If investment is as simple as just buying something for income, then compound interest should be suffice for this purpose. For example, if the Medici family had set aside $100,000 in a fund for 5% compound interest return, its 1933 value will be a staggering $517,000,000,000,000,000!

But there are a lot of threat to the preservation of capital: war, political change, new technical breakthrough, to name a few. As a result, only a handful of poeple can turn a profit from investment. Actually, for those who lost a portion of their purchasing power, they have done a lot better than most in the market.

Therefore , the author urged the readers to set a very high goal in their investment. The investors should aim at return so high such that it can cover the average loss sustained in the overall investment activities. The loss can be a consequence of, for example, poor investment decision, the effects of exchange rate changes, and unexpected closing position due to change in circumstances etc.



Quick link to The Battle for Investment Survival by Gerald M. Loeb