The Best Way to Fix a Financial Mistake Without Losing Too Much Money

fix_financial_mistake

Everyone makes mistakes. What separates the winners from everyone else is how they fix their mistakes. 

When playing chess, it’s easy to make the wrong move. If you notice your mistake while the game is on, you can choose one of three responses: 

  1. Ignore it and keep on playing. Maybe your opponent will follow suit and also make a mistake.
  2. Try to find a way to rectify the damage. While you can’t actually turn back the clock and reverse the bad move, you might be able to limit any subsequent damage by changing your strategy. For example, if you find you are now boxed in at the back of the board with nowhere to go, look for a way to open up a better path for yourself.
  3. Learn from your mistake. Now that you realize your mistake and can see its effects, make sure not to make the same mistake twice.

Failure doesn’t always have to result in a loss 

The first of the three options, ignoring your mistake, is not a good idea, as it means you are no longer in control. But the second two options, applied either together or separately, can help you save your situation. This is true whether the situation is a chess game or your investment portfolio. 

If you invested in something that turns out to be a bad position, there’s no point in holding onto it and hoping the situation will improve. Sell as soon as you can and look for something that better meets your needs. Even if the bad investment caused you a loss, it is prudent to move on, find something better – and also learn for the next time. 

Learn from your failures to ensure that a small loss doesn’t become a bigger one. And by learning this lesson from your failure, your earlier loss may ultimately become your gain. 

For more about loss and why it shouldn’t intimidate you, go to: ProfileFinancial.com/loss-aversion

 

You May Also Want to Read:

  1. Why is it Difficult to Follow Financial Advice?
  2. How to Safely Boost Returns in a Low Interest Rate Environment
  3. Do Simple Investments Generate Higher Returns?
  4. How to Increase Income from Your Portfolio

Douglas Goldstein, CFP®, GFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

Published May 12, 2022.

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