Avoiding Beginner Mistakes in Australian Online Share Selling

Common Mistakes When Selling Shares Online (And How to Avoid Them)

1. Failing to Research the Share Market

One of the biggest mistakes beginners make when selling shares online is rushing into the process without proper market research. The value of shares can fluctuate daily based on a variety of factors, such as company performance, economic conditions, and market sentiment. Selling during a market dip could result in lower returns than if you had waited for a more favourable time.

How to Avoid:
Before selling shares, take time to research the market. Tools like market analysis reports or financial news platforms can provide insights into whether now is the right time to sell. If you’re unsure, you might consider seeking professional advice or using resources provided by the Australian Securities Exchange (ASX).

2. Ignoring Tax Implications

Another common beginner mistake is forgetting about the tax implications of selling shares. In Australia, the profit you make from selling shares may be subject to Capital Gains Tax (CGT). If you’ve held the shares for less than 12 months, the entire profit is taxable at your marginal tax rate. However, if you’ve held the shares for over a year, you may be eligible for a 50% CGT discount.

How to Avoid:
Keep records of when you purchased the shares and their original value. When selling, calculate the potential CGT to avoid a surprise tax bill. Additionally, if you’re selling a large volume of shares, consider spreading the sale over multiple financial years to minimise your tax liability. You can consult a tax advisor for personalised advice based on your situation.

3. Not Comparing Online Share Sale Platforms

While online share sale platforms are typically more convenient and cost-effective than traditional brokers, not all platforms are the same. Fees can vary significantly, and the level of service offered may also differ. Some platforms may charge flat-rate fees, while others might take a percentage of the sale, which could eat into your profits if you’re selling a large portfolio.

How to Avoid:
Always compare the fees and features of different platforms before deciding where to sell your shares online. For instance, Sell My Shares offers transparent pricing and fast processing, which can help you maximise your returns. Look for platforms with a good reputation, quick processing times, and competitive fees.

4. Misunderstanding Your Legal Obligations

Beginners often overlook the legal requirements for selling shares, particularly if those shares were inherited or are part of a deceased estate. When selling shares from a deceased estate, for example, you may need to provide additional documentation, such as a certified copy of the death certificate or probate documents, to prove that you have the legal right to sell the shares.

How to Avoid:
Make sure you understand the legal documentation required before initiating the sale. For individual investors, this process is usually simple. However, if you are the executor of a deceased estate, consult a legal professional or refer to your online platform’s guidelines to ensure all the necessary paperwork is in order.

5. Overlooking Hidden Fees

While online share sale platforms are generally transparent with their fees, some users may still overlook certain charges. These can include withdrawal fees, currency conversion fees if you’re selling international shares, or additional costs for expedited processing. Such fees can reduce your overall profit from the sale.

How to Avoid:
Before selling, review the platform’s fee structure in detail. Be cautious of any extra services or options that may incur additional charges, and always factor these into your expected profit calculation.

6. Failing to Diversify Your Share Portfolio

Though not directly related to the act of selling shares online, failing to diversify your portfolio is a common mistake many beginner investors make. Holding onto a single company’s shares or a narrow range of industries can be risky, as poor performance in one sector could drastically reduce your portfolio’s value.

How to Avoid:
Consider diversifying your investments by spreading them across various sectors or asset types. When selling shares, you may want to reinvest some of the proceeds into other companies or sectors to reduce your risk exposure. This approach helps you balance potential losses in one area with gains in another, especially if you’re planning to continue investing in the future.

7. Selling Based on Emotion Rather Than Strategy

Emotional decision-making is another pitfall for beginners. Share prices can be volatile, and sudden dips may tempt new investors to sell out of fear. However, short-term fluctuations are a normal part of market activity, and selling in a panic may lead to losses you could have avoided by holding onto your shares.

How to Avoid:
Develop a long-term strategy and stick to it. If you’ve done your research and believe in the strength of the company or market, it may be better to wait for a recovery instead of selling during a downturn. Avoid making rash decisions based on short-term market movements.

Conclusion

Selling shares online can be a quick and efficient way to liquidate investments, but it’s important for beginners to be aware of common mistakes that could diminish their returns. By doing thorough research, understanding the tax and legal implications, comparing online platforms, and avoiding emotional decision-making, you can sell your shares with confidence and maximise your profits.

Using a reputable platform like Sell My Shares will help ensure a smooth and cost-effective transaction. With the right knowledge and strategy, you can avoid these beginner mistakes and make informed decisions when selling shares online in Australia.