When is the best time to sell?

ARH_2

We all know the answer to the question of when is the best time to buy: You don't know when the best time to buy is, so you should drip feed your money in. 

Does the same apply to selling? I want access to some of my money tied up in Vanguard LS100 for renovations next year, so should I start 'drip-selling'? Or should I go with the 'things are looking good right now after all this vaccine news', so I should sell the lot right now?

TIA  

MarkCarnage

If you know for sure that you need to access cash next year and have a fair idea how much, it would be prudent to sell now IMO, and sell enough to cover your estimated requirement as trying to second guess market moves over any time period is a mugs game.
The known news on vaccines is now likely to be priced in as a generalisation, so why wait? 

Alexland

ARH_2 said:

I want access to some of my money tied up in Vanguard LS100 for renovations next year, so should I start 'drip-selling'?

Depends if you need or just want to spend the money next year. If it is needed (eg to fix a leaky roof) then sell now as you don't have a suitable investment timeframe and the potential upside is much less than the potential downside. If you are happy to delay the renovations for up to several years while the stock market recovers from a crash you might decide to sell closer to the time. Most people probably wouldn't be happy delaying a job for years so should sell now. "Drip Selling" might be something you do to derisk a portfolio in the 5-10 years leading up to withdrawal but not for money you might spend next year. Too late for that now.

Linton

Ideally....
The best time to sell is when the reason to buy no longer applies, either because you, your objectives, the world or your investment have changed.

You should be able to cope with an unplanned small/medium expense by using your saved cash.  Cash for a planned expense should be released well in advance as part of an annual rebalance of your investments and cash holdings.

The worst option is to wait until the last minute to see what happens.

eskbanker

ARH_2 said:

We all know the answer to the question of when is the best time to buy: You don't know when the best time to buy is, so you should drip feed your money in.  

That's certainly not a universally-accepted answer - the prevailing view is typically that (given the long-term trend of increases) it's statistically more likely to be better to commit a lump sum in one go rather than drip-feeding.

csgohan4

Drip selling incurs more costs as likely the platform has selling fees attached. 

Sell when you need to or according to your strategy. 

Thrugelmir

If the money is ear marked for a particular purpose. Then wisdom would suggest that holding a volatile fund such as VLS100 isn't advisable. You never know what lies ahead. 

DairyQueen

The best time to sell a 100% equity fund is 5+ years before you need the cash. 

Steve182

DairyQueen said:

The best time to sell a 100% equity fund is 5+ years before you need the cash. 

That may be the surest way of avoiding risk of capital loss, but in that timeframe you are likely to miss out on significant growth and the value of your cash will be eroded by inflation. 

Bravepants

Steve182 said:

DairyQueen said:

The best time to sell a 100% equity fund is 5+ years before you need the cash. 

That may be the surest way of avoiding risk of capital loss, but in that timeframe you are likely to miss out on significant growth and the value of your cash will be eroded by inflation. 

But if you understand that, then it can still be a useful thing to do. I have a SIPP with 5 years' worth of drawdown sitting in a cash SIPP for if I choose to retire early in a couple of years. Having that sum sitting at no risk apart from inflation means that my retirement plan and timeframe is pretty solid.Yes, I'm paying for that assurance, but still there is assurance. I of course have other investments that are in the higher risk category, BUT I won't need them to enable my retirement plan. I guess it's a similar set of arguments to deciding whether to pay the mortgage off early.

dunstonh

We all know the answer to the question of when is the best time to buy: You don't know when the best time to buy is, so you should drip feed your money in. 

Statistically, drip feeding (or phasing) the investment results in lower returns in the majority of periods.  I have never heard of drip feeding being the best option to maximise returns.  So, I believe you are mistaken.  It is mainly used for those that contribute from income, so have no choice or don't have the risk profile to invest in one go (not someone who invests in 100% equity).

I want access to some of my money tied up in Vanguard LS100 for renovations next year, so should I start 'drip-selling'?

You should phase the risk down about 5 years before you need to draw it ideally.  

This is an issue of risk and affordability and the amounts involved..   At 100% equity you are risk of losing half the value in a fall.   So, can you afford to take the risk of that happening with the money you intend to draw?

If you have £200,000 and you need to draw £5,000 then the risk is minimal and in the scheme of things, there isn't really a need to reduce risk.   If have £30,000 and you need £10,000 then the risk is far higher and you do need to reduce risk.