Carlos and Teresa have been watching their mutual fund lose money and now disagree on what to do next. "When we first invested this money, we agreed we were in it for the long haul, so I want to ride it out," Teresa says. "We understand the market can go up and down, but in the long run, our investment should give us a decent rate of return we can rely on for our retirement. We've invested in mutual funds that have performed well historically, and I have faith in the system." Carlos isn't so sure.
Suze says to pretend the money invested in the mutual fund is cash. "Let's say you have $40,000 in cash right now," she says. "Would you right here and right now take that $40,000 and buy what you already have that money in? Would you buy that same mutual fund? Would you buy those same stocks? If the answer to that question is, 'No, I would not,' then you sell. If the answer to that question is, 'Yes, I would,' then you keep it."