5 lessons I learnt from losing $180,000

Losing sucks…

No one likes to be on the losing end. Whether it’s losing a board game, losing a partner, losing a job or losing money – it all hurts.

But it seems that in order to win, you must lose a little.

All the best have experienced tough times. Michael Jordan’s team was mired in mediocrity for years. Roger Federer constantly lost his composure as a teenager. Tony Robbins was on the verge of bankruptcy. Donald Trump almost lost it all. And yet, all of them went on to succeed many times over.

More personally I’ve had my share of loses but nothing that dire.

A few years ago I lost $4,000 in a ponzi scheme. It was painful but a good lesson: never invest in anything you don’t truly understand or is too good to be true.

I felt it was an opportunity to get in on the ground floor of a growing business with the possibility of a high return. Speaking to people in the organization, it sounded as if it was truly a great opportunity with a unique business plan. But isn’t that always the case. I did have my doubts but in the end I decided to go for it anyway.

What I did learn is that high return always, despite what people tell you, equals high risk and in this case I lost.

But that’s nothing compared to my father.

My father was big into funds but in 2008 when Lehman Brothers went bankrupt my father’s finances took a devastating hit to the tune of $180,000.

That’s not chump change for anyone. In fact it almost forced my father to sell his house and move back to England.

But like most families, my parents shielded me from this.

It wasn’t until my father passed away and I was put in charge of my mother’s finances that I was able to understand just what had happened.

My father had invested his money with a well known financial firm and entrusted them to invest his money for him, assuming they could help him navigate the financial waters and grow his money.

Turns out he was wrong.

Over the next three years I did some studying of my own and what here are the 5 lessons I learned:

  1. Financial advisers are more often sales people in disguise
  2. The world has changed
  3. Education is critical
  4. Learn to take the loss
  5. Look to the future

Now let me elaborate on each of them. First off financial advisers.

As I talk about in my book, iSucceed, the advice we receive is only as good as the people we choose to work with and just as not all teachers are created equal, the same is true for financial advisers.

A critical point is that you must be sure to go with someone who has skin in the game. As such the first question you should always ask is what investments are they themselves doing (not the firm). This is something most people never ask but it’s a critical point to consider.

Another point is that many financial advisers speak jargon and dazzle their prospects with charts and technical analysis.

You need someone who can explain things to you so you understand. If you don’t, keep asking.

The second point is that the world has changed. Most people I talk to today disagree with me on this one but I stand by my belief.

The system itself is broken. Housing has not recovered despite the incredible amount of money being thrown at it by governments. Banks are struggling and despite record low interests rates most people are unable to get a loan. Governments are incredibly indebted and many of the so-called first world nations of the world are stuck in a recession.

Solutions that have worked in the past, aren’t working today which is why # 3 on my list is an absolute must in today’s world.

Regardless of how much money you have to invest, we should all get educated.

As Earl Shoaff said, “It’s the plan that counts.” Jim Rohn, my mentor added, “If you’re struggling with money, start a wealth plan. If you don’t feel good, start a feel good plan. If you can’t, start a can plan.”

Education today is practically free thanks to libraries and the Internet. That’s where I started.

Today I have a collection of over 300 books on the topics of finance, success, marketing, time management and more. Why? Because I decided that I could entrust my future to other people, or I could grow up and take responsibility for my life and my future. I chose the latter.

The final two lessons are interlinked. I addressed the issue of failure earlier and a big way to do this is to look to the future. What’s done is done. As the saying goes, “It’s no use crying over spilt milk.” Pick yourself back up, appreciate all the fantastic gifts you have in your life (friends and family, all your favorite toys) and then start all over again.

One thing’s for sure, there are no shortage of opportunities. Watching a show like Shark Tank and listening to all the entrepreneurs who come on the show talk about their new invention is truly eye-opening.

It may be hard to believe but one man turned his idea of using two industrial magnets and two pieces of metal into a multi-million dollar business on the third season. Thanks to the Internet and a growing population, all it takes is one idea and the right marketing and you, too, could be the next millionaire.

So there you have it, 5 simple lessons to remember whenever you decide to invest in anything.

Thankfully, I learnt them vicariously through my father’s experience.

I hope these lessons will help protect you from making the same mistake.

Adrian Shepherd

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