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Today’s self-directed investor has more options and more direct control over the transactions in his or her account than those in past decades. Consider these three steps before hitting the "buy" or "sell" button.
Because the stock market regularly fluctuates, it can be a challenge to make an informed decision on whether to buy, sell, or hold. Emotions may also influence your decisions and lead to irrational choices, which can be costly.
One of the best ways to avoid mistakes in both buying and selling is to thoroughly research the stock you want to trade. This can be difficult for many self-directed investors, and that’s why they often get the assistance of a Financial Advisor to help them analyze company data, industry factors, and other considerations that can also affect stock price. While some investors rely on resources to pull a company’s financial reports and analyze their performance and potential, others may prefer reading the market commentary and equity research provided by analysts.
Understanding your investment objectives, risk tolerance, and strategy helps to inform your decision on whether to buy, sell, or hold. It is also helpful to consider any trading fees or commissions, if applicable.
It’s also important to remember the tax consequences for short-term and long-term gains as these can cut into your potential profits. There may be higher taxes (such as paying ordinary income tax rates) when you sell a stock that you've held for one year or less. Stocks sold after more than one year, however, are subject to long-term capital gains tax.
Some investors enjoy researching companies and choosing stocks to invest in, but not everyone's comfortable with the opportunity and responsibility of self-directed investing. That’s why investors may choose to secure the services of a Financial Advisor.
With an advisor helping to direct the activity in your portfolio, not only can you gain from their valuable experience and knowledge, but you also benefit from having an objective financial professional involved. Advisors can help you avoid making decisions that are based on emotions. Instead, your advisor can work with you to develop a disciplined approach to investing that helps to meet your goals—whether they’re long- or short-term.
While there are no guarantees when trading stocks, these three steps may help you make informed decisions on whether to buy, sell, or hold your investments.
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Products to Consider:
Investment products and services are offered through Wells Fargo Advisors. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC (WFCS) and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.
WellsTrade® and Intuitive Investor® accounts are offered through WFCS.
Wells Fargo and Company and its affiliates do not provide tax or legal advice. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.
Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations.
This information is provided for educational and illustrative purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Investing involves risk, including the possible loss of principal. Since each investor's situation is unique, you should review your specific investment objectives, risk tolerance and liquidity needs with your financial professional to help determine an appropriate investment strategy.
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