How To Turn Your Addiction Into A Successful Investment

My 22 year-old cousin loves the American apparel Guess more than anything else. If she’s gonna wear anything, it better be Guess. When she won P82 million in the lotto in April 2004, she started splurging right and left. She had a nice house built in this posh village in Iloilo, bought several cars, several pieces of land, overpriced jewelry and yes, clothes, shoes, and purses! Since there are no haute couture stores in Iloilo, the most expensive brand that she could adorn herself with is Guess. The lone Guess branch at SM Iloilo became her everyday shopping destination and spending P10,000 - P20,000 at least per visit. She was caught up in this frivolous life of the young and loaded. She was spending as if money will last forever.

Until one day, we just heard that she sold some parcels of land that she bought and was renting out her house to Koreans. Not only that, she also sold her two cars and started taking a cab to the city. She also lost her jewelry to pawnshops and found herself borrowing money from neighbors. All these happened in a little more than a year since she won the lottery. Those who know her couldn’t help but wonder how she could spend that much money in a short period of time. She was still addicted to Guess, though. She would ransack the store every week for new finds. Nevermind if she couldn’t pay her loan from her neighbors. Then, she finally sold her house to a Filipino nurse from the States for only 7 million, which is lower than the original cost of building the house. When she got the payment for the house, she went straight to Guess to celebrate.

I couldn’t help but wonder what would become of her if she’ll lose all the money from all these crazy spending. I guess she’d turn into a loony. The worse part is, she doesn’t have the financial IQ and couldn’t comprehend how the business world operates. My husband, who makes a living from investing, told me that if she’s a Guess addict, then why not invest on Guess? So we looked back to the time when she still had enough money. Let’s say she bought shares of Guess worth P10 million in December 2004 (after a few months she won the lotto). According to this chart on Yahoo Finance, the cost per share of Guess in December 2004 was $6.25. If my cousin did absolutely nothing but sit back and spend the rest of her money on whatever, today her share would have gone up to $52.53. This means that her P10 million would have easily become P84 million today. She wouldn’t only be glad to get 800% return on her investment after two years but she would have millions of shopping-money to spend not only on Guess but on Louis Vuittons, Pradas, Guccis and Burberrys.

Sadly, that’s not the case. She wouldn’t even listen to any financial advise from relatives. I also think that it’s a blessing in disguise that her idea of business is only limited to supplying metal caskets from Pampanga to the provinces in Visayas. Her spending habits still remains the same. With that kind of lifestyle, it won’t be long until she goes bankrupt. Oh well, she has no one to blame but herself.