The Sunk Cost Fallacy: Breaking Free from Past Investments
Be careful of the sunk cost fallacy.
Ask yourself if you would start something new today. If not, consider the costs of continuing and decide if it makes sense to stop. Think about the expenses involved in stopping and if it's worth it. At the same time, consider the potential benefits and returns of pursuing new things that make sense, and then take action accordingly.
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For example, let's say you invested in stock at $50, but now it's worth $40. You see that you've lost $10. However, you hesitate to sell the stock because that would turn the $10 loss into a real loss. You hold onto the stock. Here's a question to ask yourself: If you had the opportunity to invest in that company now, would you do it? If the answer is yes, then don't sell the stock. But if the answer is no, then sell it and invest that money in another company that you believe in. By doing so, you may have the chance to turn that $40 into $100, which would be a missed opportunity if you had held onto the stock.
I've met several people who feel miserable in their current jobs, but they continue to invest their time in them because of the time they have already spent. However, whatever time is already gone is gone. If you don't make a switch and continue in a situation that doesn't make you happy, any time you invest in the future will be a waste.
I've also met some amazing people who switched from their core jobs (like mechanical engineering, electrical engineering, or teaching) to software jobs. They did this not just for the money but because they love coding and were unhappy in their previous jobs. Initially, they took a pay cut, but in the long run, they gained so much in terms of happiness, fulfilment, and even better pay.
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