{"id":22165,"date":"2016-03-07T10:37:44","date_gmt":"2016-03-07T02:37:44","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=22165"},"modified":"2023-11-15T19:21:40","modified_gmt":"2023-11-15T11:21:40","slug":"you-wouldnt-believe-how-much-your-inactions-could-cost-you","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you","title":{"rendered":"You Wouldn\u2019t Believe How Much Your Inactions Could Cost You"},"content":{"rendered":"

Investors face a choice every time they make an investment decision. The value you give up for the decision or choice is known as \u2018opportunity cost\u2019<\/strong>. Choices cost more than just the time and money you spend on them. Opportunity cost also refers to the value of the alternative.<\/p>\n

For example, imagine that at the beginning of 2013, you decided to buy UMW Holdings, one of Malaysia\u2019s largest industrial companies. At the same time, IOI Corporation, another big conglomerate, looked appealing. But you decided to invest RM10,000 in UMW Holdings.<\/p>\n

One year later, both company\u2019s stock price had not move much and you were collecting a nice dividend from UMW, so you decided to hold onto the stock without conducting any research to find out if UMW was still a good investment, or if IOI looked better at this point.<\/p>\n

However, another year passes, and IOI had gained more than 10% and UMW was down over 10%. Two years later, UMW was down nearly 40%, while IOI was still up over 10%.<\/p>\n

If you had invested your RM10,000 in IOI, you would have pocketed RM12,396 (including dividends) while the same RM10,000 invested in UMW would only be worth RM7,049 (including dividends). The difference is RM 5,347, if you include dividends.<\/p>\n

That RM 5,347 is your opportunity cost.<\/p>\n

Of course, it is not possible to predict accurately how these two stocks would have performed. However, the \u00a0investor in the example above have had many chances to sell UMW shares and buy IOI shares along the way, as the chart below demonstrates. He could have lowered his opportunity cost by realising he had made the wrong choice and used the \u201cdead money\u201d in UMW to buy IOI stock.<\/p>\n

\"UMW<\/p>\n

It\u2019s not easy to admit failure. In fact, cutting losses is one of the most difficult choices an investor has to make. He must avoid the sunk cost trap, which causes an investor to evaluate an investment based on the time and money already \u201csunk\u201d into it.<\/p>\n

Despite evidence against it, this investor did not sell but kept going forward in the hope that things would improve.<\/p>\n

On the other hand, experienced investors would have evaluated each portfolio holding by asking, \u201cIf I didn\u2019t already own it, would I buy it today?\u201d If they can answer \u201cyes,\u201d then there is reason to hold on to a stock that\u2019s lost value. If they answer \u201cno,\u201d the better decision is to sell and move on.<\/p>\n

To avoid the risks of emotional investing, it\u2019s important to set rules before you buy. A practical and useful way to limit your losses is a trailing stop.<\/em><\/p>\n

When buying a stock, enter a trailing stop order that will fill when the share price falls by a certain amount, say 25%. This takes emotions and worrying about what to do out of the picture. You\u2019re automatically out.<\/p>\n

Taking a loss is not pleasant. But the reward will be a lower opportunity cost and a more valuable opportunity down the road.<\/p>\n

Image from Biggerpockets.com<\/em><\/h6>\n
This article was first published on Truewealth Publishing<\/em><\/h5>\n","protected":false},"excerpt":{"rendered":"

