In 1999, I changed jobs and left the company with several thousands dollars in cash from my retirement payout. At the time, tech stocks were booming, so I decided to invest in the market.
People around me were doing the same, hoping to strike it rich. But then the bubble burst, and I lost everything I’d invested.
As a wave of new investors pours money into the market to take advantage of coronavirus-related swings, take it from me: learn about investing before you get started, and consider talking to a financial professional to make a sustainable, long-term plan.
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I have a tale of greed, wishful thinking, and ignorance that collided back in 2000. My story probably isn’t unique, but it was painful and expensive.
I changed jobs back in late 1999, and I received several thousand dollars in cash as my retirement payout. At that time, the internet boom was pretty new, and tech companies were popping up daily.
People were making fortunes in the stock market. I knew people who quit their jobs to be day traders. One man I knew in his late 50s was putting hundreds of thousands of dollars into the stock market. Like me, he knew little to nothing about the history of the market, how to research the fundamentals of a company you are looking to buy stock in, or any sound investing advice.
Back then, for many of us, the stock market was more like a slot machine or poker game. I wouldn’t call what I or others did during that time “investing,” and it sure wasn’t investment planning. It seemed like a sure bet, but the risk, unknown to us at the time, was enormous.
Shortly after I bought stocks in several tech companies, with my purchases all based on the “cool factor” of the business, the market started to free fall. The only stock that didn’t go to pennies or just about zero from my portfolio was Starbucks. Unfortunately, that wasn’t my primary holding. I lost almost all of my money.
Fortunately for me, I was still young enough to start again, but the lure of a get-rich-quick path to wealth set me back years and most likely impacted my retirement savings and how much I’ve been able to save all these years later.
My story would probably die there as a footnote to history, but I am starting to hear friends talk about day trading during the stay-at-home orders. These are friends who have never purchased stocks before. The volatility of the market and its wild fluctuations are making people money, there is no doubt about it. But that’s probably not the case for all of the millions of new investors.
What new investors need to know
A new generation has entered the market en masse since the pandemic began. One investing platform, called Robinhood, saw 3 million new investors …read more
Source:: Business Insider