Stupid money mistakes seniors make (part 2)

The problem
“Losses are only paper, it’ll eventually be fine. I don’t really care about losses right now.” This investment mistake is called “mental accounting.” The money you have is worth the same, no matter how you make or lose it. Still, subconsciously, people believe that some dollars are worth less than others, and therefore matter less. The notion is that my earned income is worth more than the money I make from investing. This is where the idea of “found money” came from.

While waiting for his wife to dress before dinner, a new husband decided to try his luck with $10 at a Las Vegas casino roulette table. $10 turned into $100. That became $1,000 and soon $10,000. Then he lost it all on his last roll. On the way back to his hotel room, he noticed $5 still left in his pocket. His wife asked about his luck, he said, “Not bad, I only lost $10.” Casinos always make money. Las Vegas hotel mogul Steve Wynn once said he has never seen a gambler make money over the long term.

The fix
Take out a $10 bill and give it to your prospect. Let them keep it long enough to feel like they own it. Then ask for $10 out of their wallet and tear it up. Ask which $10 was a gift and which was earned. Your point will soon be made. (You might want to give them another $10.)