Financial Planning - Eight Signals to Sell That Stock! Protect Your Retirement Savings

Most people spend more time evaluating a stock to buy than deciding whether it is time to sell. Evaluating a stock to buy is the easy part of the equation. Deciding when to sell is much harder. I have been investing in the stock market for 30 years and I still find the act of selling difficult. Listed below are my top reasons for selling a stock:

You're holding on for emotional reasons. People often hold on to stocks longer than they should because of their emotions-even in the face of the obvious. Maybe a stock has been a big winner and you love to tell your friends how much money it's made you in the past. Separate your emotions from the facts and make decisions based on logic and good information.

The Stock is overvalued. Maybe the Price to Earnings ratio is too high or the Earnings per Share growth or revenues have declined. It could be some world event hurt the industry (higher oil prices cause airline profits to drop). If you feel your stock is overvalued, sell all or at least part of your holding, wait for the price to settle in a more realistic range, and then buy it again.

The reasons you bought are no longer valid. You bought a stock because it was under-priced or you were expecting a major surge in earnings. If your expectations don't materialize, you should consider selling.

Other investments might offer a better return. If you can earn more money somewhere else, you should take advantage of the opportunity. Perhaps there is a better stock to buy or there may be a piece of land you feel will give you a greater return.

One stock dominates your portfolio. Sometimes a stock goes up so far in relation to the rest of your portfolio you are no longer properly diversified. If this happens you should cut back on your holding.

You do not have time to recover from a market decline. If you are nearing retirement or must make a major purchase and you need the money invested in your stock in the next few years, sell or partially sell and eliminate your risk.

The only reason you are hanging on is that you don't want to admit you lost money. Sometimes people do not want to admit to picking a bad stock and they hold on even though the stock shows no sign of recovery.

You do not want to sell and take a tax hit. You may have capital gains in a stock in November but you want to wait until January to sell so you can delay paying tax for a year. Once January rolls around, however, the stock may have dropped in price and capital gains are not longer an issue. Remember the old adage: Nobody ever went broke taking a profit.

If you actively invest in the market you will make some of these common mistakes. When you do, learn from it and be determined not to make the same mistake twice.

Financial Planning For Your Retirement

Financial planning for retirement is something practiced early only by the wise. Sadly, most of us fall short in this regard, until the middle-age blues start taking toll. So, once the days of fun and frolic disappear into the gloomy mists upon wave-less financial lakes, people start:

i. Savoring the memories of the good, old days.
ii. Blaming a miserable luck.
iii. Adjusting to a shoestring budget.

However, a proper step taken early in life can ward off the later hardships.

Take control

If taking a proper step grabs your interest, then you're already on the way to financial planning for retirement. So start by calculating your current financial needs with respect to the rising living costs, which also must take health care under consideration. The purchasing power of the dollar is not going to stay the same forever; therefore, if you are feeling satisfied thinking of putting aside a certain amount periodically to support you in future, you are utterly wrong. What you need is putting that amount somewhere else to see it increased considerably after a definite period. This is where a financial planning expert steps in.

Know yourself

Only you shall know better your own risk-tolerance capability. This is important because the markets offer you an array of retirement planning and investment choices, from moderate to high money-yielding capabilities. But with them shall come the risks; you cannot generate a million dollars by investing only a tenth of it unless you are prepared to take real big risks. Therefore, instead of being blinded by the dreams of a golden future, settle for one with silver streaks if you think you cannot bear the loss.

Get advice

Once that is done, you must consult a professional financial planning expert to verify if your choice is correct. And that applies even for the best retirement planning, for you must know if you shall be comfortable with the taxing disbursements. Talk to the chosen financial planner about your plans and how to make them happen. But how do you know if your chosen financial planner is the right person?

The Principles of Financial Planning for Retirement Life

Retirement is something that needs to be planned for and it is best to start as early as possible. If you are reaching retirement age and haven't started planning for your retirement, don't panic. There is still time to take some proactive steps in order to ensure the best quality of life after you retire. If you are just starting out in the work force, retirement might not be on your mind but the sooner you start planning, the more money you can save.

There are several main principles of financial planning that you will want to pay attention to when you are planning for your retirement. First, you will want to make a realistic goal regarding how much money you will need once you retire. You will most likely spend seventy to ninety percent of what you are making now when you retire. You will also need to take a honest look at your finances to determine what your financial position is now. You should examine money flow in and out of your bank account as well as make a budget to help you pinpoint where you can reduce your expenses.

Once you know how much money you want to have once you reach retirement and where you are now, you'll want to determine how much Social Security you will be receiving. Typically it will be about forty percent of what you earn now. You can get a free Social Security statement by contacting the Social Security Administration. Take a good look at what your employer offers in terms of pensions, profit sharing and 401K plans. If you are not already contributing to these plans, you should start. You should also start putting money into either a traditional IRA or a Roth IRA. You will be able to save on your taxes as well as save for retirement. Younger employees might also consider investments that might make you more profits, but are more risky.

Retirement planning is not complete without making sure that you have adequate life insurance. If you have a life insurance policy, you may be able to sell it if you no longer want it or need it. This is called a life insurance settlement. Life settlements can get you immediate cash which you can use to help fund your retirement.

With a little bit of preplanning, saving and investing, you can enjoy your retirement without having to worry about money at all.