The 10 Investment Commandments

Charles Ellis has taught investment courses at the Harvard Business School and the Yale School of Management. He is an award-winning author on the subject of investing, his most popular book ‘Winning the Loser’s Game’ features excellent discussions on a number of issues including investing in retirement, coping with risk and building a successful investment portfolio.

One of the most interesting items in the book is what Ellis calls “The ten investment Commandments”:

  1. Save. For your future happiness, and education for your kids.
  2. Don’t Speculate. If you must gamble, limit the amounts you play with to the same amounts you would stake at Las Vegas.
  3. Don’t do anything by investing primarily for tax reasons. Tax shelters are poor investments. Tax loss selling is primarily a way for brokers to increase their commissions. There are exceptions, of course, and some are important.
  4. Be sure you have an astute estate plan that is current with your financial situation and the ever-changing tax laws.Don’t think of your home as an investment. Think of it as a place to live with your family.
  5. Never do commodities. It’s only ever price speculation, not investment in economic productivity or value creation.
  6. Don’t be confused about fund managers. They are usually very nice people, but their job is not to make money for you. Their job is to make money from you.
  7. Don’t invest in new or “interesting” investments.
  8. Don’t invest in bonds just because you’ve heard they’re safe.
  9. Write out your long-term investing goals and stick with them.
  10. Distrust your feelings. When you feel euphoric, you are probably cruising for a financial bruising.
  11. These are directives that are embedded in our business and are an integral part of our advice to you. As you know already know, our message never changes.