Let’s continue our discussion about the human facility for self-deception when we construct logical-sounding arguments to justify doing things with our money that may not be prudent but feel comfortable.
As humans, it is common to construct somewhat elaborate, short-term excuses to justify behavior that runs counter to our own long-term interests.
Let’s review a few more of these money excuses to see if you are becoming victim to your own financial excuses.
5. “I want to get some of those losses back before I sell.”
It is human nature to be emotionally attached to past investments, even losing ones. Waiting to sell a disappointing investment may just be a way to avoid admitting you made a poor investment decision. Evaluate whether the poor-performing investment is a sound investment that still belongs in your investment portfolio. As the song says, you have to know when to fold’em. Holding a bad investment does not make it a good investment.
6. “I’m not selling. This investment has been good to me.”
Many people have a tendency to hold on to a winning investment too long. Unfortunately, most investments do not perform well forever. Without disciplined rebalancing, a winning investment can become too great a percentage of your investment holdings, and your portfolio can end up more risky than you bargained for. Be sure to stay diversified.
Take personal responsibility for your financial future. Be intentional. Develop a financial and investment plan to improve your probability for success. Click here to learn more about sound financial planning.
Click here to read part 1, part 2, part 4, and part 5.
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