Losing money is the only thing keeping investors from creating wealth. Sounds obvious, but many investors don’t pay attention to this mistake. As Warren Buffet so eloquently put, “The first rule of investing is don’t lose money. The second rule is don’t forget rule number one.” When you lose money, it takes twice as much money just to get back to break even. For example, if an equity loses 50% in value it will require a 100% increase just to get back to break even. When you take substantial risks, it’s not unusual for your asset to decrease 50% in value, but gaining 100% is far more unusual. While the dividends and earnings from your winning stocks can be reinvested in order to take advantage of compound interest, your losers also compound and quickly eat away any gains you achieve in other investments. No one is immune to losing money, but when investors put themselves in too much danger of losing money, those losses compound. But all investors seek to make money, which is why they take some risk. In order to accumulate great wealth, it is necessary to protect the downside by investing in what appears to be as close to a sure thing as possible.