8 rules of prudent investing from Larry Swedroe

I think that Larry Swedroe always does a great job making complex ideas more simple.  He has done this again in compiling this list.

Steve

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While we search for the answers to the complex problem of how to live a longer life, there are simple solutions that can have a dramatic impact.

For example, it would be hard to find better advice on living longer than: do not smoke, drink alcohol in moderation, eat a balanced diet, get at least a half an hour of aerobic exercise three to four times a week, and buckle up before driving.

The idea that complex problems can have simple solutions is not limited to the question of living a longer life.

I have spent almost 40 years managing financial risks for two financial institutions as well as advising individuals and multinational corporations on the management of financial risks. Based on those experiences, I have compiled a list of rules that will give you the greatest chance of achieving your financial goals:

1. Do not take more risk than you have the ability, willingness, or need to take. Plans fail because investors take excessive risks. The risks show up unexpectedly, which leads to the abandonment of plans. When developing your plan, consider your horizon, stability of income, ability to tolerate losses, and the rate of return required to meet your goals.

read the complete article here:  8 rules of prudent investing | Toronto Star.