$300 million lesson from Temasek's investment in FTX

The original content of this post first appeared on Trader Deekay.

Despite writing down the whole of its $300 million investment into cryptocurrency exchange FTX, Temasek Holdings (Temasek) has said it will not have significant impact to their overall performance.

How did they do that and what can we learn from it?

#1: Do not invest money you cannot afford to lose

Even if it promises a billion dollars tomorrow, always take care of your back first. The cost of the FTX investment was reportedly only 0.09% of Temasek's net portfolio value. While taking a loss may be painful, but hey, it's not even a cent to the dollar.

Enter into every investment with full expectation that you might lose everything.

#2: Diversify, Diversify and...Diversify

When an investment seems to be returning good profits, it is tempting to go in big and bigger. However, just imagine if Temasek had invested 100% of its money into FTX!

While you focus on finding and accumulating more 'golden eggs', consider to also put them into multiple (nice) baskets.

You'll never know which is the real golden egg and which is just a gold-plated rotten egg.

#3: Not all 'Extensive Due Diligence' can detect/deter malicious intents

Like it or not, scammers are getting smarter and 'better' with the advancement of technology (AI, anyone?) that has made it so much easier for them to trick their prey in.

So do not beat yourself up if you have been a victim of financial scams or failed investments.

Just remember that not even the robust due diligence carried out by the elites at Temasek managed to avoid the FTX saga.

And most importantly,

#4: Keep investing

Do not let it stop you from investing again because, well, you just can't afford to do so.

One thing for sure is that Temasek will not stop looking out for new investment opportunities just because of a failed investment.

Just be like Temasek, learn from the previous lesson, practice strict risk management and keep making your money work harder for you.