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.
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