I have been a member of several Facebook groups about investing. I like investing and the idea of having a passive income. No matter how small the income is, the fact that I can make money while I am doing something else is really rewarding. Gone are the days during my childhood where the only way to save money (actually, to avoid spending them) is to put them in a piggy bank. In order to make money aside from your main source of income (maybe a job or a business), you need to put in money to other ventures that will eventually earn you more money in the process.
With the advancement of technologies, the Internet in particular, it opens many doors of opportunities for people to invest their money. I can buy a U.S. stock through a click of a button, or do some forex trading using a mobile phone app – some things that the masses couldn’t do if we travel back in time like some twenty years ago. Alongside with these developments, much have been written on how to invest your money to various channels. The growing literature of finance, business, investing, and every sort of money-making opportunities is within our reach.
I have read a lot of investing resources and even so, I know I still know a little about investing in general. But what I find it interesting is most, if not all, of them has this “golden rule” of investing, that is - Never invest money that you can't afford to lose. I always believe in that even if most risk-takers will say otherwise. I am a risk-taker myself but in terms of investing, I do not want to do something that I will regret in the end. I have some investments that are low-risk. They offer little returns but I am optimistic my money is safe in the long term. For high-risk investments, that’s where I apply that golden rule every time I venture into them.
Let me put it this way, for high-risk investments, I treat them like gambling – which I think investments really are. It’s a gamble, and since these can provide higher returns than other income opportunities, there’s a big chance that you will lose your money. And for most people who can barely set aside savings after spending for most of their basic needs, putting the rest of the money in these kinds of investments might not be a good idea. The main difference with investing with gambling is you have more control in most investments, unlike in gambling that you leave most of them to chance. Though many people also consider gambling as their investments, but that’s for another discussion.
Going back to the golden rule, I think that’s what most people fail to realize, or to some extent remember. I’ve known many friends who know that rule even before they ventured into something, and yet, when the investments failed, they become so depressed and acted like the world turned its back on them. I learned too that the hard-earned money that they lost is all they've got and they couldn't do anything about it and just regretting the actions that they did.
I think the same scenario is very common with most of us. We become too excited early in the game that our "optimism" overshadows every single doubt that a particular investment will work. And without even further tinkering, we put our money into that investment and that money is not something we can afford to lose. This is very prevalent during the cryptocurrency crash of December 2017. You will hear different tales of regrets and disappointments from people who invested their money in Bitcoin and other cryptocurrencies in the third and last quarter of that year, without even thinking of the risks, or seriously considering it. They just have their "eyes on the prize" and when the market collapse, the Internet was full of tragic stories of people losing their fortunes in a heartbeat. There was one guy who put in all his retirement money and it was all gone. Another person went to get a loan and had his house as collateral and he too was about to lose his house (I didn't get updated what happened to him eventually).
I had my own share of losses during that crash, the thing however, is I try to keep that golden rule as my guide. So even if I lost some, I moved on quickly because I can afford to lose that money. And no, don't get me wrong. I wish I hadn't lost that money but because of that rule, I was able to teach myself NOT to pour in more money just because I want to capitalize of the rise of Bitcoin prices. I charged my losses to experience and to the lessons that I learned from that market crash.
The same is true with Steem and its community, as it is more than just a blogging platform. It is an investment opportunity and thousands of people have already poured in money to buy Steem and convert it to Steem Power in the hope of gaining returns by curating content across the Steem blockchain. There are also those who trade Steem in exchanges and they are not necessarily part of the Steem community. Steem operates like a capitalist economy and it is important to understand the process before you dive in and put your money into it.
At the moment, I consider Steem both as a hobby and as investment. In fact, I consider hobby as an investment and vice-versa - treat my investment as a hobby. For instance, I love gardening. It is one of my favorite hobbies. And like any other hobbies (fishing, running, travel, etc.), I spend money on that hobby (buying plants, soil, etc). The fact that I can earn something from this hobby - selling seeds and plants - I consider this too as an investment. So Steem is just the same. I like reading content from Steem authors and liking (upvoting) them. I love to share my ideas, photos that I have taken in my travels, photos of my plants, things that I do, and many more. On the other hand, I invest too in Steem. I buy Steem to power up my account and I dedicate my time to write posts such as this one you're reading, and upvote and comment to content I find interesting. I poured in a lot of resources into it and should everything else fails, I keep preparing myself to cope with that loss.
The harrowing stories of investing failures should be a lesson for us. Whether you’re in Steem or a bit serious in another investment venture, always remember that you are in control of your resources before you put them into an investment. Make sure you can handle any outcome once you lose (some or all of) that control. It is not just about being able to afford any loses from investing. It is more of being cautious, of being able to value money as an important resource, and of being able to practice the learnings from one's failures, whether it is yours or other's.
Do you also invest what you can afford to lose? Or do you invest like you bet your whole life in it? Feel free to leave you feedback by commenting below.