Ah, losing 97% of your hard-earned money. That means $1 million becomes $30,000.
Nope, it’s not a joke, and it didn’t happen at a roulette table or a magic show gone wrong. Nope, it happened in the wild world of investments, and this time round, it’s brought to you by WeWork.
So picture this: you’re minding your own business, thinking you’re making smart money moves, and then ALL OF A SUDDEN! Your 1 million dollars shrinks to a mere 30,000 dollars. Ouch! That’s like ordering a fancy steak dinner and getting served a half-eaten hot dog. Or maybe you were more sensible and invested 100,000 dollars, only to see it turn into 3,000 dollars. It’s like buying a brand-new sports car and getting a wheelbarrow in return. Even the folks who threw in 10,000 dollars ended up with just 300 dollars – that’s basically a coffee budget for a month.
What exactly happened to WeWork?
In case you aren’t sure, WeWork is a company that provides co-working spaces for corporate businesses.
To acquire the real estate required for their business model, they borrowed a lot, taking on large amounts of debt.
Eventually, IPO filings began revealing deep losses, with WeWork being unable to turn an operational profit while running on consistently negative cash flows.
This is just a simple broad explanation of what happened. If you’d like to know more, refer to this.
Now, the big question is: How can you avoid this financial fiasco?
Well, the pros say to diversify, and it’s not some complicated hocus-pocus. You don’t put all your money on a single dish; you try a little of this, a little of that, and a sprinkle of the other.
Imagine you had 100,000 dollars to play with. If you went all-in on WeWork, congratulations, you just joined the 97% loss club. But what if you tried the Half-and-Half Approach, investing 50% in WeWork? You’d still end up with 3,000 dollars.
Ouch, that’s like choosing between a root canal and stepping on a LEGO in the dark.
Now, here’s where the magic happens: The Diversified Approach.
Imagine you’re smart, you put just 1% (1,000 dollars) in WeWork and scatter the rest sensibly across a bunch of different investments. Even if WeWork goes downhill (and it probably will), you’ll only suffer a 0.97% loss on your total investment. That’s like getting a small paper cut instead of a full-blown car crash.
At the same time, you have more stake in a wider variety of companies – all of which will have a chance of big growth, giving your portfolio the boost it deserves.
Lesson Learnt!
The moral of the story is clear: diversification should be the goal of your financial portfolio. It won’t save you from all financial troubles, but it’ll protect you from those “oh-my-goodness” moments. So, diversify like a pro, spread your investments across various options like you’re choosing toppings for your pizza, and watch your financial future achieve stable, sustainable growth.
Diversify for financial security; WeWork’s fall proves that. Here’s to your financial well-being! 🍻💰
