Nick Invested $20,000 at 45. At 47, He lost Everything. 10 Years In, He Got It All Back.

A true story of a retirement-aspiree and his investing journey

Some retirement stories are jaw-dropping, eye-popping, and breath-stopping.

This is especially so when money is involved.

When our retirement money is involved.

And such stories expose what we know about the investment world. Very often, near-nothing.

We would listen to what others say, get envious, maybe jealous, and then bet our chips on what they throw their money on.

The real retirement lesson comes when we lose our money.

When we lose big money.

The Pain from Gains

Nick is an ex-colleague of mine.

We met 10 years ago. Nick used to be working for a client I served. Then, he wanted to seek greener pastures and asked me for help. I did.

He came to my consulting firm, and we were colleagues for 2 years (maybe 3?) before I moved on.

Nick comes across to me as a hard worker. And that is not it. He is genuinely interested in investing for his retirement.

That said, his questions exposed his ability to assume financial risk.

“Aldric, I read that junk bonds pay 7% interest annually. Where to find them?”

“Why is it that my funds are only returning me 4%? What did I do wrong?”

“Hey, man. Can I ask you one thing? Where to find 10% returns today?”

Such random back-and-forth(s) during our coffee chats worried me a little. Okay, I take that back. Not a little. A lot.

Because my spider sense says Nick is the perfect candidate for financial scams.

Unfortunately, I was proven right.

He got scammed.

The Scammers’ Favorite Pet

Financial scammers know one thing most people do not.

They know how to get higher-than-market returns. And it is not through their ability to outperform or juice the markets.

They [simply] know,

• Who to prey on,
• How to put your money into their pockets,
• And how to disappear with our money in their pockets.

The scam Nick fell prey to was an investment scheme that invested in Gold-backed products. It was marketed as a higher-yielding deposit account.

And indeed. It was high-yielding. It paid 13% interest over one year.

My spider sense shot up. What kind of deposits pay 13%? Remember, this is 2011–2012. Interest rates were benchmarked at 0%. Banks were paying 0.0125% on our deposit(s). Okay, maybe 0.1%.

I asked Nick to explain to me what he invested in. He couldn’t.

“Aldric, all I know is this is an investment into gold, and I get paid 13% as a return over 2 payments in a year. That means I make $2,600 over $20,000.”

“Hey man, don’t get me wrong when I say this. I do hold gold and silver. They don’t pay me any interest. It’s 0% interest payments. Why would you be getting 13% on your gold-backed deposit?”

Nick thought I was getting jealous. He barked back.

“Hey, are you getting jealous that I am earning more than you despite starting later? I don’t know why you lost money on your gold, while I am killing it. You need to think harder, not me.”

I backed off. It was not a topic of civic discourse. Not then.

We did not talk for months. Our relationship soured.

About 4 or 5 months in, he texted me.

I was surprised. And then, I got upset.

“Hey, Aldric. You are right. The gold-backed deposit? It was a scam. I lost all my money. All $20,000 of it.”

I stared at this text for a long while.

I decided to give Nick a call.

When the Person of Experience Meets the Person with Money, The Person with Experience Walks Away with the Money, and the Person with Money Walks Away with Experience.

It was a lesson Nick will never, ever, never, ever forget.

I can sense it in his words.

“I thought there were people outside of the investing world genuinely offering to help the little guys earn a better return than the investment managers and bankers. I was wrong. They were out to get my money. Every cent of it.”

Nick was bitter. I was upset.

Of course. It’s $20,000. It’s hard-earned money. Our blood, sweat, and tears went along with it.

“I’m going to do it with understanding. Maybe I will start with 1 stock. I will start with the one where I understand the business. Like this retail mall.”

I smiled. It made perfect sense to me.

• Start small.
• Start with basic understanding.
• And always start with what we know.

I can’t help but prick him a little.

“So, does 4% return bother you now?”

I laughed. Nick chuckled a bomb.

“It sure beats getting scammed 100%!!”

I was happy that day. I knew Nick would stay on the right course of investing, one that would accelerate his journey to retirement.

And.

Nick got back what he lost and more… 10 years later.

The Close

“If it sounds too good to be true, then highly likely is.”

- Mary Callahan Erdoes, JP Morgan Asset Management

Everyone I know wants a high return from our investment(s). Of course. I do, too.

But we must be discerning. There are times when our gut says something feels off.

Listen to your gut. Let your life experience guide you.

Because there are many money booby traps online and off.

There are people out to take your money and put it into their pockets.

Don’t fall for their honey-coated words. Err on the side of financial caution.

After all, this is our money, our retirement fund we are talking about.

Not everyone gets to stage a comeback…

Nick may be lucky.

You and I may not.

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