I had my first heartbreak when I was a freshman in college. I had been dating a guy (we will call him Chi because he was shy and we met in Chicago) from high school for about 3 years and we were trying to navigate long-distance. For the first few years of our relationship, I was infatuated with him. He was a lax bro, cute, popular, and checked all the right boxes for a first high school love.
When I was preparing to leave for college, we sat down on the steps of Oak Street beach and talked about the bright future we had. We also talked about how easy distance was going to be with Skype and it would feel like we were still in person. Oh, and of course, we were going to visit each other on a monthly basis. I was very wrong.
Just after a few weeks of school, I started to feel the emotional strain of the distance. He would try to call me but I’d be out with friends and vice versa. I would leave parties early to talk to him on the phone while my studious roommate muffled that I quiet down because she was studying for a math exam (Harmony, I will forever love you & I’m still sorry for being that annoying roommate). I even had a boy from the soccer team ask for my number multiple times and couldn’t stop thinking what if.
And while I don’t blame him, my boyfriend started to get more frustrated with me, wanted more of my time, and got more desperate to hang on to what was. I also felt deep sadness saying goodbye to the love we had but in reality – I simply was not happy.
And that leads me to today’s topic – bad boyfriends and bad investments. Because although you might have an attachment to them, sometimes you need to say goodbye.
WTF are you talking about?
We all make bad investments sometimes. Oh, you bought Dogecoin at its peak but don’t want to cut ties? I am talking to you. Or perhaps you thought MJ was going to the moon due to the legalization of marijuana but you also bought at its highest price ever and couldn’t let go out of spite (this was me personally). It’s okay, we all do it and in this article I am going to help give you the tools to say “peace.”
What do bad relationships and bad investments have in common?
- You Hold On Too Long – We’ve all been there. You tell your friends you’re ready to say goodbye but you date the person for another year. Or, you convince yourself that things aren’t that bad so you should wait to see if things get better. In my situation, I stayed for a full year in a relationship I was unhappy in. Bad investments can have the same effect. You buy something like crypto, a property, a stock (dear god I hope none of you are still holding GME) and it’s not going super well but you think maybe things will turn the corner. Well, sometimes it’s better to part ways than to stay the course because sometimes the course you’re on is a road to nowhere.
- They Can Be Heartbreaking – The amount of hours I cried over Chi is disgusting to think about. I was in despair even after the breakup for months questioning if my decision was even the right one. Investments can feel equally emotional because you put your hope AND your money on the line. For example, I once bought XRP at $2.40 (quite literally the highest it has ever been) and held it for 3 years until deciding I was ready to say goodbye. While I lost a significant portion of my original investment, I finally got other coins that brought me much more satisfaction.
- They Can Be Manipulative – Again, I don’t want to smear Chi, but there were things he used to say to me that kept me in the relationship for the wrong reasons like, “college is only 3 more years then things will go back to normal” and “you aren’t you with those people, you’re you when you’re with me.” Bad investment situations can also get sticky. People are often going to say, “you don’t lose til you sell.” That’s like saying a marriage hasn’t failed unless you get divorced. I see a marriage as failing when the individuals involved are unhappy beyond the point of return and you don’t need a stamp of divorce to prove that. The same goes for investing – sometimes you are past the point of return and you need to say goodbye.
- They Don’t Validate Your Feelings – At the end of my relationship, I simply did not feel emotionally taken care of. My partner was hanging on to what was, not who I was becoming. I’m not trying to get too woo-woo here but investments can take a strain on your emotional side and if this becomes too much to handle, it might be time to cash out.
What Should I Do with Bad Investments?
- Identify Them – Sometimes the hardest part about breaking up is identifying that you’re in a bad relationship. With investments, you need to do the same.
- Look at investments that are no longer suitable. For instance, if you are about to buy a house, you might not be investing in private equity vehicles like Fundrise. Inherently, if you’re buying a house, your exposure to real estate will skyrocket, so you may not need that extra sidepiece (aka, Fundraise).
- Look at investments that have underperformed compared to a benchmark (like the S&P 500). For example, if you have a single-name stock that has underperformed consistently, you can consider removing it from your portfolio. These positions may be dragging your overall performance. It’s also important to note, ETFs may underperform but they do not go out of business since they evolve and change. Companies themselves CAN go out of business.
- Sell Them – It’s easier to cut the losers than pick the winners. While we cannot predict the future, we can cut our losses once they have happened. So if it’s not working, break up with them.
- Get Tax Benefits – The best thing about cutting your losses is offsetting your gains. In other words, when you sell at a loss, you get to offset your realized gains and lower your tax burden. This is called tax-loss harvesting and one of the best ways to reduce your tax bill.For example: let’s say you are in the 24% tax bracket. This year, your losses exceed her capital gains (you didn’t do as well as you had hoped on Robinhood). You are in luck though, because you can use up to $3,000 of your net capital loss to offset ordinary income, thereby reducing your income tax by $720 (i.e., $3,000 x 24%).
Things to Be Mindful Of
- Stress – Bad boyfriends can cause a LOT of stress. When I was going through my breakup, my skin was breaking out constantly, I felt tired all the time, I felt constantly anxious, and struggled to make good decisions. Bad investments can cause an equal amount of stress and anxiety. While knowing when to say goodbye is more of an art than a science, one solution is asking yourself, “Is this worth the stress?” If the answer is no, say goodbye. Mental health is mental wealth.
- Temporary Improvement – When going through a breakup, it is easy to get sidetracked and trick yourself into thinking things are okay. The same thing can happen with investments. The investment could have been performing poorly for months but then on one random day, you see a slight green spike and might convince yourself that things are getting better. Don’t get trapped by temporary serotonin and think about the long term.
- Some Things Do Get Better – Not all bad boyfriends are lost causes. Therapy can help and people can change. Some investments can experience quite a turnaround. RCL took a nosedive like you can not imagine in early 2020 but has massively rebounded and recovered. Just make sure you think long-term and holistically before commitment.
Originally published on September 1, 2021, on Not Your Boyfriend’s Investment Advice