My Dumbest Investment

Back in early 2005, I invested as a partner with four other individuals in a seafood cafe and grill by the beach. I didn't look into my partners' business backgrounds or their accounting books. I just trusted what one of them told me about the prospects of the business because he was an old friend, and because his business supported the cafe with tours and dinner packages every month. I lost everything! - Mike, via e-mail

The Fool Responds: Ouch. Restaurants have long been very risky ventures. It's estimated that more than half of new restaurants fail within the first few years. As you now know, whenever you're considering going into business with someone, be sure to learn as much as you can about him, along with learning about the business's risks. Think about the person's personality, too - will you be comfortable working with him? Consider your own risks carefully, such as how tied up your money will be. Remember that while stocks carry some risk, too, you can always sell them quickly if you need or want to.

Do you have an embarrassing lesson learned the hard way? Boil it down to 100 words (or less) and send it to The Motley Fool c/o My Dumbest Investment. Got one that worked? Submit to My Smartest Investment.

If we print yours, you'll win a Fool's cap!