THE GREATEST MISTAKE OF AN INVESTOR
As an investor in the competitive market, there are a lot of mistakes you can make that can cost you your place in the field. Among these many mistakes, I will discuss the greatest among them.
This is one great lesson you can’t afford to forget as far as the world of investment is concerned. Depending on one company for investments can be very disastrous to your financial status. Am not saying one should be jack of all trades and master of none, but in the investment world, as there is a word termed "niche" which means the field of specification in terms of the services a company renders and the goods and information they provide or simply an area of concentration, there is also “diversification” which is the process of a company or business enterprise enlarging or varying it range of products or field of operation. Therefore individual investors, business owners, and companies should learn to diversify investments, range of products or field of operation.
MY STORY
During my youthful life of investment, I went through a whole lot of setbacks for the lack of proper financial education. I had always believed that for one to acquire wealth he will have to work harder and harder and as such, I concentrated all efforts, resources, and cash to this business of mine. But it turned out I was making a grievous mistake. I invested all my time and effort into developing my first network business. But the huge mistake I made was ever focusing all resources time and effort into one business without a backup plan. After investing all the savings I had on the network, I noticed it yet needed more financing and as at then, my passive income was lagging which resulted in the folding of the business.
When the business folded, I had then understood the greatest mistake I made as an investor. But that was a way too hard way to learn because I ended up losing everything. But yet, the lessons I have gotten from that experience is what has made me financially free and the same lesson is what I want to share with you today. That one of the greatest mistake an investor can ever make is putting all his financial eggs in one basket and most especially, without a backup plan.
After the tragic fall, I had a very hard time coping with my very competitive world again. I felt such guilt in the face and carried it about wherever I went. One breezy evening outside my homely cottage, I was surfing the Internet and came about a very inspiring story of the famous investor Warren Buffet. I read his success story nonstop and soon realized what mistakes I made and how to correct them. Here, I discovered how he had carefully and properly diversified his funds until he got to become the 3rd richest man in the world by Forbes. I immediately got inspired and having acknowledged what harm financial illiteracy could do, I started investing in my financial education and never again did I forget the most important thing warren buffet did “careful diversification of funds”. Today am financially free and don’t have to bother about anything.
THE RELEVANCE
Putting all your financial eggs in one basket means risking everything on the success of one venture. Never focus all resources on one business or you could lose everything. There are three rules to avoid this mistake.- Properly diversify
- Persistently diversify
- Perpetually diversify
Many investors make this mistake of investing all their resources and prospects in one company, as some financial investors will tell you to put all time and effort in one business to ensure it works out before setting out for another. The fact is concentrating on one company or business can be very dangerous to your portfolio. This is because if the company or business you are investing on folds then you lost all your financial eggs. But what if you are trying to build a business of your own like I did. When building your own business, it will demand time, attention and a whole lot of cash and effort. You should have to concentrate your efforts in order to make this business a success. But the point is, you don’t start a business when there is no positive cash flow already coming through, as statistically, it will fold when there is no proper financing. This was the biggest mistake I made and it haunted me. Therefore as prospective businessmen and investors, what you want to do is properly diversify, persistently diversify and perpetually diversify. Not only should you invest in different companies, but make sure you have a variety of asset classes, sectors, and industry groups.
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