In an episode of The Simpsons, in an attempt to get a free can of Crystal Buzz Cola, Homer sticks his arm up the chute of a vending machine and it gets stuck. He ends up with his other arm stuck up the chute of the candy machine. Just before they are about to saw his arms off, they ask: “Homer, are you just holding onto the can?” To which he replies “Your point being?”
We can all have a bit of Homer in us when it comes to our investments. We need money for something but we can’t touch the investments. Instead of selling these investments, we look at all other solutions including taking on more debt or borrowing from parents. Under no circumstances are we going to liquidate assets that we have saved up for years.
One of the biggest reasons why people won’t sell investments is they don’t want to pay the tax. Here’s a little known secret…you have to pay the tax at some stage! There are only two circumstances where you don’t:
We also lose sight of the purpose of investing. We invest money now so we can spend it on things in the future. Sometimes that future event occurs earlier than we anticipated it would . And that is fine, life doesn’t go in a straight line. It is impossible to predict where we are going to be in 20 years time. So if that big expenditure is now and not in the distant future, don’t worry about it. Cash in your investment and start again from the beginning.
Sometimes we have the solution to our own financial problems. Let go of the can.
Steven Barrett
01 August 2022