Olde Hornet
Well-Known Member
Bitcoin, Meme Stocks and the Psychological Toll of Figuring out When to Sell
So you made a lot of money quickly. Now what?
money.com
What you should do
For every investor we see in the news making lots of money, there are tons on the other side who have lost lots of money — and next time, it could be you.“When you get a windfall like that, you want to take the risk off the table,” says Anjali Jariwala, a certified financial planner and founder of Fit Advisors. “The best way to do so is to pull that money out in increments.”
If you put money in the market and that position has accelerated, at least pull out what you put in so you can recoup your investment, she says. If it continues to jump, consider selling half, so you’ve made money but you can still wait to see if there is more to gain. Of course, if you’re more risk averse, selling out once you’ve seen that price jump might be the best move for you (quit while you’re ahead, as they say).
If you’re starting out with self-directed trading, split your money into a “get rich” pot and a “stay rich” pot, Egan says. The “get rich” pot is a small amount of your wealth where you can do your experimenting in trading, and the rest should be in more risk-managed vehicles, like target-date funds. As your “get rich” pot inches up, rebalance and bring it back down to where it started.
If you’re actually good at trading, you can make money this way. But the rebalancing protects you in case you just got lucky once and you’re not actually that skilled, Egan says.
