Email #2: How I turned a $2,000 Investment into $24,000
This email contains factual information only. Always consult a licensed and trustworthy professional before making a financial, taxation or legal decision.
Boy, do I have a story for you…
With one of my very first share market investments, I turned a $2,000 punt into $24,000.
Yes, at the ripe old age of 23, still stuck in the whirlpool of undergrad university, I took $2k and made it into something that set me on a path towards bigger and better things.
Who doesn’t want $24,000 of cold-hard cash, seemingly plucked from the sky, just sitting in their bank account at 23?
I was pretty happy with myself.
However, at the same time, the investment could have been one of the worst I ever made.
You see after the share price rose from 30 cents to $3.75 — which took about 18 months — I entered a long dry patch.
There and Back Again
I thought investing was as simple as finding a speculative company on the sharemarket, buying in and waiting for the market to do the rest.
Had I been born a few years later, I probably would have bought Bitcoin.
Small bets, big payoffs – right?
Shortly after my big payoff though, I went on to make two bigger upfront investments: the first one dropped by 70%, the other by 97%.
Needless to say, these two speculations brought my investing ‘strategy’ – and account balance – crashing back to earth.
How did you find the investment?
I found my winning ‘investment’ by trolling through broker/analyst reports.
I read a couple of the analyst reports and targeted the one with the highest ‘price target’ and lowest share price. It was an oil and gas company.
The ‘price target’ is often what an analyst believes an investment is worth.
What I didn’t realise and understand, however, was that the analyst had made a number of assumptions that were unrealistic.
But that didn’t matter because soon enough the company released some decent updates and the oil price surged…
Up goes the share price.
My eyes began to water as the share price swelled towards $5 (a 1,560% gain, on paper). But I was reluctant to sell because tax time was fast approaching.
It soon fell to back to $3.75 and I got out — $22,000 richer.
Back to the Future
I wish I could say that I listened to others and did something meaningful with my cash windfall. But the tough truth is that it took me a long time to realise that what I was doing was more akin to gambling than investing.
For every 11-bagger (that’s finance speak for an 11-time increase in your investment), I made three terrible investments.
I should have listened to the advice of others sooner and got on the path to getting rich slowly.
That’s what I’m doing now.
Here’s to your financial future.