Avoid Making Major Financial Mistakes But Don’t Be Obsessed With It

After all, who goes into an investment with the intention of making mistake, what more, a major mistake? No one. Not even a fool would do it.

In other words, people make mistakes because they do not realize that they are making the mistakes. Until it’s too late.

Worse, mistakes are often disguised as solid investments. Mistakes often come looking like Sharon Stone. Like buying child education insurance, like time-sharing deals, like becoming a guarantor for your colleague because he is a nice guy.

But at the same time, being obsessed with avoiding mistakes in finance is also just as bad, if not more so. It’s like wanting to get to heaven but not wanting to die. It cannot happen. Because it does not work that way.

Investments by their nature involve two factors — risk and return. Two sides of the same coin. One does not exist without the other. So just about the only way you can avoid risk and not lose, is not to do anything with your money. While you may avoid the risk of losing, the reality is that you will not gain anything either. And this is the most certain way of never becoming rich or a millionaire. In actual fact, you will be at the losing end by taking this “not doing anything” option as inflation will get you in the end.

Here is a surefire way to help you get ahead.

As much as we try, and as much as we plan, there will be bad times, poor investments, and poor choices. And who among us has not made mistakes in life? Who has not faced adversity? Who has not to have their hearts broken? This is life, my friends. Making mistakes is part of the equation. In every life, a little rain must fall. And as many of us would have discovered already, that little rain can often turn into a raging, thundering, twisting tempest. The storms here will include financial losses. So don’t worry too much when you do lose money because it is a mandatory price that we all have to pay in life. The idea is to keep the losses small and rare. And when you do lose, learn the lesson. This way you will avoid major losses later on.

In fact, one of the best things that can happen to you is to make a mistake at the beginning. Here, it is likely the error done at the beginning will not cause you massive losses. So, as long as you learn the lesson, you would have gained something from the experience. What does not kill you will make you stronger!

Do note that as long as you do not learn the lesson, you will continue to make the same mistake. Over and over again. And for some people, they go to their graves never learning the lesson.

I had to learn the hard way.

One of the lessons I learned early in life was never to lend anything, particularly when that anything is money. Now, I’ve been warned about this before. Even my parent had reminded me of this about a “million” times. Unfortunately, for some things in life, you have to experience yourself. No matter how many people tell you and no matter how many times you hear me, you will not believe it until it happens to you.

When friends asked to borrow money, I quickly gave. After all, I had the money, they were my friends and I wanted to help. But things were not so simple when I asked them for the money back. They were excuses, one after another but still, I did not learn the lesson.

Here is a surefire way to help you get ahead.

Until one day, I lent $200 to my housemate. He was a nice guy, he was my housemate and to make the situation more dramatic, he walked with a slight limp as his left leg was shorter than the other. Every time I asked for the money back, he gave all sorts of excuses. Naturally, tension ran high a bit in that house. Until one day he just disappeared. Of course, I never got my $200 back. I learned the lesson.

The $200 had taught me the lesson that I needed to learn — never lend money. I reckon that I had saved thousands because of that lesson, 25 years ago and will probably save a lot more in the future.

The Chinese have a saying, “Once sickness, long life. No sickness, short life.” Basically, it means that you will live longer because of that one illness because you become more careful with what you eat and do. But if you have never been sick at all, you may take your health for granted and become careless with your life. So, when things go wrong, they go really wrong which can even lead to fatal consequences.

And in our case, you would probably become more careful when managing your finances because of previous small losses. But if you have never lost money at all, you may believe that you are infallible. You may think you know it all. This can lead to gross errors and although not fatal, can result in severe losses and bigger problems.

That’s all for now, my friends. See you all in my next article.