Everyone wants to put their money to work, particularly when the interest rate is meager because bank accounts accrue only pennies on years of savings. While investing has been the way to grow money, such as for a retirement account, it always involves risk. The amount of risk you're willing to take with an investment is usually directly related to the promised return (high risk equals high return).

The stock market has traditionally been how people invest, but it's just one way to multiply your savings. Other options for investing include:

  • Start-up ventures like businesses or services always need seed money from investors. This is a direct investment but requires a lot of research to ensure the risk is acceptable, as statistics show that up to 75 percent fail. Only one out of three is likely to produce a significant return on investment. These investments are usually not insured, so losses can be total. If you invested in an individual whose start-up failed, you might recover some money if you're allowed to file a claim during a bankruptcy proceeding.
  • Real estate is usually a long-term, slow-growing investment. Despite the trend of "flipping" properties to make a quick return, real estate investments may take decades to realize significant value growth. Many factors influence real estate, from location to demand.
  • Governments use bonds to raise money for projects like airports and highways. These are low-risk, low-return investments, but most are insured against losses, so you are more likely to get your money back.
  • Traditionally, long-term, slow-growth investments in retirement accounts (such as Roth and 401(k)) that are programmed to roll over to less-risky stocks as the investor ages are safest. This only remains true if the stock market continues to make gains.
  • Cryptocurrencies are an extremely risky investment. While media attention makes crypto sound mainstream, and some people claim giant returns on their investments in obscure coins, this digital platform remains unregulated and even suspicious.

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Tips to Bounce Back From a Failed Investment

Losing money is a gut punch. It's wrenching to feel helpless as your hard-earned money disappears down the drain. You may wonder if you'll ever recover or allow yourself to dream of retirement, a new car, or even a vacation. Take heart. People have weathered these storms before, and there are strategies for recovering and even thriving again. Much depends on one's age and the size of the loss:

  • When the stock market tanks, investments lose value, and those holding the bag are tempted to cash out. These investments can take a decade to regain their value, but holding the course is often the best option. Talk to a portfolio advisor before withdrawing your funds forever.
  • Take a break and ask for support. Consider your options, including whether the fund manager or start-up company CEO acted illegally. Consult an attorney who specializes in business litigation. Talk to a psychologist if you're feeling depressed. Over time even the worst losses will feel less severe.
  • Regain your focus and confidence by focusing on a life's purpose unrelated to money. Instead of doubling your efforts to make money, give yourself a break. Spend a few minutes or an hour a day walking on a wooded trail, meditating, or listening to music.
  • Retrace your steps and see what went wrong. Before you try again, ensure that you understand why your investment failed. Was it a lack of research, too much risk, poor business marketing, or wrongdoing? Did you check the bankruptcy records of the person or company you went into business with? Some of the answers may take significant research. If you invested in a start-up that folded and won't allow anyone to examine its records, you might want to seek legal guidance.
  • See if you can regain any of the losses. Carefully weigh the pros and cons of withdrawing entirely from the investment. Did the start-up business have insurance? Beware the sunk cost fallacy, which encourages investors to keep putting money in despite little proof that it's the real solution to the problem.
  • Don't shy away from trying again. Consider the first loss a lesson. Examine the circumstances of your initial investment. Then, consider the gaps in your knowledge that could have prevented a loss. From there, you can take steps to prevent a recurrence. Investing remains the best way to grow your money and realize your financial goals.

Don’t Give Up from One Bad Experience

It's common for even the most educated investor to lose money, and a fake opportunity scams at least one in ten people at some point. Still, investing is the most reliable way to grow your savings passively.

When you're ready to get back into investing, weigh the offers very carefully, watching for red flags like selective groups, pressure to act immediately, and a feeling of obligation that can come with free dinners or hotel stays for those allowed to invest. The key is to be careful, invest wisely, and not risk more than you can afford to.