When’s the best time to sell? Your top investing questions answered

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0:34After your trial, you'll save an extra£5 a quarter on the subscription, which is exclusive to Making Money listeners. And that's moneyweek.com forward slash money. But there's a link in the description if you just want to click that. Hello, everyone. Hope you're well. So we get loads of questions from you about money and all manner of other things. And today we thought we'd just run through a load of them. Get them answered. Let's go. William wrote in, question for you both. when is the best time to sell stocks? What are the triggers to sell and why? Also, when is the best time to buy? I think there's some really clear answers here.

1:09So the first of all is, harking back to Sasha Janshin, if it hits your target price. So if you said, I think that this investment is worth this amount and at the minute it's undervalued, once it hits that amount, you revalue it and you sell if it's at that price, right? The second thing is, if something fundamentally changes about the business that changes your thesis or outlook. This could be sector specific or it could be the individual business itself. Let's say it comes out that the board are committing fraud. You probably, that's something you might not have known. So you exit. The other reason is you think that you can generate more returns in another investment.

1:46So you might have a, I bought this investment, this like, you know, company. I think it's going to do 10 % in the next two years, but this one over here might do 500. I think I'm pretty confident. so I'm going to sell that for that. You sell it for a better thing. And the final one would be that you made a mistake, that you thought, oh, God, I bought this at a time when I knew nothing about investing. I invested in this EV company because I thought, electric cars are the future, bro, and now I'm holding on to this massive bag, and I don't really know why. That would be another reason. And then you need the money.

2:25It's a pretty good reason to sell. but that can be painful yeah but if you need the money you need the money is what it's there for but the one reason the one thing you don't sell for is it because it went down yeah because that's like that shows that you have no understanding of what the fair value is of that investment um if the same with an index fund all of that still applies with an index fund if it if it goes if it goes down that's not a reason to sell um i think with uh with index funds the one that's probably most common is someone's bought something they didn't realize or they want to tidy up their portfolio.

3:00I see people when they first start, they message me like, hi, I'm just getting started. And this is what I've decided to buy. And it's like 15 funds. And it's like, you know, UK small companies, UK large companies, Japanese bonds. And I'm like, what the hell are you doing? Like, why have you done that? And they're like, well, I just want to diversify a portfolio. And they've got a global fund in there as well. I'm like, you're already buying the world. And I think after a few years, they realize like, oh, I don't need all this crap i could just buy that i think that you know that maybe then at the point that you want to consolidate but that falls into that category of you didn't know what you were doing and you need to sell i don't think there's anything wrong with going when i first started i didn't know what i was doing i don't know why i bought this really i bought it because my mate told me to i think a lot of people can relate to that yeah but i would say yeah the most important thing i think that you said out of all that is if you have a price target you should sell because i think everyone's been I've definitely been guilty.

3:53Individual companies are surprised to. Yeah. If you have an individual, so you're like, okay, if it gets to a hundred dollars on the sale, it gets to a hundred, you're like, it's going to$200. You just keep holding on or you buy more. You just keep thinking the rise and the go on forever. And then when it goes down, human nature is, oh, I'm losing my money. I better sell it before, like I lose more. Whereas you, you need to have a better understanding of your targets and be ready for it. I find that hard though. Everyone, I think that's the hardest bit when it goes down, you see negative. I mean going up.

4:17Oh yeah. So I bought Barclays shares recently and they were up about 40, 50 % since when I bought them. And I'm staring there going, I should just sell this and put it into the index because it's done really well. But I'm finding it hard to do that because the dividends are just so chunky. I just, I don't know, just like it's done so well that the emotional turmoil of letting it go and seeing it go up even more would just, I know. I can sit here all day and say, just do this. The emotional turmoil. You're not meant to be emotional about your investments though. Yeah, but I'm a human. Do you know what I mean?

4:50So, and yeah, the same with Alphabet. I've got a large Alphabet position and that's rallied because of the AI bubble or whatever, if it might not be a bubble, but the AI mania. And there's a large part of me that goes, I should probably step out of that and just put it into the index. This is why I just think buying individual companies, all these questions you have to ask yourself that if you just buy the index, you don't have to ask yourself any of that. You can just get on with your day. Yeah, and by the way, when I talk about individual companies, that's only 10 % of what I invest on a monthly basis.

