What is sentimental value?

Sentimental value is how much worth is placed on an item without properly taking into account its monetary value. For example, photographs usually cost very little, but their sentimental value can be priceless. The value is emotional, not logical.

Where have you heard about sentimental value?

You may have heard about sentimental value when it comes to investing. For example, if you were looking to invest in a company for a purely emotional reason: for example, it's a company based in your home town – rather than for a logical reason: ie that you're diversifying your portfolio. Your financial adviser may have warned you that you're placing sentimental value on your investments.

What you need to know about sentimental value.

People often confuse sentimental value with market value when it comes to their own business or home. They believe that because they value it so much that others should too.

This also works the other way round with investors. If investor sentiment is high then their bidding premium is also often high too. Business owners can sometimes look to seek to take advantage of the increased confidence by selling their firm while the sentiment – and price – is high.