One of the worst things that can happen to someone looking to implement responsible personal finance strategies and reduce debt is seeing an investment go south. There are legitimate debates about whether or not it’s wise to invest before paying off debt in the first place. But plenty choose to set aside a portion of their wealth to grow in financial markets while trying to get out of debt. And for people who make this decision, getting trapped in a declining investment can be seriously problematic!
The tricky part is how to recognise and get out of a truly declining investment. Let’s say you’ve invested in Starbucks because it’s pumpkin-everything season and their sales are probably going up. But then the stock dips a couple of points. Do you abandon ship? Do you double down and buy more shares during the lull? Or do you wait for news that might explain why it dipped and go from there?
Every situation is different and should be treated as an individual scenario. But here are a few general tips for responsibly exiting an investment.