Investment Commandments

Strategy to Follow

I – Thou shalt consider every dip / crash as an “buying opportunity”. When whatever investment you have takes a sudden and large drop, this is not a time to panic, this is an opportunity to buy more.

II – Thou shalt aim for returns of 20% or more per year. These are what will grow your wealth.

III – Thou shalt aim for a minimum return of at least 10% per year. Remember: real inflation is the growth of the money supply. Long term (since 1985) this has averaged 5.7%. If your investment is paying less than this, you are actually losing wealth.

IV – Thou shalt only make long term investments. If you don’t have confidence the investment will be a good investment five or ten years from now, then you probably shouldn’t invest in it. Short term investments are called gambles. If you can afford to lose, then fine, but don’t fool yourself into thinking it’s a good investment.

V – Thou shall not sell at a profit something you’ve held for less than a year, unless it is in a tax protected account like an IRA. Don’t waste money paying short term capital gains tax!

VI – Thou shalt use gold as your “cash”. Never hold fiat currency in an amount larger than to cover your short term expenses. Gold or other valuable commodities should make up a significant portion of your portfolio. The percentage should reflect your life situation and strategy.

VII – Thou shalt not trust a dying currency. Fiat currencies are evil and the enemy of the common person.

VIII – Thou shalt avoid buying at a peak. Unless an investment has a long track record of steady gains, don’t buy it when it is very near it’s all time high.

IX – Thou shalt see the big picture. Do not be distracted by the day to day noise or any media hype.

X - Thou shalt not use leverage. When you make an obligation that you can not cover, if things don’t go as planned, is when you stand to lose money. Some people may disagree with me here, but I prefer to avoid personal disasters and maintain a robust portfolio capable of weathering any storm.

XI – Favor Roth accounts over traditional IRAs. Roth accounts give you flexibility when you retire. Traditional IRAs force “Required Minimum Distributions”. Remember, this is a long term investment, long term benefits are more important than short term tax breaks.

Rules are made to be broken. The above should serve you well, but sometimes you must judge the world situation and do something that otherwise might not make sense.