How does one take the emotion out of some investing when it’s YOUR money involved? Let me share….
Your retirement investments, the kids college funds, etc….I would certainly label those as ones you should be emotionally invested in. But what if you are already comfortable with those and where they sit and some dividends come in and you have a few hundred bucks to play with within your portfolio?
This is the emotionless part. Say I have $500 to play with and these are my options: go to the casino, buy some lottery tickets, or invest in a small stock that has potential.
Your best odds may actually be going to the casino and throwing that $500 down on black or red at the Roulette Wheel. Win and have the power to walk away with a $1000. However, lose and it’s bye-bye $500. That’s why it’s called gambling.
Lottery tickets: $500 can buy a lot of lottery tickets. Maybe you get some $5, $10, or even a $50 winner. Odds of you coming out ahead with more than your initial $500 investment is probably slim at best.
Invest in a small stock that has potential: even with some due diligence, you could still fail here. But if you set up an exit strategy, things could work out either way. Say you buy $500 worth of stock that’s trading at 20 cents. You buy 2500 shares. All the sudden there is some catalyst and the stock goes up to 25 cents. Not a huge jump but you just made $125 profit. Sell and get out and be happy. On the other side, if the stock goes down and you sell at a loss, you can declare the losses on your taxes (tax harvesting) which is easy enough because it’s already part of your tax forms from your brokerage account. You can technically declare gambling losses as well but have fun dealing with those forms from the IRS.
Just more things to think about on a Wednesday regarding what you’re doing with your money.
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