Should you hold or buy? Don\u2019t sweep investment decisions under a rug or you\u2019ll suffer from a hefty opportunity cost in the future.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1,267],"tags":[219],"class_list":["post-22165","post","type-post","status-publish","format-standard","hentry","category-investment","category-share-trading","tag-bi"],"acf":[],"yoast_head":"\nHere's How Opportunity Cost Could Affect Your Investment | iMoney<\/title>\n<meta name=\"description\" content=\"Should you hold or buy? Don\u2019t sweep investment decisions under a rug or you\u2019ll suffer from a hefty opportunity cost in the future.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"You Wouldn\u2019t Believe How Much Your Inactions Could Cost You\" \/>\n<meta property=\"og:description\" content=\"Should you hold or buy? Don\u2019t sweep investment decisions under a rug or you\u2019ll suffer from a hefty opportunity cost in the future.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you\" \/>\n<meta property=\"og:site_name\" content=\"iMoney Malaysia\" \/>\n<meta property=\"article:published_time\" content=\"2016-03-07T02:37:44+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-11-15T11:21:40+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2016\/03\/UMW-vs-IOI-800x495.png\" \/>\n<meta name=\"author\" content=\"iMoney Editorial\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"iMoney Editorial\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you\"},\"author\":{\"name\":\"iMoney Editorial\",\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/#\\\/schema\\\/person\\\/2dc429bac9840e75ad08ab242c57dcbb\"},\"headline\":\"You Wouldn\u2019t Believe How Much Your Inactions Could Cost You\",\"datePublished\":\"2016-03-07T02:37:44+00:00\",\"dateModified\":\"2023-11-15T11:21:40+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you\"},\"wordCount\":521,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/static.imoney.my\\\/articles\\\/wp-content\\\/uploads\\\/2016\\\/03\\\/UMW-vs-IOI-800x495.png\",\"keywords\":[\"BI\"],\"articleSection\":[\"Investment\",\"Share trading\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you\",\"url\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you\",\"name\":\"Here's How Opportunity Cost Could Affect Your Investment | iMoney\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/static.imoney.my\\\/articles\\\/wp-content\\\/uploads\\\/2016\\\/03\\\/UMW-vs-IOI-800x495.png\",\"datePublished\":\"2016-03-07T02:37:44+00:00\",\"dateModified\":\"2023-11-15T11:21:40+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/#\\\/schema\\\/person\\\/2dc429bac9840e75ad08ab242c57dcbb\"},\"description\":\"Should you hold or buy? Don\u2019t sweep investment decisions under a rug or you\u2019ll suffer from a hefty opportunity cost in the future.\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#primaryimage\",\"url\":\"https:\\\/\\\/static.imoney.my\\\/articles\\\/wp-content\\\/uploads\\\/2016\\\/03\\\/UMW-vs-IOI-800x495.png\",\"contentUrl\":\"https:\\\/\\\/static.imoney.my\\\/articles\\\/wp-content\\\/uploads\\\/2016\\\/03\\\/UMW-vs-IOI-800x495.png\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Investment\",\"item\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/category\\\/investment\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Share trading\",\"item\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/category\\\/investment\\\/share-trading\"},{\"@type\":\"ListItem\",\"position\":4,\"name\":\"You Wouldn\u2019t Believe How Much Your Inactions Could Cost You\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/#website\",\"url\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/\",\"name\":\"iMoney Malaysia\",\"description\":\"Everything you need to know about improving your personal finances.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/#\\\/schema\\\/person\\\/2dc429bac9840e75ad08ab242c57dcbb\",\"name\":\"iMoney Editorial\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/484677d6814081d0b791a545e2dd7d826425b53411de07415367b72a884f01c8?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/484677d6814081d0b791a545e2dd7d826425b53411de07415367b72a884f01c8?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/484677d6814081d0b791a545e2dd7d826425b53411de07415367b72a884f01c8?s=96&d=mm&r=g\",\"caption\":\"iMoney Editorial\"},\"description\":\"iMoney Editorial Team is composed of 4 writers with wide-ranging interests and areas of expertise. Their primary responsibility is to write financial-related articles to share and educate Malaysians on how to save, make and grow their money.\",\"sameAs\":[\"http:\\\/\\\/www.imoney.my\"],\"url\":\"https:\\\/\\\/www.imoney.my\\\/articles\\\/author\\\/chinglee\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Here's How Opportunity Cost Could Affect Your Investment | iMoney","description":"Should you hold or buy? Don\u2019t sweep investment decisions under a rug or you\u2019ll suffer from a hefty opportunity cost in the future.