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Set of wooden block stair depicting top slicing share profits

What To Do With Profits On Your Shareholdings – Top Slicing Mastered

When to take those Share Profits and the Best Ways to do it

So we’ve explored what to do when the share investment losses arrive, so what about the upside, when and how to take the share profits.

One method that’s often used is called Top Slicing or sometimes Top Skimming, love some of these share investment terms, these somehow conjure up images of being a milkmaid, skimming off all that cream.

That in essence is what Top Slicing is, you wait until a share makes for what is for you as the investor a satisfactory profit, you take the profit and leave in your original investment value to hopefully grow even more profit for you.

From a monetary point of view this is how it looks:

If you invested £1,000 in Vodafone and in six months time that invested holding is worth £1,500. You sell £500 worth of shares leaving you £1,000 left in Vodafone shares. Simple.

Now the trick to this strategy is knowing when to take those profits?

Here are a few things to consider when making that critical sell decision

– Do you have another share you are keen to investment in? I like this one because it creates another great habit. If you haven’t got anything else to invest in, why take out your money? If the investment is still growing, leave your money where it is. Additionally, always keep a list of potential share investments. Keep these investments in what is in essence your fantasy portfolio, track it like you do your normal portfolio, see if those theoretical holdings are making money and compare them to your actual investments. Benchmark your actual holdings. You can use Yahoo Finance to do this, it is still one of the best portfolio tools around. If you could be doing better with your actual profits as compared to your fantasy portfolio, get top slicing and reinvest.

– Check whether those shares you’re about to top slice are going to payout a dividend soon, keep an eye on those dividend payment dates. You might want to collect those dividends before you make a sale, don’t throw money away.

– What is the general sentiment for the share you are holding, are things still favourable? Do this by keeping a track of news for the company. Set-up news alerts for the company and follow the financial press. Do this for all your holdings as a matter of course.

– Keep a track of the increases in share price over time, is it slowing or gathering momentum? What is the volume of trade, do the number of buys exceed the number of sells, how strong is the demand in your share?

– In terms of what is the lowest value to take when top slicing, I’d say never take less than £100, that should really be the lowest you’d ever scrape when top slicing. It’s just not worth it when you consider broker charges.

– How is the company performing financially? Watch those quarterly forecasts and quarterly financial updates, if they keep exceeding expectations and forecasts, chances are you want to be keeping hold of your full shareholding.

Enjoy reinvesting those profits.

All the best, .

Man in Huge Blue Shoes

When to Sell Loss Making Shares – Is it Time?

What to do with Loss Making Shares

Have you ever bought some clothes, got them home or received them in the mail, tried them on and wondered what on earth you were thinking?

Now quite often we do this and our folly doesn’t register at first, we simply bury the problem and never look at our crime again. We overt it from our gaze, an inconvenient truth.

It happens with share purchases all the time. Come on….you know the ones, the red stuff on your portfolio that never, ever turns green, it just stays red. The nagging stuff we quickly swipe over when browsing our favourite victories.

The worst thing with shares is we can’t take them back for a refund like you can with the hideous jumpers or winckle picker boots, they just sit there getting redder and redder.

Now with spring in the air and a new year begun it’s time to revisit those failures and accept my friends the inevitable, take the hit and move on. Vanquish those beasts.

With the FTSE 100 and 250 gathering more and more upward inertia now more than ever feels like the right time to carry out a Mary Poppins, get some spit spot on the back of the portfolio cupboard.

So how do we know when a relationship is over with a share? Well, it’s different in every case. Whether you sell them is a personal decision and a measure of your tolerance, patience, risk and loss appetite.

Here are a few tests that can help you decide:

– How long have the shares been in a loss and when did you intend to make a profit on them?

– What is your tolerance for losing what capital is left in there? Sometimes you can be left with nothing, the road is littered with the dead (remember Carillion or Thomas Cook). Is any company too big to fail?

– What opportunities are you missing while those slugs drain the life out of your cash?

– How quickly can you make that money back buying a share that is breaking out, check your list of potential buys, you may surprise yourself

– Look at the credibility of a failing company’s recovery plan, is it working and is it credible?

– Set yourself a new deadline for improvement, if that time passes and nothing has changed, it’s probably time

– Has the tide permanently turned on the sector or business, parts of the bricks and mortar retail sectors are good examples of permanent sentiment and market conditional change

Whatever your decision it’s always a good exercise to revisit your share buying failures whether you sell them or not. Hindsight is a wonderful thing, we only learn from reconsidering our purchase decision making process.

All the best, .

Useful Resources for Stocks and Shares Related Websites, Books and Tools

Below are some of my favourite stock and share related websites, books and tools:

Share Research Tools

This is Money – Risers and Fallers – This tool is free, always good to see, allowing you to filter all the UK markets to find the biggest rising and falling shares. What I really like about this tool is the ability to find constant gainers and fallers. This is really useful for identifying trends, i.e. stocks that are taking off. This method is not for the faint hearted but is a great research tool that should only be used as part of a wider overall suite of research.

Stock and Share Pickers

Obermatt – I don’t tend to use stock pickers and stock recommends but prefer to do my own research. Obermatt I do though find quite useful. They have a free top 10 stock section from global indices and regularly have selections for the FTSE. This section doesn’t provide opinion, which is nice to see, but simply rates the stocks on Value, Growth, Safety and Combined. I would not rely on the tool for selection alone, it can though help to qualify some wider research.

Wealth Management Firms

GFM Asset – US and Hong Kong Wealth Management – Assists professionals in developing regular investment plans to build retirement plans and beyond. Specialises in cross boarder individuals who have worked in more than one tax jurisdiction.

