He also has a second rule and that is to never forget rule number one!
Did you know that a loss of 25% requires a positive return of almost 34% just to get back to even? What? How can that be?
A 50% loss of your retirement account means you have to double your money (receive a 100% return) just to be whole again.
Think about it. If you have $100,000 and lose 50%, you’re left with $50,000. Now you’re left with the insurmountable task of going from $50,000 back to your original deposit of $100,000; a return of 100%! How long do you think that will take? Two years? Five years? Ten years or more? What if you experience additional losses in the process of trying to get back to even? What if you’re drawing income from this account? What kind of impact will that have?