This article, by Justin Baiocchi, was originally published in The Northern Daily Leader on 28 March 2015.
In the reception area of our office we keep a large bowl of chocolates. Intended mainly for clients who might feel like sneaking a treat prior to a meeting, the chocolates have become a hit with local couriers and deliverymen. They usually wait until they’re half-way down the stairs before sneaking a hand back up through the railing and grabbing a few chocolates. We’ve even had the occasional random person walk in off the street, ask an inane question like ‘Is this where I pay my electricity bill..?’, before walking out and of course helping themselves to a few chocolates on the way past. A certain staff member also likes to dip into the bowl of chocolates on occasion – I don’t want to mention any names or point any fingers, but let’s just say that he rides a bicycle a lot and his name starts with R and ends with Y. So popular are the chocolates with clients, couriers, the general public and the staff member called R_Y, that Coles alerts me via email whenever they’re on sale. There must be a logistics manager somewhere in Sydney scratching his head over the enormous quantities of chocolate being trucked up to Tamworth on a regular basis.
Of course, there’s nothing wrong with occasionally giving in to a little temptation and having a chocolate – life’s too short and unpredictable to forgo any treats or pleasures. When it comes to investing however, giving into temptation can have far more serious ramifications than needing to spend an extra five minutes on the treadmill at the gym. Investment temptation usually arises when you read or hear of a company which doubled or tripled in value almost overnight. Sometimes a friend or neighbour will tell you how he or she invested $5,000 into the company last year and it’s now worth over a hundred thousand dollars. The company generally operates in the mining, energy or internet sectors, or makes products or provides services which are apparently extremely complex and very difficult to understand. There’s nearly always a great deal of hype about how this is ‘the next big thing’.
The reality however, is that for every highly speculative investment with unbelievable returns, there are literally hundreds of other similar investments which are almost guaranteed to lose everything you put into them. And as for all your friends and neighbours who made a fortune, just remember that gamblers generally only ever remember (and share with you) their wins, never their endless stream of losses. Giving into temptation when it comes to investing is a definite no-no – if you’re ever tempted, rather than five minutes extra on the treadmill, think about spending five extra years in your job, trying to make the money back. Not a very pleasant thought is it?