Warren Buffett is known as the world’s greatest investor, when asked what is the most important rule in investing.  He said “Rule #1: never lose money, rule #2: never forget rule #1.  I have spent a lot of time pondering what he means by never lose money.  Even he has lost money on a few investments.  Here is what I think he means by “Never Lose Money”


  1. Don’t Take Unnecessary Risk. You should be aggressive with growing your income but conservative with investing.


  1. Don’t risk what is important to you, to try and get what is not that important to you.

For instance, suppose you had 5 Million Dollars set aside as your retirement money and you can invest it guaranteed and make $5.2M in a year, but someone offers you a high risk investment that can help you make $10M in a year but you can also lose your principal.


Would you take the chance?  Even though you don’t need the additional $5M.

I was having a conversation with six business owners over the past weekend.  They subscribed to the paradigm of keeping the maximum mortgage on their homes and investing the rest, because they can earn 8% in the stock market but their mortgage only costs 3%.  All these business owners earn over $300k a year and have been earning well over $100k for the past 10 years.  I asked them if they can afford to take 3 months off work and still maintain their lifestyles and they all said No.


The fact is Life is not all about an endless pursuit of wealth or chasing a higher return on investment, life is about having the freedom, security and peace of mind to pursue the activities that brings you the most satisfaction.


5 Steps To Never Lose Money


  1. Pay off all consumer debts: Consumer debt is a slave master, pay off all consumer debts regardless of interest rate.  Yes, this includes your personal home mortgage.  You are consuming your home, so it is a consumer debt.


  1. Invest in Personal Development: The most important investment you can make is in yourself.


  1. Don’t be greedy: Nothing exposes your investments to losses quicker than greed.



  1. Invest in wonderful companies: Invest in companies and instruments that you can close your eyes for the next 10 years and the investment will still be doing great.


  1. When in doubt, say NO: Steve Jobs once said that to be really, really successful…you have to say NO to almost everything.  Focus your efforts and energy on what you know best.




Victor Lofinmakin


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