Should I Sell My Stocks?

Reasons to Sell a Stock

Every investor has their own risk profile and investment timeline. That means your portfolio's asset allocation will be unique to you. Having said that, you might choose to sell stocks if any of the following scenarios apply.

1. You Made a Mistake

You may have purchased certain stocks without considering the bigger picture—leading to buyer's remorse. This could happen if:

• You accidentally bought the wrong stock or purchased too many shares.
• You got caught up in the moment and made an emotional purchase.
• You didn't consider your desired asset allocation.
• You bought shares of a company that doesn't share your values.

Your investment portfolio isn't set in stone. Instead, you can make trades and rebalance as needed to ensure that your holdings are in line with your goals.

Learn more: How to Avoid Emotional Investing

2. The Stock Hit Your Target Price

You may own stock that's worth much more today than it was when you bought it. Your target price is the highest amount you're willing to let a stock price reach before selling. Be aware that this isn't an exact science: It's impossible to time the market and predict the exact moment to sell. But if you have a goal for the top stock price you're comfortable with, you could get out before the price potentially falls

If you do sell your shares for a profit, be prepared to cover capital gains tax. The amount you pay will depend on your income, your tax filing status and how long you held the stock.

3. You Need to Rebalance Your Portfolio

Staying diversified is an essential part of investing. When done right, you'll have a healthy mix of assets across different industries, sectors and locations. That can help minimize investment risk and prevent your portfolio from becoming lopsided.

But with regular market activity, the values of your investments can change over time. Rebalancing is a simple way to restore your desired asset allocation. This might involve selling high-performing investments. You'll ultimately want to maintain an asset allocation that supports your short- and long-term investing goals.

Learn more: How to Rebalance Your Investment Portfolio

4. The Stock Didn't Perform as Expected

Investing comes with some degree of risk, and not every stock ends up being a winner. You might own some shares that simply never lived up to your expectations. That could happen if a company:

• Underperforms financially or is heading toward bankruptcy
• Is under poor management
• Experiences a scandal that it never recovers from

Selling at a loss isn't ideal, but it could "stop the bleeding" and prevent further drops in your portfolio. It's also worth noting that your shares will be worthless if the company goes bankrupt.

5. The Company Is Involved in a Scandal

If a company becomes part of a scandal or otherwise attracts negative attention, it could have a real effect on a company's revenue and stock value. Case in point: Within the first four months of 2025, Tesla's stock price plummeted by more than 55%.

A corporate scandal could cause investors to question a company's future and long-term profitability—and some companies never recover. For example, Enron's stock price tanked when their shady accounting practices became public. The company eventually filed for bankruptcy.

6. There's a Misalignment of Values

Socially responsible investing is a strategy that looks beyond a company's financial performance. It's also about investing in companies that share your values. That might revolve around:

• Environmental sustainability
• Corporate governance
• Social issues
• Diversity and inclusion efforts
• Salary equity

If you learn that a company is engaging in practices that go against your moral compass, it might be enough to make you sell.

7. The Company Is Acquired by Another Organization

If you own stock in a company that performs well, they may get bought out by a larger organization—and the announcement could lead to a major bump in the stock price, especially if they have more than one interested buyer. If the stock value continues climbing, you might be tempted to sell your shares. Investors who bought into the company for a low price stand to profit the most. But again, this comes with built-in risk as it's impossible to predict the exact right time to sell.

8. A Financial Situation Requires You to Liquidate Stock

A financial emergency might put you in a tough spot. If you've exhausted your savings, you may have no other choice but to sell stocks. Just be aware that pulling your investments might cut you off from future returns.

It could also impact your nest egg if you're offloading shares within a retirement account. What's more, pulling out cash could trigger a tax bill and an early withdrawal penalty. This is why having a strong emergency fund is so important.

9. You Have Something Potentially Better to Invest In

While it's generally advised to have some money in the stock market, you might choose to sell some shares and redirect those funds into other investments—whether that's a new home, an investment property or a new business. Just be sure to stay diversified along the way. One rule of thumb is to invest more heavily in stocks while you're younger, then gradually dial back as you get closer to retirement.

Frequently Asked Questions

The Bottom Line

Investing in stocks carries more risk than investing in assets like bonds or certificates of deposit (CDs), but there's also the potential for much higher returns. Most financial experts suggest sticking with your investing plan, even during market ups and downs. Diversification is also key. Your financial situation, risk tolerance and investment goals will ultimately be your North Star.