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When is the right time to buy and sell shares?

When is the best time to buy and sell shares on the stock market?
When is the right time to buy and sell shares?
Reading time: 5 mins

If you want to make a gain as an investor, you’ll need to sell your investments at a higher price than you bought them. Put simply, you’ll have to buy and sell at the right time – easier said than done! Unless you have a crystal ball, predicting when to buy and sell can be tricky, and many investors fail to do so. Here are some things to consider when buying and selling shares.

When should I buy shares?
This may come as no surprise for you, but there’s no right or wrong time to buy shares. In fact, it’s not so much about when you buy stocks and shares, but rather what you decide to purchase. Because you want to make money, you need to buy shares that are likely to go up in value over time. ‘But how do you find these investments’, you ask? Unfortunately, there’s no magic formula to spot winners. However, there are ways to avoid nasty surprises and the key to choosing investments is hard work.

If you decide to buy shares, it’s important, dare we say crucial, to do some thorough research before committing to anything. Buying shares is like purchasing a laptop, you wouldn’t buy the first product you see. You’d typically research and check a plethora of criteria, including price, storage, battery life, and speed. Well it’s the same with investments. You’ve got to do some homework before investing your money. It’s very tempting to follow what the investing crowd is doing and buy investments such as Bitcoin, just to soothe your FOMO. But such a strategy rarely pays off and could lead to disappointment. Instead, you’ll need to research companies, and this can take a lot of time. Not only will you have to read through company results and balance sheets, you’ll also need to keep a constant eye on the news to make sure you’re happy with what you’re investing in.

If you’re too busy or concerned that you don’t have the right knowledge and experience to pick stocks on your own, there are many other routes you could take to invest. With robo-investing platforms, like Wealthify, you can become an investor in just a few taps. All you need to do is download our investment app and choose how much you want to invest along with the risk level that suits you. We’ll then do the rest, from selecting the right mix of investments to adjusting your Plan to take advantage of the good times and sheltering your investments from the bad.

When should I sell shares?
Picking the right time to sell shares is not as straightforward as you might think. Having a target price in mind is a good way to decide when to sell. However, you could be waving goodbye to potential higher gains by selling your shares when they hit a specific number. If you want to maximise returns, you’ll need to commit long-term. To borrow from one of the most famous investors, Warren Buffett: “If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.” Many studies have found that remaining invested over the long-term tends to increase the chances of making a gain. For instance, if you invested in the FTSE 100 for any 10-year period between 1986 and 2022, you would have had an 88% chance of making a positive return.1.

But what if the markets fall? Should I sell when the markets are down?
Seeing markets drop is stressful and can often lead to irrational and rushed decisions. Many investors lose their nerve and start selling their shares because they’re afraid of losing money. Whilst this is a perfectly normal reaction, it might not be the wisest. When markets fall, the value of your investments will likely follow. But as long as you stay invested, it’ll just be a negative number on your dashboard. For instance, let’s say you buy some shares from company A for a total of £100 and they go down to £80 in value. You start panicking and decide to sell them to avoid losing more money. By doing so, you’re making your £20 loss real. However, if you stay invested and do nothing, this loss remains hypothetical and there’s still a chance for your investments to bounce back and go up in value. So, when markets are down, try to keep your nerve and focus on your long-term goals.

1: Data from Bloomberg



Please remember the value of your investments can go down as well as up, and you could get back less than invested.


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