SAN ANTONIO — Selling a stock can help you make a profit or cut your losses. If you’re thinking about pushing the sell button, here are three questions to ask yourself first.
What taxes will you have to pay?
“When you sell a stock for a gain, you’re going to have capital gain taxes to pay. Depending on your tax bracket, it could be 15-20 % and you’re going to take a hit,” said Karl Eggerss, senior wealth advisor and partner of Covenant. “Secondly if you do that, what are you going to put it back into?”
Would I purchase this stock today?
“You bought a stock at 2, it’s gone up to 10. If you did not own that stock before, would you buy it at $10 per share? Take an agnostic approach, don’t worry about where you bought it. Look at the stock for what it is today. Look at the financials, same way you evaluated it when you first bought it. Do that same thing again. If you would buy it today at $10 per share? Then you probably shouldn’t sell it,” recommended Eggerss.
How much of your net worth is in the stock?
“If you purchase a stock and it was only 1% of your net worth, it’s not going to have a big impact on your life. But if it’s now grown 10% of your net worth, now you have some risk,” explained Eggerss. “A classic example of where that could go wrong is ENRON, where a lot of people had most of their net worth and most of their investments in ENRON stock. We know what happened to that. A lot of people ended up losing everything they had in investments. It’s important to diversify but it's also important to monitor that stock you own.”