5:19The majority of what I invest in every month is in a global index. That's probably why I sit there going, I'm not going to sell the Barclays, even though I should, because it's not a massive portion of my portfolio. But you mentioned Sasha earlier, and he said that when you're looking at these companies, you're trying to find a target price for a stock. The amount of work you need to put into is insane. You have to put hours and hours of research into the company to know what a good target price is. And like every day, every month, just constantly doing research. So it's not just picking one guy.

5:50I think it's going to go to$10. You have to put in the work, do the company research, all of it. Yeah, my target price is double. Why? More. Yeah, more. More. More? Please, sir. Some more. Connor writes, is it wise to sell your investments when switching? or is it better to just keep the portfolio and then build up the new one? Switching what? Switching girlfriends, switching houses, switching cars, switching outfits? Switching, I think he means like if you're a changing provider, if you're going to a different platform to invest in, should you switch over your investments from the old platform to the new one?

6:27Or if you're maybe saying, I'm going to buy a new fund now, should you switch from the old fund to the new fund or should you just leave that pot where it was? Cool, what do you reckon? So it can be pretty, I think it can be problematic changing out of one investment fund to another because you can incur fees, first of all. So if you have a fund that's not listed in pounds, so it's a dollar or euro based fund, when you sell, you'll likely incur an FX fee for that. Yeah, if it's a pound listed fund, there shouldn't be any fees. So that should be pretty straightforward to do. So that's the first thing to consider.

7:02Am I going to pay fees to do this? If I was, I wouldn't do it. It doesn't bother me. Secondly, if they don't offer the ability to transfer the portfolio from one platform to another, and a lot of them do, but there's caveats and criteria and they might convert it to cash and then move it. If it's not a straight like-for-like swap, or you have to pull the money out of the platform and then migrate it over, the issue you have there is you might be taking money out of an ISA and then putting it back into an ISA and using up your own allowance. you can get what I call flexible ices now where you can take money out and put money back in and it doesn't actually eat up your allowance but they're quite rare I actually think trading 212s is flexible I don't know for certain I tell you what we'll look into that we'll leave that in the description I like saying that because it just means that one of the minions in the back has to do some work Damo's like I'm going to outsource this guy next to that we're going to put a recipe for a gluten free bagel so enjoy that Will but yeah there'll be a link to if Trading212's ISA is flexible what that means and all of that stuff but yeah I think they're one of the more mainstream flexible ISAs if I'm correct so in that circumstance you can take money out and put it back in this is news to me I've never heard of a flexible ISA before is it quite a new product no they've been floating around for ages but they're not widely offered and the platforms that did offer them were quite expensive so there was just no point but I think they're becoming more common and Trading212 seems to be willing to go through whatever work it is to offer those kind of products.

8:36I think because they've introduced a cash ISA, they're quite keen to let people be able to move money from one to the other, because I think the cash ISA has been really popular for them. And then they'll be able to hopefully convince people to move cash to the investment side. Who knows? Anyway, for me personally, I've got pots of investments on loads of different platforms, and I see absolutely no need to switch them. The only reason I would do it is if I was saving a considerable amount of fees. Obviously, there's the financial services compensation scheme to consider as well, which is the£85 ,000 worth of cover that you get if a platform kind of goes under.

9:11Now, it's unlikely that this will happen with any UK platform. They're heavily regulated under something called the CAS rules, which means they segregate your investments away from their own assets. So if a Vanguard or a Trading 212 went bust, all your money should just be sat there in a pot. Up to 85 ,000? No, no, all of it. All of it. Yeah, because these are the cash rules. So then what happens is they go in and they just go, okay, who owns what in here? Dish it out. The 85 ,000 cover is if when they go to look at that pot, the money's missing because a broker has robbed it, essentially committed mass fraud.

9:47Because if a broker goes bust, that might just be a bad business model because like, you know, they don't make any money. But then if they've robbed your shares, that's when the cover will come in and be like, there's been fraud here. will pay up to 85 ,000 pounds. So actually the financial services compensation scheme cover is a last resort solution. The CAS rules are the main protection. But anyway, you might feel more comfortable having multiple pots below the 85K across different brokers. So for all the big boys with lots of investments, it's better to spread it across different brokers. I wouldn't say better.

