Aim to build a squad of two players for each position, plus a clutch of youth academy players. The time to sell the older player is when your younger player is ready to step up and take over without harming the overall quality of your first team squad. Then the youth player should be coming up behind him - having already been out on loan for a season or two to aid his development - to ensure you still have two players per position.
You won't normally be able to do that for every position, but if you do it enough then you can concentrate your transfer budget on signing fewer but better players. Occasionally, you'll have a potential superstar among your new youth intake - typically aged 16. So if you aim to get him into the first team by the age of 20 or 21, you know you can sign an older player to do a job for the first team in that same position until the youngster is ready to take over. You can even have that older player tutor the youngster, too.