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Not Willing to Admit (Short Term) Defeat?

Not Willing to Admit (Short Term) Defeat?


Not Willing to Admit (Short Term) Defeat?

Many investors hold on to losing positions long after it makes sense. It's easy to understand; few people like to lose money, and many will hold on to an investment that has gone down in value in hopes that it will someday recover. Studies show that investors are far more likely to sell when they make a profit (and pay taxes on the gain) than to sell when they have lost money, even though selling at a loss can help offset other gains and lower overall tax burdens.

While each investing situation is unique, if an investment has lost money and you no longer feel it is a worthwhile investment, it may be time to sell. Wouldn't you rather put your money in an investment you feel is likely to increase in value than to simply hold on to a losing investment so you won't have to admit "defeat"? No investor makes money on every investment; cut your losses when necessary and put your money where it has a better chance of building wealth.

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