10:15I'm just saying... What, safer? I'm just saying peace of mind. You know, like people might... Yeah, people might feel better about that. But, you know, some people like having everything in one place so you can make the move if you're buying uk funds and you can switch in then that's okay but if you've got stocks and things like this you're going to be incurring all sorts of fees to sell out of those positions and i think just leave it yeah is that what you do yeah that's exactly what i've got yeah i've got my train to want to hug these lands down barclays isa all sorts of things so i'll just leave everything where it is there's that fidelity study i think it was fidelity where they looked at who their best investors were and they found that they were all dead people so they look back at like the last 10 years and who were the most successful investors than it was anyone who died who hadn't told the platform because they just left the money alone so i think there's like an out of sight out of mind vibe that if you go okay well i've got this pot on vanguard that's like 30k and i'm now going to go over to 212 and you just leave the vanguard one you forget about you come back in 30 years you'd be like holy shit that that's the one that's done well because i've been over here tinkering yeah on the 212s yeah let the escalator ride up yeah chilling yeah yeah yeah can i ask a question yeah have you got a mic you need to mic the back of the room or something don't you

11:41so if people can't hear ruth the producer in the background she's asking about uh internal transfers of isis you can do isa transfers on certain platforms not all of them offer it portfolio transfers they call them as well um but the the functionality and features vary from platform to platform some platforms might not accept them going out other ones might not accept them going in um for a time it was like they would transfer your platform but they essentially sell everything and just bring over the cash balance so you end up with like you might say you've got 30k or 40k on one platform you end up with 40k in cash on the new platform but what that means is it protects your ISA allowances.

12:19You don't have to pull the 40k out and put it back in, which would use two years worth of ISA allowance. They're getting better and better. And now there are... So the concern is like for like investments. What I mean by that is if you're on a Vanguard or you're on a trading platform and you've got 10 grand in Tesla shares and you want to move that to a Vanguard, they don't have Tesla on that platform. Or if you're in a Fidelity fund and you want to move to a Vanguard. It's not simple. It's not easy. And for me, I've always just looked at it and thought I'm just going to leave my stuff here. And I assume they don't want you to move to another platform so they don't make it - They really don't.

12:54They don't make it the easiest process. I don't think the transfer process is the thing they want to streamline. Yeah, they're not putting on the homepage in like big letters, transfer here. They're all in it together in a sense of like, yeah, we want to make it as hard as possible for you to leave really. Because yeah, the assets under management is the money that - I tried transferring my Barclays I saw once and gave up because it was just too complicated. I couldn't figure out. Yeah, I do. I have transferred into Bangor, but this was a SIP and that process was pretty smooth. For anyone out there that's like, oh, should I be consolidating pensions?

13:25It seems like a big blag. It's pretty easy. You just bang in the policy number and the amount you want to transfer and it did it in a week. Other people have complained about the process taking months to do. But yeah, transfers are not the easiest thing to do or the functionality isn't great. and just again, you might incur fees. If there's dealing fees on the platform, say you're trying to get away from HL to move to a discount broker, there might be loads of fees when you exit in. And in terms of - But if you're paying a lot of fees currently, you might wanna move to avoid the current fees you're paying for better.

13:59Yeah, definitely. But you get charged per trade and things like this on the likes of HL. So just be aware of the fees. I think a lot of people who pay fees on platforms like HL pay them by accident because they don't realise. You'll move a thousand pound portfolio, you end up with a hundred quid on the other side or something like what the hell just happened.

14:21Last time we recorded, Tomei, and you were having some real dramas with your accountant. So how's that been going, mate? They're sacked. So drama sorted. They're a big corporate firm. They didn't really reply to my emails very quickly, like took a week or two at times. And they charged me way too much. I mean, I've got pretty simple taxes and yeah, they were charging me thousands. They saved me some money, but yeah, I had to move on. Slow and expensive. Pretty much, yeah. This is one of the reasons that we're really happy to be partnering with TaxApp. It's a tech platform that makes self-assessment simple.

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15:21We've left a link in the description and use the code MONEY10 for 10 % off your first tax filing. That code is MONEY, M-O-N-E-Y 1-0. So Mr. O 'Carolet, I hear you are a salesman. Elite salesman, yes. One of the best, they say? I've got a little bit of experience in the game, yeah, I could say. You've done a few deals. Bill, Bill. What would your compliance team say about you? They would say that I am always nagging them and that essentially I just have beef with compliance. I love the team. Compliance slows down all my deals because every time I get to the finish line, they've got to check documents, KYC, GDPR, and it's just a nightmare.

