Regret aversion is when a person wastes time, energy, or money in order to avoid feeling regret over an initial decision that can exceed the value of the investment. One example is buying a bad car, then spending more money on repairs than the original cost of the car, rather than admit that a mistake was made and that you should have just bought a different car. Investors do the same by not making trades, or else holding on to losers for too long for fear of regret. Having a basic understanding of behavioral finance, developing a strong portfolio plan, and understanding your risk tolerance and reasons for it can limit the probability of engaging in destructive regret avoidance behavior.