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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
Entrepreneur Estate Plans For Those Who Choose To 1) Ready, 2) Fire, THEN 3) Aim

Estate planning for business owners, particularly those known for impulsive decision-making, requires a nuanced approach. ...

The post Entrepreneur Estate Plans For Those Who Choose To 1) Ready, 2) Fire, THEN 3) Aim first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

See more
How Rising Interest Rates Can Affect Your FinancialPlans

Whether you are managing debt, investing assets, or developing an estate plan, changes in interest ...

The post How Rising Interest Rates Can Affect Your FinancialPlans first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

See more
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Here’s how to get a jump-start on creating a system to organize your bills, statements, ...

The post Creating a Financially Organized Life first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

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