When to Buy, Sell & Hold ETFs?

Content Producer · 1 February 2021
How do you know when to buy, sell and hold ETFs? In this article, we explore the different strategies you can take when adding ETFs to your portfolio.

Do you ever dream of being like Biff in Back to the Future?

Spoiler Alert (for those of you who have been living under a rock since the 1980s!)

In Back to the Future, Biff travels back in time to give his past self a copy of The Sportsman’s Almanac. This book contains details of future sports results before they happen. Biff’s past self then uses this information to get rich by betting on the outcome of every sports event for the next 50 years.

Imagine what you could do with The Australian ETF Almanac!

If you knew when every market high, low and crash was going to happen in the next 50 years, then knowing when to Buy, Sell and Hold Australian ETFs would be a piece of cake!

Luckily, you don’t need The Australian ETF Almanac or knowledge of the future in order to make smart ETF investing decisions today. These simple guidelines on when to Buy, Sell, and Hold ETFs will help you to be well on your way to making your future self financially secure – without help from Biff!

When to Buy ETFs

The best time to buy ETFs is at regular intervals throughout your lifetime.

ETFs are like savings accounts from back when savings accounts actually paid you interest. Think back to a time when you (or your parents!) used to invest in your future by putting money into a savings account. In a low-interest-rate environment savings accounts are no longer an effective way to invest for your future.

But ETFs are!

ETFs are where you should invest your excess income throughout your working life. I don’t mean money that you are saving to buy a house with, or saving for a wedding. I mean money that you are never going to need again.

Well, at least not until your retirement!

One way to think about it is every three months taking whatever excess income you can afford to invest – money that you will never need to touch again – and buy ETFs!

Buy ETFs when the market is up. Buy ETFs when the market is down. Buy ETFs when we get a new Prime Minister. Buy ETFs when you call your mum each month.

The point is to buy ETFs at regular intervals, not just because you think now might be a good time to buy.

Oh and I’ve got you covered if you don’t know how to buy an Australian ETF.

If you regularly invest, and invest only what you can afford to, then over your lifetime the power of compound interest will make you look like you had a visit from Biff from Back to the Future too!

When to Sell ETFs

In an ideal world, we would all have enough invested in ETFs to live off the dividends in retirement. Ideally, you would never have to sell your ETFs! Unfortunately, this will be true for precious few people. Here in the real world, you will more than likely need to sell your ETFs at some stage in your life. But when is the right time?

The best time to sell ETFs is when you need cash to fund your retirement!

We all need cash all the time. To eat. To live. To buy new cars. To go on holidays. But your ETF portfolio should not be raided for life’s essentials. Stay strong, don’t sell those ETFs just yet, you will need those ETFs for retirement!

Here’s a tip, when you approach retirement age and need to live off your investments, don’t get hung up on dividends. Too often I see investors go chasing dividend returns at the expense of capital gains. In the end, money is money, regardless of whether you earned it through dividends or through capital gains. And investing in ETFs will earn you both!

Money earned through dividends will automatically be paid out to you at regular intervals. But money earned through capital gains will require you to sell your ETFs to put that money in your pocket.

This isn’t something to be afraid of!

Every quarter or every 6 months when you receive your dividend payment, just log into your broker account and sell off a small number of shares in your ETFs to access extra cash. That is the right time to sell your ETFs.

Now I can’t talk about when to sell ETFs without briefly mentioning when not to sell ETFs.

When not to sell ETFs – during a market crash!

This might sound obvious, but emotions run high during events like the global financial crisis or during any stock market crash. Years of smart investing can be undone in a single moment if you are financially pressured into selling your ETFs at the absolute worst time to do so during a market crash.

The way to avoid this is to avoid the perceived pressure.

Don’t invest more than you can afford to, don’t use leverage to invest, and maintain an emergency fund of cash to support yourself for a year so in case you lose your job during the next market crash.

When to Hold ETFs

ETFs should be held throughout your working life and into your retirement.

The best time to Hold ETFs is right now. And tomorrow. And the next day. And next month. And next year. And in 10 years’ time.

How do I know this? Well, I am going to let you in on a little stock market investing secret.

The market always goes up.

Don’t believe me? Take a look for yourself.

Investment graph of ETFs
Was there a bad time to invest in the US stock market?

The simple truth is that when you invest in the stock market over timeframes of 20+, 30+ or 40+ years, the market always goes up. It always has.

And I can already hear you asking “Yeah but, will it always go up?”

Only Biff knows that.

But the past tells us that the longer you hold ETFs for, the better your investment returns will be. If the market always goes up over a long enough time period – as it always has in the past – then the best time to hold ETFs is today.

The Best Time to Buy, Sell & Hold ETFs

Alright let’s break down all that chat into a few simple guidelines on when you should Buy, Sell & Hold ETFs:

  • Buy ETFs at regular intervals
  • Invest excess income that you will not need to touch again
  • Buy the Best ETF’s in Australia
  • Hold ETFs throughout your working life
  • Hold ETFs as long as you can, give compound interest time to work for you
  • Sell ETFs to fund your retirement
  • Don’t sell ETFs during a market crash

Consider this your Australian ETF Almanac in brief. All that’s left is for you to stop making excuses, get amongst it and start investing in Australian ETF’s.

Go on, get cracking!

Your future self will thank you.

The table below displays some of the International Broad Based ETFs available on our database with the highest three-year returns (sorted highest to lowest by three-year returns and then alphabetically by provider name). Use Canstar’s ETF comparison selector to view a wider range of products. Canstar may earn a fee for referrals.

About ETF Bloke 
ETF Bloke logo

ETF Bloke is written for Australians who want to learn more about ETF investing, asset allocation and building your own ETF portfolio. 

I firmly believe that investing in ETFs is one of the few ways that your average Aussie bloke (or sheila!) can become Financially Independent and Retire Early. I found loads of ETF investing information available online – but most of it was targeted at Americans. So I took it upon myself to provide information specific to ETF investing in Australia. 

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