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Principle 20

Don’t Turn a Temporary Loss into a Permanent Decline

It is a rough road that leads to the heights of greatness.


— Seneca, Philosopher

Imagine there was an electronic sign on your home that always showed its latest price (or you log in to Zillow every day to check your home’s valuation). If your home dropped in value by 15% would you immediately sell it?

Probably not. Our house has a necessary functional value — even if the price goes down, we still need a place to live. The same may be true for investing. It’s necessary functional value is to help us achieve our most important goals: educating kids, staying ahead of inflation, enjoying a long and secure retirement.

When markets are open, stock prices change every second. Though markets have historically gone up over the long term, in the shorter term, prices can swing wildly and even decline severely.

This can lead some investors panic and sell, turning a temporary decline into a permanent loss (since you no longer own the investments and can’t benefit from any future rebound). It is little like leaving a great movie, just because there is a scary scene in the middle.

So the next time your portfolio value drops, ask yourself if it’s worth creating a permanent loss or whether your reasons for investing in the first place (i.e. retirement) still apply.

Schedule your free Exploratory phone call

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can be of assistance.

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Recent Posts
Is Social Security Going To Run Out In Your Lifetime?

We get regular updates on the Social Security trust fund. In early May, the Social ...

The post Is Social Security Going To Run Out In Your Lifetime? first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

See more
Thriving on the Uncertainties In Investments

We all like surprises, right? Well not exactly. We like the surprises that we want. ...

The post Thriving on the Uncertainties In Investments first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

See more
9 Facts About Retirement

Retirement can have many meanings. For some, it will be a time to travel and ...

The post 9 Facts About Retirement first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

See more