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Choosing your investments; Never put all your eggs in one basket

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In 1983, when America experienced a boom in many businesses, gold and the acquisition of gold was trending because many people anticipated that currencies would crash. The key thing at that time was, buy gold in order to edge. Mr Stone gathered money from different people to invest in the golden opportunities but only few people understood the risks he was exposing them to. He was buying gold on margin. Many people had seen him make a lot of money in the past because he knew when to go in and when to step out of any investment, so it increased the confidence they reposed in his abilities. Sadly, the danger with buying gold on margin is the fact it was an unstable form of investment.

This is why:
If gold was sold at $50, you are encouraged to add 10% , which is an extra $5. This $5 was a lot of money for people at that time. But as the price of gold continued to rise, at $100, to retain your position, you had to keep up with your 10% by adding more money. This meant you needed to pay an extra $5 but if you are unable to keep up by a particular deadline, the $5 that you put in will be forfeited. In other words, buying on margin is similar to a situation where you borrow money but cannot pay. 

When the price of gold took a run in 1983, many people who invested everything they had into the gold business were left with nothing. 

For the Nigerian counterpart, prior to experiencing the stock market crash, many people went into debt to make more out of stocks. Seeing how well their stocks were faring, there were many who decided to borrow large sums of money just to double their ROI within a particular period. Sadly, when the stock market crashed, many people ended up with critical health issues and some even committed suicide. The extreme reactions to the crashed stocks was a result of them being caught in the downside of stock investment as debtors.

For Mr Stone and many other Nigerians who fell victim to the crash, they learnt a truth the hard way; emptying your savings or borrowing for investment is not the wise way to go. 

Only excess money should be put in any form of investment; always keep the cash needed for sustenance aside. This is what turns many people into beggars because they are suddenly under pressure as they make frantic efforts to raise the cash needed for basic necessities of life. The blood runs hot when they begin to fail in responsibilities to pay the rent or other fees but runs hotter when the lender comes calling.

Always cover the basic expenses needed for your day to day living as an individual or as a family before diverting funds into any form of investment; only use a part of your savings for investment. Never ever empty your purse no matter how juicy a deal sounds.

Investing via exclusivity will also lead to problems later on; you must build a balanced portfolio concerning your investments. Look for investments on different platforms; Cash, stocks, real estate, agriculture, etc. So that if one fails, you have a backup plan.

In the meltdown of 1992, people lost millions of naira when the technology market crashed. A more recent event was when MMM seemed the main deal for Nigerians in 2016. Many people, spurred by greed, emptied their savings, diverted funds meant for other projects and even went as far as borrowing. In the end, they got their fingers burnt. 

Wisdom for investment states that before you make the choice to invest, ensure that you have covered your daily expenses, then take out just a part of your savings. 

My dear friend, learn to diversify investments and never ever empty your savings for any investment opportunity.

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I agree with this statement. You should always try to expand your options all the time. I know that not everyone has the luxury to invest in different things but you should do it if you have the resources. The trademark of a successful is that he always looks around in different things.

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