“Rule No. 1: Never lose Money.
Rule No. 2: Never forget rule No. 1.”
The great secret to getting rich is getting your money to compound for you, and the larger sum you start with, all the better.
As an example $100,000 compounding at 15% for Twenty years will grow to $1,636,653 in year twenty, which gives you a profit of $1,536,653.
But let’s say you lost $90,000 of your initial capital before you even started and could only invest $10,000. Your investment would then only grow to $163,665 in year twenty, for a profit of $153,665.
This is a much smaller number. The larger the amount of money you lose, the greater the impact on your ability to earn money in the future.
That is something that Warren has never forgotten. It is also the reason why he drove an old VW Beetle long after he was a multimillionaire.