After reading books like Richest Man in Babylon (one of my favorite books to date) and Cashflow Quadrant by Robert Kiyosaki, I could not help but agree that I needed to not only have multiple streams of income but put my money to work for me.
Armed with information and motivation, I was ready to put my money to work through investments.
There was just one problem. I wasn’t sure where to begin. I had narrowed my investment options to Real Estate or Stocks. I decided the stock market had a lower barrier to entry and would require less effort and capital on my part to get started. So I embarked on learning as much as I could. However, even after reading lots of different material, I still wasn’t sure how to go about it as a beginner.
I had to piece things together bit by bit. Don’t get me wrong. The information was out there, I needed it distilled a little bit more. I didn’t know what I didn’t know and the pieces just seemed too many for the novice that I was.
The big question I had was “How do I know what stock to buy?“. I wanted a simple approach to identifying stocks but wasn’t sure where to look. I googled and searched long and hard. Sometimes the answers were right in front of me but I didn’t even know it. The stock market didn’t always agree on what stocks were a good buy. One day they could be saying ‘buy, buy, buy’ and the next it was ‘sell, sell, sell’ … I found that to be quite unhelpful.
As I continued my quest, feeling discouraged and overwhelmed by all the information available, I had a ‘breakthrough’. One fine day, a dear friend of mine on Facebook passionately encouraged me and pretty much all his friends to jump on an IPO. He warned us not to miss out on that boat. At first, I ignored his warning but something inside of me cautioned me not to become one of those people who hesitate when opportunity knocks and then miss out.
So I decided to check out the company he was recommending. I tried to do my due diligence – I pulled up information on the company, went to their website and read about who they were, went to google and pulled up as many articles as I could find on them. There was a lot of media hype around this company. After some time, I came to the realization that my level of uncertainty had not improved. It wasn’t that there wasn’t information, the issue I had was that I just wasn’t sure what the information was telling me.
I finally decided to take the plunge – if so many people were saying it was a good buy, who was a novice like me to disagree?
I decided to jump into the ring. I was tired of standing by the sidelines. I made the bet and bought the stock. Shortly after, buyer’s remorse kicked in. I questioned whether it was a smart buy or not. I didn’t know. I promised myself to sell the stock the first chance it grew in value. But then …. the stock price started dropping. First it was a small drop, then a big drop, then an even bigger drop . My fears had just materialized. The stock went on a free fall of sorts. Halfway down, I bought some more. Digging in and hoping to improve my situation. Things did not get much better. Actually, they got worse . (Today that stock is at 8% of the value I bought it at. Yes, you read correctly, that is a 92% loss. Imagine that).
I was devastated ! I had fallen for one of the ‘deadly sins’ of investing. I had succumbed to hype and simply gambled with my hard earned money. After that fiasco, I almost gave up investing. My husband encouraged me to learn from the experience and make something out of it, and I did just that.