Want to know a secret? Everyone makes mistakes during our investment journey. Sometimes we pay too much in fees because we didn’t know better, sometimes we try to time the market and it didn’t work, and sometimes we trust the wrong people and get sucked into some shady Ponzi scheme.
I made plenty of mistakes myself, like the many, many times I tried to time the market but it went on the opposite direction (WHEN WILL I LEARN?!?). But this article is NOT about those kinds of mistakes. I don’t mean losing money when the market is not in your favour. Fluctuations in price and value is normal and even expected for some types of investments, like properties, gold/precious metals, things like that.
This article is about the times where I lost ALL of the money in the investment. Here they are, compiled in one post.
#1 – Gold: Gold Bar
In my early 20s, circa 2010s, there was this gold rush, this gold craze. The price went up like crazy, and naturally it generated a ton of attention. I covered this in more detail in the What You Should Know About Gold Prices In 2008-2018 article.
At the time, I bought some e-gold from a bank (and made some profit there). But I also bought something else – a gold bar. From Lelong.com.my.
Physical gold is a type of investment, yes, but because I was young and stupid, I bought a gold-plated bar, which I now know is pretty much useless as an investment. At the time, I just thought I snapped a bargain. Again, I was young and stupid.
Plus, the gold bar never arrived too. I think it was a scam seller -_- Double bodo. It wasn’t a huge amount to lose, but I might as well throw that money away.
#2 – Forex: Copy-trade platform
Have you seen the forex trading advertisement using images like these?
The idea is you can use technical analysis to predict if the market is going up or down, enter a trade, and hopefully make a profit. Rather than investment, I’d say forex trading is more like a skill. Many people have lost a lot of money because they overestimated their trading skills.
I’ve kind of dabbled in forex trading, but never lost actual money… until I decided to try a copy-trade platform called 1Broker (US authorities have taken down the platform on October 2018).
How it works is (for this particular platform):
- You fund your account
- You copy someone else’s trading activities in the platform. When they enter a trade, you’ll automatically enter the same one as well.
- You make a profit/loss if they make a profit/loss
In June 2017, I transferred in an amount I could afford to lose into the account (if not mistaken, around $500). I didn’t want to lose that money you know. To ‘diversify’ and reduce my risks, I copied trades from at least 3 people who had high ratings. Each of them had over 50% ROI on their own trades. I also set small entry amounts – only $10 for each trade.
I thought it would be easy money. But in just two months, my account ran out of funds. I lost everything I deposited.
#3 – Cryptocurrencies: Waves & ZCoin
Broadly speaking, there are two types of crypto wallets: the one where you have complete control and ownership, and the one where the company acts as a custodian for your cryptocurrencies. Compare it like physical gold that you keep yourself in your own password-ed vault versus e-gold that banks keep for you.
To make long story short, I’ve done a classic newbie mistake and forgotten the seeds for two crypto wallets which I have complete ownership – my Waves and ZCoin wallets. The seeds are a bunch of random words or a long alphanumeric passkey. I can’t possibly reproduce and bantai the words to gain access.
Without the seeds, I can’t access my account. And if I can’t access my account, I can’t access those cryptocurrencies. Forever. Not even the developer team can help me.
I’m not sure how much I lost exactly, but at least $500 easily, as of current rates (and now crypto market is bear-ish, too!). To my defence, I thought I saved those seeds somewhere. Maybe someday I’ll discover I did actually write it down.
Note: I still love crypto as an investment. The rest of my cryptocurrencies are safe.
Lessons from losing money
Does it hurt? Hell yeah it does. It hurts not just my finances, but my ego as well. Each time it happens, I always go ‘you should have known better, you idiot‘.
Ah, the power of hindsight ay?
But you know what? I won’t cry over the lost money. I accept these losses and will consider them as expensive mistakes instead. No investment or financial course can teach me these valuable life lessons. In fact, I’m grateful they happened:
- I’m grateful that the amounts I lost were comparatively small. Some people have lost much more than I did
- I’m grateful that I still have time on my side to earn money and recover these losses
- I’m grateful that they made me super sceptical of new types of investments I come across
- I’m grateful that I get to write about them so that YOU don’t make the same mistakes I did
Going forward, these mistakes won’t deter me from trying out new types of investment platforms and financial services (that’s kinda my hobby). But I will be more selective of what I pick from now on.
Have you lost money at any point during your investing journey? Share in the comments section, so all of us can learn and ultimately be better investors together.