Somewhere in your portfolio there’s a share you bought years ago that you’re waiting to come back to what you paid for it. It might be a fund you picked because a colleague swore by it, or a subscription you’ve paid for since 2019 and opened twice. You aren’t keeping it because it’s any good. You’re keeping it because selling would mean admitting it wasn’t.
Venture capitalists can’t afford to think like that. Most of the start-ups they back will fail, and they know it before they write the first cheque. What keeps them in business is being ruthless about where the next pound goes. You don’t need a Patagonia gilet to borrow the habit.
Why do venture capitalists cut their losses so quickly?
The venture model rests on an awkward truth: a few winners pay for a lot of losers. So a good investor spends less time worrying about the losers and more time asking one question about each holding. If I had this money in cash today, would I put it here?
If the answer is no, the money moves. It doesn’t matter what it cost to get in or how much has already been lost. That’s history. Only the next pound counts.
Most of us do the opposite. Behavioural economists call it the sunk cost fallacy: hanging on to something because of what you’ve already put in, not because of what it’s likely to do from here. It’s why people sit through terrible films and why some shares spend a decade as a monument to their owner’s pride.
The market doesn’t know what you paid for something, and it doesn’t care.
Run a portfolio review like a board meeting
Venture firms review their holdings on a regular timetable, not when the mood takes them. Do the same thing. Once a year is enough, and the run-up to the end of the tax year on 5 April is a good time, because some of your decisions will have tax consequences.
Write down everything: ISAs, general investment accounts, workplace and personal pensions, cash savings, premium bonds, the lot. For each one, note what it’s for, what it costs and how it has done against a sensible comparison. Then ask the cash question. Would you buy it today?
Set your kill criteria before you look at the numbers, not after. A fund that has lagged a comparable index tracker for five years running, while charging you more, has had a fair go. So has a cash account paying well below what the same bank offers new customers.
One caveat that VCs understand and amateur imitators often don’t: a fund that’s down because its whole market fell isn’t the same as a fund that’s broken. Selling everything after a bad year just turns a paper loss into a real one. You’re getting rid of things that are poor value, not things that are merely unfashionable this quarter.
How much are old pensions and high fees really costing you?
Charges are the slow puncture of personal finance. Take a £100,000 pension. If it charges 1.5% a year in total, that’s £1,500 gone before any growth. At 0.5% it’s £500. The difference is £1,000 a year, and it compounds, because money taken in fees never grows. Over a 15-year run to retirement, the gap can run well past five figures.
Then there are the pensions you’ve forgotten about. Research from the Pensions Policy Institute puts the value of lost pension pots in the UK at about £31.1bn. If you’ve changed jobs a few times since the 1990s, it would be odd if none of it were yours. The government’s free Pension Tracing Service on GOV.UK can find contact details for old schemes. Pensions dashboards, which will eventually show all your pensions in one place, are being rolled out in stages.
Don’t treat consolidation as an automatic win, though. Some older pensions carry valuable extras, such as guaranteed annuity rates, protected tax-free cash above the usual 25%, or defined benefit promises that are almost always worth more than they look. Transferring out can wipe these out for good. For transfers out of defined benefit schemes worth more than £30,000, you’re legally required to take regulated advice first. If you’re 50 or over, Pension Wise offers free, impartial guidance on your options, and MoneyHelper is a good place to start.
Is it worth selling an investment at a loss?
Sometimes, and the tax rules can help. Outside an ISA or pension, a loss you realise on shares or funds can be set against gains, which reduces your Capital Gains Tax bill. For the 2025/26 tax year the annual exempt amount is just £3,000, and it stays at £3,000 for 2026/27. Above that, gains on most assets are taxed at 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers. These are UK-wide rates, so Scotland’s separate income tax bands don’t change them.
With the allowance this small, realised losses are worth more than they used to be. To use them you generally need to report them to HMRC, and you have four years from the end of the tax year in which you made the loss to do it. Unused losses can be carried forward to later years.
Watch the 30-day rule. If you sell shares and buy the same ones back within 30 days, HMRC matches the two trades and your loss may vanish for tax purposes. A common workaround is to sell in a general account and buy back inside your ISA, often called a bed and ISA. That uses part of your £20,000 annual ISA allowance, but future growth is then sheltered from tax.
Apply the same rule to your bank statement
The venture mindset doesn’t stop at investments. Go through three months of bank and card statements and treat every direct debit, standing order and subscription as a start-up asking for another funding round. Is it earning its keep? Would you sign up again today at today’s price?
The gym you go to twice a year, the streaming service you kept for one series, the breakdown cover duplicated by your bank account, the insurance that quietly rolled over at a higher price. None of them is a disaster on its own. Together, £15 here and £40 there easily adds up to £100 a month. That’s £1,200 a year, or £12,000 over ten years before any growth, and you’ve got better places to put it.
The other half of the VC playbook is the more interesting one: back your winners. Once you’ve freed up money, put it where it works hardest, whether that’s paying off expensive debt, topping up a pension with tax relief, filling an ISA or simply building a cash buffer so you’re never a forced seller. Just make sure no single bet is big enough to sink you. VCs get away with backing losers because they spread their money around. You should too.
In short
Venture capitalists survive by asking whether they’d put money into each holding today, then cutting the ones that fail that test, whatever they cost to get into. Review your investments, pensions and regular payments once a year against criteria you set in advance, and get rid of the high-charging and the plain useless. Use realised losses to cut your Capital Gains Tax bill, but check old pensions carefully before moving them. For big pension decisions, talk to Pension Wise or an FCA-regulated adviser.
Sources
Midcent Money
Andrew Ingram writes about money for men 45 and over – the years when retirement starts to feel real and the decisions get bigger. Pensions and retirement planning, investing, savings, mortgages and tax: what changed, what it means for your plans and what's worth doing about it. No hype, nothing to sell, and a clear steer on when it pays to get personal advice.
One of Midcent's writers. Spotted something? Write to andrew@midcent.uk.