Share Investing Books

The Intelligent Investor by Benjamin Graham – This is an old book with some evergreen share buying lessons. Benjamin Graham turned stock selection into an art form and demystified much of the witch craft that surrounds stock selection practice. A must read for anyone entering the arena of buying shares.

The Essays of Warren Buffett – You need to get past some of Warren Buffett’s recent mistakes to read this one…..Kraft, ahem. Just shows even the best investors slip up, a good lesson there for us all. Regardless of his recent bad press Warren Buffett is still one of the best stock investors in recent memory. Within these essays you find a lot of wisdom, unquestionably worth your attention if you are new to buying shares or want to build up your knowledge of how to find the best investments.

If you have any suggestions to add to this list feel free to get in touch, I’ll be happy to check them out. All the best, .

Investing Blogs

Suredividend.com – Focuses on delivering long term growth with high quality dividend stock portfolios.

MoneyByRamey.com – Teaches Financial Freedom to The Universe by showcasing active and passive income generation strategies. You can track his dividend portfolio as well.

Imperial Brands Vaping Problem

The trouble at Imperial Brands, to Vape or not to Vape?

So big tobacco is dead? Right? Well no not really.

Tobacco is still big business, really big business. In fact it’s still one of the cash machines of the business world.

The perfect cash generator from which to develop a new delivery system for an old product. At least that’s what Imperials approach has been, until recently that is.

Imperials share price has dropped some 30% in the last twelve months. That’s quite a fall from grace.

The trouble with this tobacco titan comes in the form of what was supposed to be it’s saviour, vaping.

With the recent announced exit of Imperials CEO, Alison Cooper, the journey to recovery for Imperial looks difficult. In her tenure since May 2010 Imperials share value has shrank by some 1%. In the basket of big tobacco companies Imperial is the only large player to suffer a net decline over this period. That’s not a great way to exit a business.

So what’s at the route of Imperials problems? Well pivotally it sits in the degradation of the US vaping sector.

US regulators and health officials now eye the vaping sector with some suspicion. Officials having cited at least 530 likely cases of lung related illness and 7 deaths connected to vaping.

This news led to Imperial downgrading it’s profits forecast.

Several states including California are now advising people to stop vaping while the effects of vaping are considered and tested in more detail.

For years Imperial has been the darling of many a fund manager with a dividend yield of 10.5% it’s understandable, yields having grown from around 2.8% in 2009.

And now the hunt for a recovery at Imperial begins.

First stop is the appointment of a new CEO and Chairman, Mark Williamson having announced his departure in February.

While the search for a new CEO continues Cooper’s job remains an assets divestment strategy which Imperial expects to receive up to £2bn from by May 2020. That will make quite a war chest of cash from which to form it’s new strategy.

As to what the future holds for Imperial clearly it’s a difficult call. Given the resilience of this sector over the decades it seems a difficult one to bet against.

Many believe that the reduced use of vaping as a consequence of its recent bad press may actually drive people to cigarette smoking.  The choice for a smoker it seems is one of addiction rather than stoping the use of both products all together. If one falls out of favour people will simply switch to the other.

In terms of the vaping question and whether that market will recover, the key question hinges around the studies that will have to follow into the longer-term health effects of vaping. With the tobacco industry having staked so much of it’s future on vaping one would imagine they will be doubling down on their own research and development in this field.

Girl strikes an amazing yoga pose on cliff edge after discovering what dividend yields are

What are Dividend Yields? Find Out Their Power with dividendyieldlive.com

What are Dividend Yields?

Well put simply they are the level of income attracted to the ownership of a given share. They are expressed as a percentage, the higher the percentage the more favourable the yield.

The importance of what dividend yields are is not lost on the professional investor. They are the central tenet of the passive income builder.

They are an important measure of a shares value as a consistently high paying yield is valuable and worthy of owning.

Some would argue that dividend yields are less important in a world where share value appreciation and sky rocket returns are the holy grail.  Just think “dot com listings”!

Yields are though the main stay of the savvy investor. Any company that cannot develop decent yields is likely over time to be an investment that falls out of favour.

Owners of shares put a great deal of importance in yields. They should represent a consistent income stream attached to ownership.

Over time they should help deliver an above inflation return on the investment in a share.

The Appeal of Yields and Know the Risks

The great appeal of yields is their ability to out perform income returns on bank deposits. In the UK percentage returns on bank deposited savings are averaging around 1.5%. That is actually less than the current rate of UK inflation, somewhere around 2.5%.

When you put that into context, money saved with a bank is actually losing some of it’s purchasing power to inflation.

It is important to remember the flip side of share ownership comes with risk. As ever, money invested in the stock market can go up as well as down. The same goes for dividend yields, they rise and fall. The smart investor needs to keep a beady eye on the performance of the companies whose shares they own.

Where did Dividend Yields Originate from?

Company owners invented the dividend yield as a mechanism to encourage the appeal of their shares. In essence an investment that pays a constant return for owning it is clearly more appealing than an investment which pays no income. The first recorded dividend having been paid by the Dutch East India Company. The company having paid yields of 18%, wow!

Dividend Performance Analysis

You will see from our analysis of the top paying yields for the FTSE 100 top FTSE 100 yields are currently averaging around 8.3%. That is somewhat higher than the UK banked saving deposit average of 1.5%.

Part of the trick in share ownership is to select a share that pays a sustainable and above inflation return to the owner over many years.

Our analysis tools will help you find the best dividend yields for the FTSE. We have dividend yield analysis for the FTSE 100, FTSE 250 and the top divided yields for the FTSE 350.

Further explanation of dividend yields can be found at wikipedia.