The first rule of investing is not to lose your money. The second rule of investing is to never forget the first rule.
Smart, successful investors and business builders focus in the first instance on one question: “how can I lose my money here?”
These investors and entrepreneurs are not focused on the upside potential of the proposed investment. They know they upside will take care of itself.
It’s the downside, the ways you can lose your money that they are most concerned about.
I have spoken in the past about implementing this principle when I bought my first property. I was not aware at the time that this was an investing principle. But I see now that this is precisely what I was speaking about in the video below.
If the property purchase and business start-up worked out myself and my brother would have done well and seen a good return on our time, effort and money.
But if it did not work out, we would have got our money back, on account of the value of the property on its own, regardless of the business.
It has taken over 35 years for me to learn that this is a principle of investing. I naturally knew it at the time, however.
Here’s the video