Why selling is hard to do - Diana Clement writes for RaboPlus

Reasons to sell could include:

• A need to rebalance your portfolio
• Disposing of real dross
• Freeing up cash for a new opportunity
• Simplifying a portfolio and tax planning

The problem with selling is that we're programmed to avoid it. Researcher Terrance Odean found back in the 1990s that instead of cutting losses short and letting profits run, most investors do the opposite. It's not surprising, therefore, if you find yourself thinking:

• It has fallen so much that I really need to hold on until it rises again
• It's gone up in value so much I couldn't possibly get rid of an investment that has done so well for me
• It was given to me by my late departed Dad and I feel attached to the company/investment.

The first is a "buy and hope" strategy and the second two are based on flawed thinking. Investing should never be about emotions. If you can't keep your emotions out of your portfolio then you really need some assistance.

I've read some great tips if you have trouble selling. They include:

• Always write down the reasons you are buying an investment. If it no longer matches your strategy then it's a good time to think about selling
• Set "guide" sell prices when you buy
• Get to know yourself and what drives you to sell winners and keep losers

The Motley Fool, one of my favourite investing websites gives four triggers to sell:

1. Valuation. If you've bought undervalued investments then once they reach fair valuation it's time to sell.
2. Fundamental changes in the underlying business
3. Challenges to your investing thesis.
4. Better places for your money - as mentioned above.

Amongst the mistakes we make when selling investments is making the decision on whether they are in profit or loss. It may seem logical, but the decision should be made on what the future holds for that investment (as well as our current situations) rather than the price it was bought at.

Finally, to take advantage of any of this advice you need to track investments- which means keeping details in a spreadsheet, or portfolio monitoring tool.