Suze Orman, renowned for her financial advice on the "Women & Money" podcast, recently shared a message that she felt everyone needs to hear: it's important to let go. Sometimes, the hardest thing to do is let go, whether that's of material items in your home that you don't need, relationships that are hurting you, credit card debt or failing investments.
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It seems like it might be a no-brainer to let go of failing investments, but Orman shares some insights into the emotional attachments that some people hold with their portfolios. She discusses the psychological barriers that keep us from making smart financial decisions.
"How many of you, especially the women out there, you inherited a stock portfolio from your deceased spouse," Orman sais. "And your deceased spouse worked so hard on this portfolio. Loved these stocks; whether they were good stocks or bad stocks didn’t matter. But they were your deceased spouse’s stocks. And now they’re yours, and you don’t want to sell them. You watch them go down, they’re totally out of favor now...But you don’t want to let them go because of the memories."
Even though the investments may not be performing well, for some people, they could hold sentimental value. But, according to Orman, that's a dangerous place to sit because when you hold onto investments like this, you're losing out on opportunities to grow.
Orman also shared that some people are holding onto investments that she advised on making years ago that are no longer performing well. She gave the example of the ARK Innovation ETF, which she once recommended. Many listeners, she noted, continue to hold onto this ETF even as its value has declined, hoping for a turnaround. Orman candidly admitted, "I was as wrong as I could possibly be, but you're still holding on to it."
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Orman's main point of her message is that this reluctance to let go of bad investments comes from a place of fear and desire for security. We stick to familiar things even if they no longer serve us because the unknown feels risky. But this mindset can lead to missed opportunities and greater financial losses.
While it may seem simple to some to let go of failing investments, holding on to these losers is more common than you might think. According to stats from Tradeciety, many investors tend to sell winning investments while holding on to their losing investments. And traders often sell winners at a higher rate than they sell losing stocks. About 60% of sales are winners, while the other 40% are losers.
Orman's advice is clear: if you're holding onto an investment out of fear, sentimentality or hope, it might be time to reassess. The financial markets are constantly changing, and clinging to the past can leave you stuck and powerless. By letting go of failing investments, you open yourself up to new opportunities that better align with your current financial goals.
For personalized advice tailored to your specific situation, consulting a financial advisor can be invaluable. They can help you evaluate your portfolio and make decisions that support your long-term financial well-being.
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This article 'You're Stuck': Suze Orman On Why Holding Onto Failing Investments Could Be Your Biggest Mistake originally appeared on Benzinga.com
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