Sin #7 – Pride
Pride has no place in 401k investing. It’s easy to continue to pump money into a loser on the premise that if it was a good value at $25 per share, it’s even better at $20. Also, I’m sure we all have used some variation of how “the market is going down, so everything is going down.” And let’s not forget the old excuse about how we’re just waiting to get back to square before we sell.
The fact is that if you sell a bad mutual fund at a 20% loss and move that money into a fund that gains 20%, you’re even overall. So the only question you should ask yourself is whether you truly think that losing mutual fund is your best bet right now — or whether there’s a better investment option.
It can pay to swallow your pride on a bad investment. Otherwise, you just may wind up digging a deeper hole.