Tuesday, July 13, 2010

Thinking You Should Sell And Actually Needing To Sell Are Two Different Things

With todays economy and market fluctuations, investors are always quick to jump to conclusions or jump on the band wagon. They will listen and respond to anything that they hear on the news or radio, causing them to make some radical decisions. Then they call and want to close the entire account or move it somewhere else, aka another brokerage firm who puts stars in their eyes. Take the lady from today for example. She calls and says that she needs to close out her account because it has only been losing money. So I go and pull up her account only to discover that she has over $500 in gains.

Seriously? What was she thinking? When investors get their statements, either annual or quarterly, they do not depict what the current value is as of TODAY. So yeah, maybe they had a bad quarter but she is still $500+ in gains in the past two years of opening the account. This happens very frequently with investors. Instead of just going by your statement, try going to the company's website and registering with them for up to date values and information. You can even pick up the phone and call your advisor to ask them what the current value of the investment is and then measure how it compares with your statement.

As with any investment, market fluctuations are going to happen. That does not mean to go ahead and close it now so that you can reinvest when the market changes in the direction you are wanting. What happens when you do this, and try and reinvest at a later date, is that you may not get as high of an interest rate as you had before or if you are in bonds or stocks you may have to buy back in at a more escalated price that before.

Moral of the story? When in doubt, don't freak out. Just ride it out and you will see that nothing lasts forever.


1 comment:

  1. TCF Online Banking
    This happens very frequently with investors. Instead of just going by your statement.