Don’t invest what you can’t afford to lose

Sunday, 31st May 2009 10:17 - by Boredmum

‘Don’t invest what you can’t afford to lose’. We read that many times on the bulletin (chat) boards. Do people actually take this advice? I have read many heartbreaking comments in the time that I have been investing. There have been people using money they haven’t got, those who lose everything, and people investing money needed for a particular goal in the hope that they can grow a bigger pot…only to see it crash down around them. A good associate of mine recently said “When I played the racetracks I went with money in both my trouser pockets. The left pocket was for betting and the right pocket contained the ‘real’ money that paid for my food and daily expenses. The money in my left pocket was stock-in-trade. It had no real value. It was just pieces of paper with numbers on. If I had applied value to it, it would have clouded my judgement. I think that is the best way to view money invested in Stock Markets also.” I thought that was a wonderful statement. Everyone who invests in the stock market needs to separate those pockets and use that attitude. That way, if it does turn against you, then you still have one full pocket for the important things in life.