February 24, 2012
Everyone makes mistakes in the course of their financial lives.
One of my early mistakes taught me a lot about investing. It taught me I could lose it all. This lesson occurred right after I was married in the late 80’s. We had a few hundred dollars in gifts and I thought it would be a great idea to invest it. Based on a second hand tip through a relative who knew an experienced investor, I bought penny stocks. The investment lost enough it wasn’t worth the transaction cost to sell it. Today, more than 25 years later, I’m grateful the experience didn’t hurt too much.
My early mishap taught me a lot about investment risk, and the foolishness of acting blindly on a tip. Of course, at the time I thought I knew what I was doing. That’s probably the scariest part, but isn’t that part of any life lesson?
The key to a successful financial life is to make more good decisions than bad ones, and to always learn from the bad ones.