'm hopeless. When I was employed, I was long on everything - there was no reason to sell, really - but after I lost my job and started trying to make ends meet with stock transactions, the decision of when to sell became pretty much life or death. My basic problem seems to be that when a stock has a good rise, I get greedy and wait for the price to go even higher. So far, every time I did that, it went into a downturn and I ended up bailing out just a point or two above where I bought it. The result is, I've brought in only a little more than $4,000 cash via stocks this whole year. Pathetic. So I decided to stop with the stock deals. I just had to accept the fact that I'm no good at this game, and try to find a decent job with a reliable paycheck. For me, in the long run, that's the only way to go...
It's hard for me too. What I've learnt through experience is to not be too greedy and to periodically reexamine the business as the stock goes up to see whether I'm still comfortable with it.
$4000 may not be bad though, depending on how much you started with. However, if you're uncomfortable with sell decisions, you could build a diversified portfolio with index funds, mutual funds, and ETFs, and hold those indefinitely. That would not be a bad way to go either.
For stocks, you generally only have a capital gain (or capital loss) when you sell. Your broker will send you a Form 1099-B at the end of the year if you have that. I say "generally" because there were a few rare occasions where I received a capital gain distribution from a stock because of some accounting weirdness at the company's end. In that case, it showed up on the 1099-DIV.
For mutual funds and ETFs, you may have capital gains on them even if you didn't sell them. Those will show up on the 1099-DIV.
Usually what prompts me to sell is the desire to take a better opportunity with those proceeds.. assuming I don't take a loss in the first case.
I wish I had a dime every time I strongly considered selling my Apple shares. But belief in the management and belief in the products have me staying put. Am glad I have.
I do actually try to take losses quickly unless fundamentals tell me otherwise. There is almost always a capital gain that I can offset with the loss to lower my taxes.
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$4000 may not be bad though, depending on how much you started with. However, if you're uncomfortable with sell decisions, you could build a diversified portfolio with index funds, mutual funds, and ETFs, and hold those indefinitely. That would not be a bad way to go either.
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...are capital gains tax due every year on your portfolio's gain, or only when you sell the stock?
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For mutual funds and ETFs, you may have capital gains on them even if you didn't sell them. Those will show up on the 1099-DIV.
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I wish I had a dime every time I strongly considered selling my Apple shares. But belief in the management and belief in the products have me staying put. Am glad I have.
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