16:01It slows the deal down by like two, three weeks. It's always on both sides as well, isn't it? Sometimes it can be blocked on the other side. Well, that's where today's sponsor can help. Indeed. Vanta helps companies of all sizes get secure and compliant fast. And they stay that way. They do it by automating compliance with over 35 security and privacy frameworks like SOC2, ISO 27001, and HIPAA. Yeah, all of them. And this saves businesses so much time and money. According to a recent IDC study, Vanta customers save over half a million dollars a year in costs. Not bad. And they also help you complete security questionnaires up to five times faster, which is great because everybody hates filling out forms.

16:39If you're a business that needs to prove security and compliance, visit vanta.com forward slash making money to sign up for a completely free demo today. That's vanta.com forward slash making money. There's a link in the description though, so you can just click that. This question is from Balmy B. Can you switch from an income version of a fund to an accumulation version without a financial penalty? I stupidly picked a Vanguard income fund when I started investing. I want to change it to an accumulation, but I'm not sure of the consequences of doing it. If that's your stupidest mistake, you're doing very well.

17:12I've made a lot more dumb mistakes than picking an income fund instead of an accumulation. Yeah. Yeah. It's not even that stupid, really. People do it all the time. What's the difference to? Oh, put me on the spot. An income fund is when you get your gains, it gets reinvested. No, you get it as a dividend, but then the accumulation fund, it gets reinvested into your portfolio. Yeah, so it auto reinvested. Automatically reinvested. Come on, I'm learning stuff on this podcast. Reinvested games. Learning stuff on this podcast, games. Yeah, yeah. So I don't think it's a stupid mistake. I think it's one that people make all the time.

17:48I think, you know, let's say you're on a Vanguard platform. They're listed at the top now. So they do the INC and the ACC versions of the funds. What's the INC and ACC? Incoming accumulation. I should have known that. Yeah, you should have. I think again, if so, if it's listed in pounds, there shouldn't be any financial penalty from moving from one to the other because there's no dealing fees and there's no FX fees and you don't pay stamp duty on funds, which is the UK tax. so assuming that your platform doesn't charge fees for trades of any sort if it's an etf or an index fund then you should be okay if you're on like a hl though they will charge you i believe for etfs because they charge a dealing fee on etfs i i don't know all the fees off the top of my head for everywhere the long and short of that is you just need to check if there's any fees for buying and selling funds and then if there's not you should be okay if it's a fund unlisted in dollars, euros or any other currency, you're gonna likely have an FX fee from switching.

18:53In that case, I wouldn't switch. I mean, to be honest with you, I wouldn't switch at all. I would just leave it there as like a reminder of, you know, your own stupidity for the rest of your life. And for me personally, I actually buy income funds because I love that little dividend payment. And then you would do you spend it or reinvest it? No, reinvest it. So you could just do accumulation, but you like the process. Yeah, I like the process, you know, I'm just, yeah. Yeah, it's not a stupid mistake. It's you can just enjoy your dividends and then reinvest it yourself. Yeah, like one of my mates is a smoker and he smokes rollies and he's like, I just like the mechanics of it.

19:29I like to be involved in the making of the fag. It's like, all right, do you know what I mean? So, and like people who have those crazy vapes where they're, you know, they've got all the juices and the coils. And they're going to like make a little concoction together. Yeah, yeah, yeah. I think they're just... Mad scientists. I'm kind of like that, like with the dividends. I just like to, you know, be involved. And I think the notifications are good. And watching them every quarter get bigger and bigger and bigger is a nice feeling. The accumulation takes, it's a bit too passive for my liking.

19:55I like the notification. So, you know, I don't think you're an idiot. I think people do it all the time. And I don't think it's that big a deal. And as long as there's no dealing fees or fees for buying and selling on the platform, you probably can just switch without it being an issue. Unless it's a foreign listed fund, then there'll probably be some FX fees to consider. yeah lighten up on yourself barmy you're doing all right this question was emailed in by listener harry we're in the process of moving house at the moment which means for the short term we will have around 90k hitting our bank account from the sale of our current property nice this money will be used as deposit on our next home when we finally can purchase but it will be with us for around three to six months and potentially slightly longer.

