Top 3 Ways To Lose Your Money

The top 3 ways to lose your money are squander it, be the victim of a scam, make bad investments. Be smart; once you accumulate money try not to lose it. Not losing your money is the concern of smart rich people (and losing their money is the fear of smart rich people).

Once you have money you don’t want to lose it. You don’t want to lose your money by squandering it, being the victim of a scam, or by making bad investments.

Don't squander your money

If you suddenly find yourself with extra money ... STOP! Before you go on any major spending sprees stop, sit down, take a deep breath, and relax. When you have a chunk of money you’ll want to be careful not to spend it all.

Here’s how to do that …

Determine how much extra money you actually have. Is it taxable? If so, after taxes, you’ll end up with less money to spend so figure out how much you’ll have after taxes.

Decide what you want to do with your money. Do you want to pay off your debts? Take a long deserved vacation? Buy a new house or car? Save it for your kids college education? Give it away? Put it in the bank? Put it under your mattress? (not recommended).

If it's a lot of extra money and you’re not an experienced money manager see a professional immediately, before you do things with your money that you might regret. Find a reputable CPA or financial counselor who specializes in financial planning and go see them. Discuss your financial needs and desires with the financial professional and he or she will design a financial plan that fits you. Then, stick to the plan! Rule #1: don't squander your money.

If something sounds too good to be true it probably is

There’s no shortage of scams which try to separate you from your money. Long lost relatives (who may not be your relatives at all), bogus business and investment deals, pie-in-the-sky ridiculously high potential rates of returns, all manner of internet schemes and solicitations that want to steal your identity or want you to divulge your banking info, the list goes on and on.

How do you know if something is a scam? Personally, I am always a bit skeptical about any potential in vestment and assume any investment may be not as good as it sounds, may be a bad investment or may be a scam or something that may result in a loss of my money. And, of course, if something sounds too good to be true, it probably is; trust your instincts and walk away … fast. Rule #2: if something sounds too good to be true, it probably is.

When it comes to investing don't lose your money

No matter what the economic conditions are there’s no shortage of investments that can turn out bad. Remember the dot.com bubble? The housing bubble? The stock market crashes?

In the 1990’s many people put a lot of their money into the stocks of brand new, untried high tech companies and saw a huge run up in stock profits. This was followed by a huge crash of these same stocks, which wiped out investors’ profits AND their original investment. There were individuals who blindly invested their life saving, their kids college fund, borrowed against their home to invest more money and thought their dot.com stocks would keep going up forever. They were wrong. The dot.com bubble eventually burst and they lost all their money.

A similar thing happened with real estate and stocks in America in 2008. For nearly a decade, real estate and stock market values had been going up and up and up. Both bubbles burst in 2008 and a lot of people saw their real estate and stock investments - their wealth - go down in value 50% or more - in less than 1 year.

Here's what smart investors know ...

Every hot investment eventually cools off. Every investment bubble eventually bursts. Everything that goes up also eventually goes down. What's the secret of successful investing? Buy low and sell high!

When it comes to investing, be smart, do your homework, and invest wisely. Rule #3: when it comes to investing don't lose your money.

Once you have money you don’t want to lose it. You don’t want to lose your money by squandering it, being the victim of a scam, or by making bad investments. Whatever you decide to do with your money remember the rules ...

Rule #1 don't squander your money

Rule #2 don't get scammed; if something sounds too good to be true, it probably is

Rule #3 when it comes to investing, be smart, and don't lose your money

Andrew Lawrence is the author of "money - The Basics", an easy-to-understand book, filled with valuable real-world knowledge you can actually use.