The one golden rule of investing that you should always follow is “Never invest money you cannot afford to lose”. Investing is not saving. Saving is money you put aside that is kept in cash or other short term financial instruments that you can access in a few days or less for emergency needs. In contrast, investing is the process of putting your money to work making even more money for you.

If you always remember this rule and never break it, you shouldn’t have to worry about poverty during your retirement. But there is a natural human tendency to want to overreach, to put more money in than you can afford, and go for a huge pay-out. In fact, this trait tends to be magnified the more desperate someone is for money because they hope that hitting the jackpot will make all of their problems go away. You will see that a lot of people below the poverty line play the Lotto but that not very many executives do.

You cannot just view your “portfolio” as the stocks and shares you own. It encompasses so much more – your emergency cash reserves, your insurance policies, your fully funded pension funds, your property holdings, and even your professional skills that determine the income you earn in the job market.

It is amazing that the same people who spend weeks studying consumer ratings for a new cooker or washing machine would put all of their savings into a share or other investment they don’t understand. It is astounding that the same men and women who will protest if a shop assistant accidentally overcharges them €20 will throw €10,000 of their life savings into a scheme promising huge returns without understanding the risks.

It just doesn’t make any sense. Your first goal is to avoid major losses. Don’t get greedy. Be patient. Seek the advice of qualified, well-regarded advisers. Keep your costs low. The recipe may not seem exciting, but it has proven to work for generations.