I started taking investing seriously in 2019 and in these five years I’ve learned a lot through reading dozens of books, listening to hours upon hours of podcasts and trial and error. I’ll be the first to tell you that I am by no means an expert and still have a long way to go and a lot to learn on my investment journey, I’ve had ups and downs, made good decisions and poor ones so I thought it would be helpful to share my biggest investment mistake (so far) in hopes that others can avoid it.

Without dragging it out lets get into it, my biggest investment mistake was following the crowd and buying into the hype, diving head first into an asset class that I knew little to nothing about, and that asset class was…cryptocurrency. Till this day I still have little to no understanding of cryptocurrency and I sure as hell had no understanding back in late 2021 when I invested a few thousand dollars into Ethereum(ETH), ADA and Polkadot which are all cryptocurrencies.

When I first started out investing in 2019 I stuck to the basics and stuck to companies I understood. Apple makes iphones, Ford makes cars and Microsoft provides software products, this was an easy way to get my feet wet as a novice investor before moving on to more complicated investments, but that strategy soon went down the toilet.

It was late summer of 2021, September to be exact and cryptocurrency was all the hype. Just a year ago in September 2020 Ethereum was trading at about $350 and fast forward to September 2021 it exploded to around $2,900 at the time I considered buying in. I vividly remember deciding if I should jump in, suffering from FOMO I remember telling myself “you’re missing out on a potential life changing investment, all these other people are killing it, you can’t sit on the sidelines.” So after fantasizing about an early retirement, believing I found my golden ticket I bought in at around $2,800. The problem was I had no idea and still don’t have an idea of what the hell Ethereum is and what it does and truthfully I think most people don’t either.

After making my investment I did some research on ETH, little Google search here and a little YouTube video there, in hindsight, the fact that I made a $2,800 investment and decided to do research AFTER, is mind boggling, if I could go back in time I would Will Smith style slap the **** out of myself for being so naive. After a few YouTube videos I was confident I made a good investment and reassured myself I did the right thing but in reality I was just high on the idea of getting in on a once in a lifetime opportunity without truly knowing and understanding what I bought.

Excited about my newly acquired asset, I started looking into other cryptocurrencies for me to add to my portfolio and throughout the rest of 2021 I bought ADA and Polkadot. Just like ETH I had no real understanding of what these coins do and what real value they have, I was just buying into the hype believing I found the next big thing. For the next few weeks it looked like my investment was on its way to the moon as ETH hit $4,000 but it was too good to be true.

In January 2022 I watched as ETH spiraled downward and unlike other investments I owned, I had no idea why ETH was crashing and when I tried to figure out why, nothing made sense to me. When a car company’s price declines it might be because they didn’t sell as many vehicles this quarter as they projected, if a bank has a data breach it would make sense if their price declined, but with ETH I had no clue why it was crashing. Over the next year I continued to watch as ETH along with my other cryptocurrencies spiral downward until finally in May 2023 I decided to sell my ETH around $1,850 and the rest of my cryptocurrencies for a few hundred dollars.

After the dust settled I had lost around $1,800 dollars, $1,000 of that consisting of ETH and the rest consisting of ADA and Polkadot. Now that some time has passed I can reflect on my mistake and the lessons I learned. My intention is not to discourage you from investing in cryptocurrency, if you have a strong understanding of cryptocurrency by all means invest, I however did not have a strong understanding and just followed the crowd like a blind sheep. So my lesson to you and myself, is to make sure you understand the asset class before you invest, truly familiarize yourself with the investment to the point where you can easily explain it and simplify it to someone else, if you can’t clearly explain the investment to someone else, odds are you don’t understand it yourself.

In addition to not understanding what I was buying, I also violated the timeless advice of not making investment decisions based on emotion. A big reason I invested in cryptocurrency was not because I truly believed it would revolutionize payments and transactions, but simply because I saw other people doing it and didn’t want to miss out on the fun so I let my emotions get the best of me which was a rookie move. Being a little older and hopefully a little wiser, I now take a few deep breaths, pace the kitchen, talk to myself in the shower and sleep on it before making an investment decision.

I hope you find this beneficial and helps you avoid some mistakes throughout your investment journey, remember no matter how experienced or inexperienced you are as an investor there is always something new to learn and always a trap to avoid!