This is a fun blog post for me. I want to detail my best investment failures. And there were a few. Enjoy a good laugh on us. Cause here goes nothing.
The whole point of writing this post is to show any later stage docs that you will get where you want even with a plethora of mistakes. Ours were not small mistakes. Most people would look at these numbers and freak out!!
But I was always able to keep the simple controllable things correct. I listen to Rich Dad’s podcasts which are highly entertaining. They regularly smack down the paper portfolio methods. I can not get the moniker “Buy, hold & pray” out of my head with their guffawing in the background. But that is because they are likely successful real estate investors and they do not need the public equities market.
I have no idea which method is the correct one. One thing is for certain though. You can use less capital to invest in real estate. I only know that because simpletons like us have done that time and again. No one ever gave me safe leverage for my stocks or commodities.
I will outline the investment failures we have experienced so you can learn a thing or two vicariously. I find whenever we are with a group of physicians, people tend to speak loud and proud of their investment wins. I am someone who tends to talk about my failures. But I notice this is often met with silence or averted gazes. Why are people so unable to talk about these things?
Okay here goes.
Everyone knows about this one. It was the tech bubble. We had just converted a rather huge amount from Canadian dollars to US dollars. The exchange rate at the time was about 65 cents Canadian to 1 USD. Ouch and double ouch! We were full of energy and found out how to online invest. That was not a good idea since we did not know what we were doing. Most of our stocks FAILED except for Amgen and Berkshire. The one that is vivid was At Home Corp. We had invested 25K USD into it. Two weeks later, the price decreased 30-50 percent. And do you know what my husband does? He thinks it went on sale and bought another 25K. Shortly after our purchase, the whole company folded and that stock ticker still sits on our investment statement as a big fat zero. He really should have bought himself something nice with that money instead.
Lesson Learned– I will not buy individual stocks. I am really not very good at that game. Index funds are so much simpler.
This investment was completely different. Once again, my husband found this. I am beginning to see a pattern here… Anyhow, we even got to sit down at a restaurant and meet the founders of the REIT privately. After our meeting, my husband and I looked at one another and said “If we lose this money, we are okay with that”. We invested 25K into the REIT around 2003. And it did fine for years. The REIT sent us monthly income consistently. The founders of the REIT also grew, by A LOT. We read many wonderful things about them in the press and from other investors. I believe they had hundreds of millions of investor dollars. My husband even wanted to invest another 50K into this REIT during the stock market crash of 2008. I thankfully reminded him that our next real estate investment dollars must be spent on real estate we can control completely. You can guess how this investment went as well. By the time we heard anything negative in the press, it was too late to withdraw our initial investment.
Lesson Learned– Sometimes even with due diligence initially, I tend to forget about my investments after a while. And NEVER invest with money you can not afford to lose. At least we got that one right.
This is another one of our silly ideas. My husband and I practiced as GP’s for years. I was always happy with working at clinics since this allowed for a lot of flexibility. However my husband insisted on being his own boss. We finally started a practice together and within a year he was accepted into his residency. What a nightmare. I got to inherit a three year lease for the office space. I quickly moved my now solo practice to a group practice and paid the remainder of the lease off. That mistake cost us 15K for nothing.
Lesson Learned– Always be careful when signing onto long term contracts that can funnel money out of your pocket. This reaffirmed my allergy to ongoing payments of almost any kind.
Paying For Experts
Once again this happened because my husband wanted his own business. I had been working at a clinic that had great difficulty attracting physicians to staff the later clinic hours. The owners approached us to see if we would be interested in taking over the clinic. This involved using legal services which totaled about 4000 dollars just to review the legalese and this was in 1999!
Note to self- just build a business from scratch. Especially in Medicine, rarely do you need to buy anything to start a practice. Do not spend so much to evaluate businesses that you could simply walk away from. Nowadays, I would tell my husband that I would not want a clinic and thus we would not even look into the business to begin with.
But this experience helped me decide that I no longer want to buy apartment buildings. I figure with my limited knowledge, best to stick to multiplexes. Like I always say, even if I’m wrong I can hold onto them and my family members can live in it.
Some of these apartment buildings would take 5 figures simply to perform the due diligence on the property. That’s a lot of money to potentially just walk away from if the deal is not right. Maybe I am too risk averse now. I probably should have been more risk averse in the beginning. But hey we did not have a clue what we were doing. It is so much simpler to invest now. ETFs have been a game changer. Also with the plethora of bloggers who will deep dive into many different facets of investing, it is all extremely helpful FREE advice.
Lessons I Use
My husband and I look back and have a good chuckle over many of these investment fails. Because they were all just financial mistakes. We can recover from the majority of financial mistakes. No one gets all green lights on their investment journey.
The biggest lesson I would ever impart is to learn, start small and keep learning. There will come a time to increase the investment dollars but not initially. We were extremely reckless in the early years of our investing. Thankfully our human capital was abundant during those years.
That is why I always invest by looking first and foremost at where can I lose with the investment. I have long come to peace with the fact that I am the risk!! I yammer on and on about forever investments because I tend to forget about my investments after a while. I have figured out that I am best suited for buy and hold for almost everything I own. Thus I need to focus on my overall plan of diversification and buying assets at a fair price since I tend to keep my holdings for a very long time.
And know this. Just because someone else was successful in some investing method does NOT correspond to it being a good investment in your hands. Know thyself also rings true with investing. It is rarely the investment that is risky but the investor who is risky.