Can you really follow Warren Buffett’s number 1 rule – “Never Lose Money”? Modest Money1 Comment

The following is a guest post about Warren Buffett’s number 1 rule. If interested in submitting a guest post please read my guest post policy and then contact me.

Much of the investment world is focused on how to make money. Buy this amazing stock which will double or triple in 6 months! Follow this trading strategy for market beating returns! Short call options to increase your income!

And this is what people love to hear. Making money is exciting!

But Warren Buffett’s most important rule of investing has nothing to do with how to make money. His famous rule number one is NEVER LOSE MONEY (and his equally famous rule number two – never forget rule number one!).

Why is this such an important rule?

One of the reasons this rule is so important is that the more money you lose, the harder it is to make it back. If you lose 50% on your first investment, then your next one needs to double, just to get you back to where you started. And while you’re waiting to get back to where you started, you’re missing out on the magic of compound returns in the meantime.

This also means that if one of your…

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This entry was posted in Financial Commentary, Investing, and tagged , Modest Money1 Comment
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