2. Your Investment Goals Change

Your investment goals are a function of your personality, earnings, needs and anticipated future requirements. Most of these tend to change over time. Traditionally, appetite for risk has tended to reduce over age. As you become a mature investor, personal insight into the credibility of certain sectors or businesses may also change.

Redraw your short-term, mid-term and long-term goals from time to time and sell off investments you are not comfortable with.

3. The Investment Becomes Too Expensive According To Your Criteria

P/E ratio or The Price-to-Earnings Ratio is a measure of the price paid per share over the annual earnings per share. An increase in valuations of the company would increase the share price and hence reduce the P/E ratio. If you bought into stocks or funds because you thought they were undervalued, you were looking for a low or a particular P/E ratio which offers greater dividend for the same rupee. If that is your investment criteria, it might be time to sell stocks when it gets overvalued and repeat the process.