Be Aware Of These 7 Biggest Psychological Money Traps
7. To regain profit from lost money
People stick to unprofitable assets with a hope to regain profit out of it. Sometimes people keep hold of their old car or sometimes losing stocks. "Although everyone knows stocks aren't guaranteed, some people irrationally want to hold on to loser stocks 'until they earn their money back,' explains Cheryl Krueger, president of Growing Fortunes Financial Partners in Schaumburg, Ill. Sometimes people keep repairing an old car so as not to lose the repair cost invested on that car a month ago. This could be partly because of emotional reasons.
The Solution
Remember that whatever money is spent should not be included in your future financial decisions. Try to establish a limit after which you will get rid of the non-profitable asset. Once a loser stock reaches that limit sell it off and avoid further losses. It is good to accept the fact that sometimes it is impossible to revive a dead investment.
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