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you","og_locale":"en_US","og_type":"article","og_title":"You Wouldn\u2019t Believe How Much Your Inactions Could Cost You","og_description":"Should you hold or buy? Don\u2019t sweep investment decisions under a rug or you\u2019ll suffer from a hefty opportunity cost in the future.","og_url":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you","og_site_name":"iMoney Malaysia","article_published_time":"2016-03-07T02:37:44+00:00","article_modified_time":"2023-11-15T11:21:40+00:00","og_image":[{"url":"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2016\/03\/UMW-vs-IOI-800x495.png","type":"","width":"","height":""}],"author":"iMoney Editorial","twitter_card":"summary_large_image","twitter_misc":{"Written by":"iMoney Editorial","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#article","isPartOf":{"@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you"},"author":{"name":"iMoney Editorial","@id":"https:\/\/www.imoney.my\/articles\/#\/schema\/person\/2dc429bac9840e75ad08ab242c57dcbb"},"headline":"You Wouldn\u2019t Believe How Much Your Inactions Could Cost You","datePublished":"2016-03-07T02:37:44+00:00","dateModified":"2023-11-15T11:21:40+00:00","mainEntityOfPage":{"@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you"},"wordCount":521,"commentCount":0,"image":{"@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#primaryimage"},"thumbnailUrl":"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2016\/03\/UMW-vs-IOI-800x495.png","keywords":["BI"],"articleSection":["Investment","Share trading"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you","url":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you","name":"Here's How Opportunity Cost Could Affect Your Investment | iMoney","isPartOf":{"@id":"https:\/\/www.imoney.my\/articles\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#primaryimage"},"image":{"@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#primaryimage"},"thumbnailUrl":"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2016\/03\/UMW-vs-IOI-800x495.png","datePublished":"2016-03-07T02:37:44+00:00","dateModified":"2023-11-15T11:21:40+00:00","author":{"@id":"https:\/\/www.imoney.my\/articles\/#\/schema\/person\/2dc429bac9840e75ad08ab242c57dcbb"},"description":"Should you hold or buy? Don\u2019t sweep investment decisions under a rug or you\u2019ll suffer from a hefty opportunity cost in the future.","breadcrumb":{"@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#primaryimage","url":"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2016\/03\/UMW-vs-IOI-800x495.png","contentUrl":"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2016\/03\/UMW-vs-IOI-800x495.png"},{"@type":"BreadcrumbList","@id":"https:\/\/www.imoney.my\/articles\/you-wouldnt-believe-how-much-your-inactions-could-cost-you#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.imoney.my\/articles\/"},{"@type":"ListItem","position":2,"name":"Investment","item":"https:\/\/www.imoney.my\/articles\/category\/investment"},{"@type":"ListItem","position":3,"name":"Share trading","item":"https:\/\/www.imoney.my\/articles\/category\/investment\/share-trading"},{"@type":"ListItem","position":4,"name":"You Wouldn\u2019t Believe How Much Your Inactions Could Cost You"}]},{"@type":"WebSite","@id":"https:\/\/www.imoney.my\/articles\/#website","url":"https:\/\/www.imoney.my\/articles\/","name":"iMoney Malaysia","description":"Everything you need to know about improving your personal finances.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.imoney.my\/articles\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.imoney.my\/articles\/#\/schema\/person\/2dc429bac9840e75ad08ab242c57dcbb","name":"iMoney Editorial","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/484677d6814081d0b791a545e2dd7d826425b53411de07415367b72a884f01c8?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/484677d6814081d0b791a545e2dd7d826425b53411de07415367b72a884f01c8?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/484677d6814081d0b791a545e2dd7d826425b53411de07415367b72a884f01c8?s=96&d=mm&r=g","caption":"iMoney Editorial"},"description":"iMoney Editorial Team is composed of 4 writers with wide-ranging interests and areas of expertise. Their primary responsibility is to write financial-related articles to share and educate Malaysians on how to save, make and grow their money.","sameAs":["http:\/\/www.imoney.my"],"url":"https:\/\/www.imoney.my\/articles\/author\/chinglee"}]}},"_links":{"self":[{"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/posts\/22165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/comments?post=22165"}],"version-history":[{"count":8,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/posts\/22165\/revisions"}],"predecessor-version":[{"id":59800,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/posts\/22165\/revisions\/59800"}],"wp:attachment":[{"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/media?parent=22165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/categories?post=22165"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/tags?post=22165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}