I’ll never forget my first investment on my own. A friend of my father’s was forming a limited partnership. He’d just opened T.J. Cinnamons, a retail outlet that sold sticky buns. And he needed to raise money.
I knew what sticky buns were. I had no idea what a limited partnership was, or the risk I was taking. But hey, this was my dad’s close friend. He was extremely wealthy, very smart, massively successful. So, it had to be a great thing, right?
When T.J. Cinnamons went under, I lost all my money.
It was a priceless lesson.
I learned the difference between investing and gambling, between creating a well-planned, diversified portfolio rather than making scattershot decisions you don’t fully understand.
Picking stocks or bonds haphazardly, following a hot tip or purchasing the hottest stock, trying to time the market (buying when it’s high, freaking out and selling when it’s plunging), or just simply deferring investment decisions to another…that isn’t investing.
That is gambling…pure and simple. Have you learned any investment lessons the hard way? Share in the comments below.
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