20:39What are the best options we have in order to get the most out of this cash sitting with us? ISA, savings account. Is it best to split the cash into different areas rather than just one place? Slap it all on red. Yeah, come out. Come to the casino with me and Damo. We'll sort that out for you. Don't worry about it. It'll either be the best or worst night of your life. Like how many times in your life can you guarantee that this is either going to be the best or worst night of my life? That's the kind of like night I like. Do you know what I mean? anyway don't do that so don't don't be taking risks with your house money play it super safe so you know you could do money market funds and things like this but I wouldn't even do that it'd be savings account for me the problem with an ISA is you've got a lot of cash there you'd be filling out your ISA allowances I think people should be using their ISA allowances for investing long term not for cash personally so I would be banging it in a savings account the thing that you've got to consider there though with a savings account is your tax-free allowance on interest.

21:39So everyone gets a certain amount of interest that they can earn for it tax-free, depending on the tax bracket. So a basic rate taxpayer, which is 20 % bracket is a thousand. The higher rate is 500. An additional rate taxpayer gets nothing. 500 pounds worth of interest when you're earning 4 % on nearly 100k is not that much. You would quickly go into the position where you start needing to pay tax on the interest. So you've got two people, two allowances. You'd split it in that way to answer that question. And then if you're thinking, well, this money's going to be there for three to six months and we're going to end up going over that, maybe you might consider premium bonds.

22:21Premium bonds really are like, they're only really beneficial for people with lots of money in a way. They're a lottery. Yeah, they're not sure you win a prize, like random Palsy Winter Prize. They're the most popular investment vehicle in the UK. There's about 120 billion pounds stored in them. And they were just a lottery essentially where you buy bonds from the government and then they do a lottery every month. And off the back of that, they give out prizes and the top prize is a million pounds. The problem is that the average payout at the minute will be around about 4%. But for one person to win a million quid, they take the 4 % off all the other people, right?

22:57So with average luck, the average person should receive a benefit of 4 % a year through being in there. But a load of people will be really lucky and do loads more. Someone's going to win a million quid every month. But then there'll be millions of people who underperform that average. The benefit, though, is because it's a lottery win, it's tax free. So if you've got lots of cash and you're already hitting the interest allowance to the point where you're being taxed on any gains above that, Let's say you're a higher rate taxpayer and you know that any interest that you get on tax above 500 quid, sorry, that is getting taxed.

23:33Maybe you consider putting it into premium bonds instead because any winnings will be tax free. And it's, you know, super safe in the sense of it's not it's it carries pretty much no risk because it's government backed. So, yeah, do the savings accounts. If you're going to exceed whatever your personal tax rate allowances for interest, maybe look at premium bonds beyond that. I'm sure there'll be loads of people below with other suggestions as well. So check out the comments. I think one benefit of the world we live in at the minute is that savings accounts have got pretty good rates on them. You can get like 5 % in some cases.

24:08You could maybe look at a high interest savings account that locks the money away for a period of time. But it sounds like you're just waiting for the keys to this house. And what happens if you lock it away for six months and then it's like, oh, we need the money. So you want something easily accessible. Yeah, instant access, savings accounts. You know, maybe about four-ish percent or something and think, well, if it's enough for a year, we're getting near four grand. But then again, consider tax, maybe premium bonds. But yeah, don't be taking risks for your house money. Definitely. Next question.

24:40Mark asks, given the current freeze on the tax-free lump sum we are likely to see, what would you do with yours if you were 55? I.e., would you leave it where it is inside the SIP or would you transfer it over time into ISAs or something else? Casino. Red. Best or worst night of your life. No, for me, I think this is one of the biggest mistakes people make with their pensions. They get to the age where they can access their 25 % tax free and think, yes, need to do that, take it all. And then they just sat there with all this cash and they're like, well, I don't know, I'll go on a holiday and maybe I'll pay down the mortgage.

25:17And yeah, what do you do then? Whereas they could have left that invested in the market, let it continue to grow and compound and generated returns and boosted their pension pot even bigger and every single month take a chunk of income tax-free. What I think most people forget is if you don't use up to 25 % tax-free cash, you can use that spread out over the lifetime of the pension, essentially. Yeah, so it's not like you have to take it 25 % out in the first year or before you're 60. You can take it out whenever. You can take it whenever. For the rest of your life. Yeah, so if you've got like a million quid, say, and you can take 250 grand tax-free, you could spread that out so that you can become really tax efficient.