5/14/2552

How Not to Invest

How Not to Invest
By Biniam Teklehaimanot
I want to use this article to discuss about various investment mistakes I have made. I am hoping others will tell us their mistakes or other ideas to help all readers become better money managers / investors. The goal of my investments is to create wealth and in the process I made mistakes others can use as a learning tool.
I want to make sure readers understand my view of wealth. For me, wealth is funds needed to help support my family now and in the future, but most importantly it represents funds to be used for charitable donations. I limit donations to faith based organizations that best serve humanity while teaching the ways of GOD and our Lord Jesus Christ.
I will begin with the investment vehicles I utilize. I currently use my income to invest in Real Estate and Stocks / Options. Both of these are risky if timing is wrong.
Mistake number one is getting into real estate without enough research just because everyone is doing it. I purchased two identical rental properties plus a third which means three renter headaches. Instead of three, I should have put more money into one and tried the waters to see if it is something I am prepared to handle.
Mistake number two is stretching myself to invest and not set aside emergency cushion. When life forces me to sell one of the homes, I am not in a position to adjust the price to current market conditions since I do not have the cash to pay the bank in the event the sale price does not cover mortgage, commissions, and excise tax.
My third mistake is investing all the funds allocated to stocks and options without living enough cash for adjustments or protection. I have taken investment courses that gave me all the right knowledge but I was too aggressive and went outside the box in the wrong direction. The lesson here is do not try to hit home run every at bat but get on base as many times as possible.

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