Commandment 1: Don’t blow things up

There are very few investment opportunities that will compensate you accordingly if you blow up principal. The reward for a blow up risk needs to be outsized and that investment needs to be a small part of your portfolio. Don’t blow things up and don’t blow up your portfolio!

Commandment 2: Build a strong foundation

Build a strong foundation of diversification and income generation that will stand the test of time. Immediate income is great. But, a foundation that continues to spit out income year after year is a whole lot better.

Commandment 3: Concentrate and diversify

Concentrate your efforts while diversifying them at the same time. Don’t get too spread out in the hope for diversification. You can diversify within your geographic area and within your knowledge and interest area.

Commandment 4: Be tax efficient.

Again, current income is great. The government likes it too, often to the tune of 40% to 50%. Income that is deferred or is recognizable at one’s discretion can become very lucrative in tax savings or deferral alone. Capital gains income is better than earned income but deferred income is better still followed by unrecognized income being the sexiest of all. Notice I didn’t say NO income. I said unrecognized income. Earn income. Just don’t have taxable income.

Commandment 5: Don’t chase shiny objects

There are always amazing opportunities that you hear from friends that are in the news. Be skeptical of these. These are being sold to you in one way or the other. Do your own homework and do your own math and don’t worry about the sex appeal or missing out.

Commandment 6: Have fun.

Do something you enjoy. There are many investment opportunities that can be profitable. Do what interests you and what you enjoy. Life’s too short to make it a mutual fund, unless of course mutual funds float your boat.