Investment Guide: Risk "just" what You can afford to "lose"

avatar
(Edited)

The first day I heard the words "Risk what You can afford to lose" was in a marriage class and it was facilitated y a psychologist. I went home and those seemed as the oinly words I heard. After deep thought, I cam to light in the revelations covered by those words and I began to carefully see how they could be applied in other areas of my life.

In 2014, i remembered how I sunk in 100 percent of my savings in addition to a loaned amount into a business investment which later sublimed in few months and my capital as well as the promised interests were lost. The effect on my financial life and health was devastating as it took two years top recover from the mess. Just after that experience, the "MMM" ponzi surfaced and I actually saw friends who were earning much. Though, I remember one of the days while scrolling through the "MMM" website I saw a scary inscription "only use your spare money". That was enough reason for me to remember that I have to risk just what I can afford to miss in a business investment.


Image source

Every investment involves one form of exchange or the other. In some transactions, money is exchange for a tangible product, in another case, money may be exchanged for a skill, collateral, stake, share or another currency. Every investment involves an exchange. This is why I am of the school of thought that trade and barter still is invoke today though with modified terms from what it was traditionally known to hold.

According to wikipedia, barter could be used when participants in a business transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. We see this happening especially in the cryptocurrency world when one has to exchange one crypto to another with the elive that the later would hold more value or probably grow than the previous or be made readily liquid.

We see volatility in value in the cryptocurrency world. A token may be worth a thousand dollars and in a few minutes loses half its value due to selling pressure. Things get more worse when investments are made following information and FOMO.


Image source

Seeing the above image from Pixabay got me thinking for a while. I ask within "how would a seed be exchanged for a son?" Actually, this is what many are doing on daily basis in the name of investments. Some erroneously give out valueful assets in exchange for a "shitty" thing.

Investors and business moguls must be cautious to weigh the opportunity cost of their investment intentions to see if the sum to be issued out is "just" what can be "lost" without a loss of mind. This is one investment lesson I share with my students and anyone who asks for investment advice. Going with this has saved me a lot of heartaches.

What other lesson would you give to a friend who intends to make an investment for the first time?



0
0
0.000
4 comments
avatar

Mostly people give all of their money in the investment and then when they get loss they have nothing left

0
0
0.000
avatar

Investment is a skill that you need to learn, adapt, and control your emotions. You need to face uncertainty and never rush.

0
0
0.000
avatar

Investment is a skill that you need to learn, adapt, and control your emotions. You need to face uncertainty and never rush.

Those words are powerful and full of wisdom.

Posted Using LeoFinance

0
0
0.000