Learning To Invest-When Life Gives You Lemons

Take some time to read the articles below: Once you learn to invest, you can act with confidence and set yourself on a path to financial freedom

I want to share the story of Motley Fool member, Tamara Lemmon. It’s a story of common investing mistakes and of bad advice from professional money managers. It’s a story about not understanding risks, over extending yourself, and falling victim to short term market downturns. Parts of the story will seem familiar to many of us. But I hope you’ll find Tamara’s journey from foolish-to-Foolish investor truly inspirational.

Her story inspired me to create this article which I hope can be a forum for people to share their own stories of investing mistakes and the lessons learned from them.

Please let us know how life gave you lemons, but how you turned them (or are in the process of turning them) into lemonade! If you’re in the middle of cleaning up after your mistakes, let us know how you’re doing. Together, we can invest better.

Now here’s Tamara’s story:

Tamara’s Story

My name is Tamara Lemmon. I am a first generation stock market investor. I was raised by a single mother and money was always in short supply. I remember promising myself that someday I would put myself in a position to live without money being even a consideration...let alone a worry. I began investing as a teenager. I was excited about entering the stock market. I found a financial adviser at Dean Witter to show me the ropes and managed to invest my entire life savings a few months before the tech bubble burst. I lost everything. Undaunted, I began saving again. This time, I invested in real estate. Over the course of 10 years, I purchased an apartment complex and a couple of rental properties. 2007 arrived. I was laid off from my job as VP of Marketing for an ad firm in Orange County, CA just as the real estate bubble burst. I spent a year paying my mortgage out of my savings. Finally, the money ran out and I was forced to declare bankruptcy, losing all my assets.

The great thing about the American Dream and free market capitalism, however, is that there are no limits on how many times you are allowed to fail and try again. I taught myself how to build websites, and within two years from my bankruptcy, I went from a single mother on food stamps with no job to a business owner making a reasonable monthly salary, enough to support myself and my son anyway. Shortly thereafter, I met a wonderful man and got married. Things were looking up. We started discussing our financial future and I discovered that my husband had a small retirement fund to which he had been faithfully contributing $250 per month for the last 10 years or so. He had the entire amount invested in a single mutual fund through Edward Jones. Although his account had taken a serious beating in 2008, he kept religiously contributing to the account and believed it would eventually recover. I continue to admire him for this long term outlook.

I begged my husband, however, to let me manage a portion of the retirement account. I felt certain that I could outperform the rather dismal results of the mutual fund and I yearned to be investing again. My husband refused my many requests. He said that this money was too important, and that trying to manage it ourselves would be "foolish." As a Fool, I agree.

I began to scrimp and save cash. I opened a secret bank account and every time I saved $20 on groceries I put it into the account. By this time, I was working only part time and devoting most of my day to raising our four children. So it took me two years to accumulate $1500 in this precious account. When I had $1500, I spent $350 on Stock Adviser and I used the rest to open a TD Ameritrade account. That was January 5, 2012. In less then two years, my account is now worth almost $28,000. I have religiously devoured the content on fool.com. I read every issue of Stock Adviser. I started out only purchasing stocks for a simple buy and hold strategy. A few months ago I added a subscription to Motley Fool Options and have learned what wonderful flexibility and income can be generated through options. Most of my stock picks have been Motley Fool suggestions, but I've also used the criteria I've learned from The Motley Fool's educational material to select my own winners.

Now I realize that we have been in a great bull market for most of the time that I've been investing, but I think I've learned enough to help me continue to succeed even when the eventual corrections occur. In fact, I've got a lot of my money sitting in cash at the moment. I'm writing a lot of puts and waiting for a pullback to buy some great stocks I've got my eyes on. I can't wait to be greedy when everyone else is fearful.

My best picks so far have been purchasing Tesla at $32.86, Netflix at $70.35, DDD at $23.98 (average price..actually bought in twice for a double position) and Roundy's at $4.53. In fact, I'm fortunate enough to only have two "losers" on my scorecard right now...Apply and NLY. I'm totally fine with that. I have puts open to buy more Apple if I can, and NLY has paid me a ton of dividends so I'm OK with losing a little bit on the share price.

Thanks for putting out a great product and thanks for making me believe again in the American Dream.

Fool On!

What do you have to say about this story of  Tamara Lemmon?