The little book of safe money - three commandments

Thou shalt take no risk that thou needst not take.
Always ask yourself: Is this risk necessary? Are there
safer alternatives that can accomplish the same objective?
Have I studied the pros and cons of each before settling
on this choice as the single best way to achieve my goal?
Unless you ask, do not invest.


Thou shalt take no risk that is not most certain to
reward thee for taking it.
Always ask yourself: How do I know this risk will be
rewarded?

“ Most certain to reward thee ” does not mean that
there is zero chance that you will not be rewarded. It
does mean, and must mean, that you are highly likely to
be rewarded. What is the historical evidence, based on
the real experience of other investors, to suggest
that this approach will actually succeed? During the periods
in the past when it hasn ’ t worked — and every investment
in history has gone through such dry spells,
regardless of what the hypesters might tell you — how big
were the losses?
Unless you ask, do not invest.

Thou shalt put no money at risk that thou canst
not afford to lose.
Always ask yourself: Can I stand to lose 100 percent of
this money? Have I analyzed not merely how much I will gain
if I am right, but how much I can lose and how I will overcome
those losses if I turn out to be wrong? Will my other
assets and income be sufficient to sustain me if this investment
wipes me out? If I lose every penny I put into this idea, can I
recover from the damage?
Unless you ask, do not invest.

THE L I T T L E BOOK O F S A F E MONEY
Safe Bets
Never invest without thinking twice and consulting the Three
Commandments.
Answer the questions that accompany the Three Commandments
above whenever you invest; they will help you shape
an investment policy , telling you not only where to put your
money but why.
.