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Chapter One: Protect What You Already Have
The great investor, Warren Buffet, has two important rules:
Rule #1: "Don't lose money"
Rule #2: "Don't forget rule #1"
As an example in my workshops, I like to use a simple $100 investment
that loses 50% of its value. The investment is worth $50. The following year
you rebound with a 50% gain. Whew, that was close -- you made your
money back, right? Wrong!
$100 loses 50% = $50
$50 gains 50% = $75
You need a 100% gain to break-even on a 50% loss!
Losing 50% of your portfolio can be devastating no matter what your age.
Younger investors are led to believe that their youth allows time to recover
from massive stock market losses. I disagree with that logic, and here's
why.
