By Al Emid  

Toronto – Canada

 

Al Emid has worked in communicating ideas and concepts since beginning his career at an educational television network in 1967. He is the co-author and author of several financial books, most recently The Emid Report on Volatility 2019 available on all major book sites.

 

 

 

Chapter 5

 

The First Two Rules of Investing

 

 

 

Whenever I say this in a meeting, I get quizzical and shocked looks until I explain further. The first goal of investing is not just to make money.  Notwithstanding its obvious importance, that’s the second goal.  The first goal of investing is not to lose money, or stated more formally: capital preservation.

 

When you are confident that your capital is safe, then you – preferably in the company of an accredited advisor – can turn your attention to making money.

Within that, and again in consultation with your advisor, crystallize your goals for the yield from your investments.   If you do not have an advisor and are about to go for your first meeting with a prospective advisor to whom you have been recommended, or if you are in the throes of changing advisors, you may find it useful to crystallize your various goals on a sheet of paper before the meeting.

 

If you are early in your early earning years, with no apparent threat to your continued income and no heavy demands on your funds outside of day-to-day expenses, it may be appropriate to be fully invested except for a modest pool of cash.  If you are approaching retirement and the idea of setting up a new business appeals to you, you may need to increase the liquidity in your portfolio.

If you are anticipating children, you will likely need more liquidity in your investments.  If elder care is in your plans, it may or may not mean a greater need for available cash.

If you have recently come through a divorce – even if the terms have been settled – it might be appropriate to keep a larger pool of cash than otherwise until you have settled into your new lifestyle.

 

 

 

 





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