Don't lose money (seriously)

Why capital losses matter more than you think

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Don’t lose money (seriously)

In last week’s post, I wrote the following:

One of the most important aspects of investing carefully is not losing your money. Avoiding principal loss is not talked about enough and I will write on this in detail next week. One of Justin Pugh’s favorite quotes is, “money is like soap, the more you play with it the less you have."

I think it’s abundantly clear that understanding the upside of a real estate transaction is important and is ultimately the reason why people invest. Compound interest does wonders. Having said that, I’ve noticed from my LP Advisory work that, when look at an investment opportunity, tend to pay too much attention to upside and not enough attention to downside.

I regularly hear comments like “what do you mean ‘lose money’ - you can just sell the asset.” Many investors will put the probability of losing their money on a real estate investment at 0%, when in reality that’s not the case. You can certainly make a lot of money on an investment, but you can also lose money - I see it daily in my line of work.

A great YouTube video on this as well

Let’s talk about why not losing money is one of the most important parts of investing.