I’ve learned to invest like the pros | My biggest investment mistake + more


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Why don’t most property investors succeed, especially since there’s so much information out there and so many people willing to help them?

Well, today I’ve got three separate segments that are going to help you understand why many investors don’t succeed, but of course, the intention of that is to even the odds in your favour, to make sure you do succeed.

I’m going to share with you probably the worst investment mistake I made, but it turned out to be one of the best investment lessons I made.

It was a mistake I made early in my career when I lost 100% of my equity. Boy was it an expensive mistake and a blow to my ego.

I guess it shows that I didn’t start off as a successful investor. There are some lessons in that alone.

I’m also going to share with you a discussion I had with Joseph my hairdresser who learned how to invest like the pros. Isn’t that something that you’d like to know?

Then, in my mindset moment, I’ll help you understand that I’m a real success at failure.

So lots about success and failure in today’s show, but the intention of it is to make you a more successful property investor and more successful in all areas of your life.

How to Invest Like the Pros

I was having my hair cut the other day when Joseph, my barber, said, “Michael — I’m going to get into property investing and I’m going to make a fortune because I’ve learned how to invest like the pros!”

When Joseph told me he knows how to invest like the pros, I had to ask — “OK — how are you going to do it?”

“Easy,” he said. “I’ve been to a seminar and signed up for a course.”

Then he pulled out the advertisement in the magazine that attracted his attention.

It promised the ability to control millions of dollars worth of property with none of your own money and bypassing the banks. It also explained how the course presenter had made millions of dollars in seven days.

At that point, I felt sorry for Joseph and for the thousands of novice (and some experienced) property investors who will be taken by the new breed of property spruikers who are once again out in force.

You can’t become wealthy in seven days. You probably couldn’t even read the course material in seven days.

Here is what the real pros know:

You can’t create wealth through property overnight, but you can certainly become very rich in the medium to long term by knuckling down and seriously applying yourself in a dedicated, disciplined, persistent way.

You get there by following a proven system and by having a safe property and finance strategy.

You then implement this by buying the right property, in the right location, at the right price, and holding it for the long term.

Not by adding hot water to a packet of magic beans and counting to seven.

You can and should accelerate the process by learning the strategies of value-adding through renovations and development, but you can’t skip the fundamental process.

While property spruikers went quiet during the real estate downturn, unfortunately, the new property cycle is bringing out a fresh group of “property pretenders”.

There are now property “experts” out there selling advice and courses despite never having built their own property portfolios.

This makes it timely to remind listeners that seminars promising easy wealth through property have all too often led to financial ruin.

It’s just the cycle repeating itself.

Of course, this doesn’t mean you should do it on your own.

To become a successful investor, you will need to surround yourself with a team of independent and unbiased professionals — a team of people who are known, proven, and trusted.

Then go ahead and take advantage of the new property cycle, because the future is bright for those who invest sensibly in property.

My worst investment loss

One of my early investments was a complete loss.

I lost 100% of my invested capital many years ago, way back in the 1970s, and the investment mistakes I made that created this disastrous result.

But first I want to explain the 2 main reasons why I’m sharing this story.

  1. Losing investments can be great teachers

You’ll not only learn from the investment mistakes you make, but you can also learn from other people’s investment errors so that you don’t have to make the same mistakes yourself.

  1. Losses are a natural and normal result of making investment decisions

Don’t be so hard on yourself when things don’t go as planned because the key to long-term success is what you do when this occurs and the lessons you learn from your mistakes, so you don’t repeat them.

So here is the story of my big investment mistake where I lost 100% of my investment capital

You see…I already owned a few investment properties at the time, but I was in a hurry to get rich quickly.

I was offered the opportunity to invest in a Gold Mine.

In fact, one of my friends, Brian, had invested the vast sum of $5,000 (remember it was the 1970’s and that was a lot of money) into a venture that was resurrecting an old disused gold mine in Wedderburn, near Ballarat in Victoria.

Of course, my initial reaction was to tell him how silly he was. How he’d lose his money.

But Brian asked me to speak with the promoter, explaining that he tells a compelling story.

One Sunday morning a man called Terry came to our home and described how with the price of gold rising and using new technology it was now viable to reopen an old disused gold mine near Ballarat where the Gold Rush occurred in the 1800s.

He had budgets and profit projections, diagrams, and plans; but things changed completely when he took a shiny nugget of gold out of his pocket and placed it in my hand.

He told a compelling story of how I could double my money quickly investing in his company – The Asian Pacific Mining Corporation (what an impressive name!) – and how I’d receive dividends for years.

My greed glands began working overtime as I swallowed his story – hook, line, and sinker.

The end result was I invested $5,000 of my money and of course, I lost it all.

My investment decision was one big mistake from the beginning.

Here are a few of the more obvious mistakes I made with this investment:

  • I gave my money to a virtual stranger without doing enough due diligence.
  • I invested in something I didn’t understand.
  • I bought a story rather than investment fundamentals.
  • I was lured by the opportunity of making quick money.
  • I was speculating, not investing, and risked money I couldn’t afford to lose.
  • I had no investment strategy – just a desire to get rich quickly.

I learned many lessons from this experience including:

  1. Not everything that glitters is gold
  2. Sometimes your best investments are the ones you don’t make.
  3. Don’t invest in anything you don’t fully understand. I knew nothing about gold mining, so I was speculating rather than investing. I had no competitive advantage and there was no mathematical expectation to my investment strategy.
  4. One of the worst things that can happen to an investor is to get it right the first time. I thought I was smarter than I was when in reality my investment success so far was in large part to a rising property market – a boom that made me look smarter than I was.
  5. Don’t become overconfident -the market will soon humble you.
  6. I didn’t understand the incentives of the so-called “advisor” who really had a vested interest which created biases in the recommendations he gave me.

In retrospect…

My worst investment mistake was a cheap lesson

This investment was the first of many learning fees I’ve paid to the market over the years.

I’ve made a lot of mistakes and paid a lot of learning fees during my journey to investment success.

It’s much easier for investors nowadays – you don’t need to do it on your own.


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Shownotes plus more here: I’ve learned to invest like the pros | My biggest investment mistake + more

Some of our favorite quotes from the show:

“If you are going to listen to somebody’s advice, make sure it is somebody who’s unbiased.” – Michael Yardney

“Find a credible source, not somebody with incredible promises.” – Michael Yardney

“One of the key factors to my investment success is that I always try to learn from my mistakes.” –Michael Yardney


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