Welcome back to another installment of Money Mistakes. Here is where we see that even the self-proclaimed experts with money can also make mistakes. Today’s post revolves around inheriting a large sum of money and how to handle it….or not to, enjoy!
Tell Us a Little Bit About Yourself
I am a 41-year-old South African entrepreneur that owns and manages an internet marketing company. We service clients in domestic and international markets, providing web-based solutions and content management services to companies as far as the UK and United States.
I am married and have two school-going children (12 & 14). We live in the beautiful city of Cape Town, which is renowned for its mountain ranges and oceans. It is a thriving tourist destination and the ideal hub to run an international business. Unfortunately, its global prominence also makes it the ideal hotspot for scammers.
What Was Your Money Mistake and When Did You Make It?
When I was in my late 20s, I had come into quite a lot of money through an inheritance left to me by my late father. While I won’t go into details of the exact sum, let’s just say that it would have set me up for life, had I used it responsibly.
Of course, losing a loved one is never easy, but squandering what they spent a lifetime saving for you is like taking a stake to the heart. In summary, my youth got the better of me and I invested most of the money in a super high-risk diamond venture that promised the world and eventually lost me all my money.
What Led You To Make the Mistake?
I had been looking for a place to invest a large portion of the money to try and create a passive
income for myself while I used a smaller amount to get a business idea started. As we all know, new businesses take time to get going, so it would be a while before I could draw a liveable wage. As such, I wanted to generate an income off the interest of the money to keep myself going until the business had grounded itself.
In my search for a suitable investment option, I came across a ‘mining business’ that was taking on investors for a diamond mining project off the west coast of Africa. I attended a shareholders’
meeting to hear what they had to say. Everything was so professionally presented, and the
excitement in the room was tangible. We were warned, however, that it was a slightly riskier
investment, but it came with high rewards.
In hindsight, I should have figured that a successful mining company would have attracted investors on the Johannesburg Stock Exchange and would not have had to seek an injection privately. Anyway, I parted with the money. I received awesome returns for three months and then never again. I lost it all! It turns out, that it was all a Ponzi scheme. Many of the previous investors had cashed out and the entire scam collapsed.
How Did You Recover From It?
Hard work and determination have gotten me to where I am today. I haven’t fully recovered the
losses, but I live a life free of the financial stress that I felt just after the scheme collapsed. The very first thing I did was find myself a job. I applied for a sales job at a furniture store and worked my way up to branch manager over the span of 5 years. This way I could keep the overheads in check and see to the needs of my young family. But it was never enough.
I, therefore, started working part-time on my web business, handling only one client at a time.
Unfortunately, it was all I could do with the time allotted to me in the week. I had to remind myself that if I wanted to be wealthy again, I’d have to write the loss off to experience and convert my current loser mentality into a millionaire mindset instead. And millionaires never quit. Today, I work in the business full time, and it’s going well.
What Would You Have Done Differently?
Looking back now, I realize that I made one vital mistake. As a young inexperienced man, I should have consulted a financial advisor to help me manage my finances. They would have caught onto the issues with the ‘investment’ quickly. They would have also given me solid investment advice and I would still have the cash today.
How Can Others Avoid Making the Same Money Mistake?
People not experienced in the business world should avoid prospects that seem too good to be true because they usually are. Instead, speak to someone who knows what they are doing. In fact, speak to several people, as I believe there is safety in the counsel of many. Then, hire a good financial consultant and plot the course with them.
Most Importantly, What Did You Learn From Your Money Mistake?
My money mistake has taught me a considerable amount. Firstly, it taught me how to deal with negativity and positivity in life. Secondly, it’s taught me never to place all my eggs (money) in one basket (investment). And thirdly, it has taught me to appreciate even more the hard work my dad put in to provide for us as children. Hardship certainly matures a person.