Do you want to get rich without compromising your integrity? Do you want to invest wisely and avoid emotional mistakes? Do you want to enjoy what you have and avoid greed?

If you answered yes to any of these questions, you might benefit from applying the philosophy of Stoicism to your financial life. Stoicism is a way of living that helps you focus on what you can control and ignore what you can’t. It also helps you cultivate virtues like wisdom, courage, justice, and self-control.

In this blog post, I will share with you how I use Stoicism to become a better investor and wealth builder. I will also show you the three key milestones for building wealth, and the 90/10 rule of investing that I follow.

I’ve studied the work of various investors, such as Warren Buffett, Charlie Munger, Peter Lynch, Bill Ackman, Joel Greenblatt, Jon Bogle, Jesse Livermore, George Soros, and Paul Tudor Jones. After spending years studying a wide range of philosophers and investors, I’ve learned that there are three key milestones for building wealth. I call this the Stoic path to wealth because I can see Stoic qualities in every single successful investor.

Milestone 1: Earn money

The first step to building wealth is to earn more than you spend on necessities. To do that, you need to acquire income-generating skills, such as writing, coding, speaking, leading, etc. These skills will help you create value for others and earn a living.

Acquiring skills is the most Stoic thing you can do because you start by focusing on what you control. And in today’s economy, a person who can create value with their skills will never be without a job for a long time.

Every investor that I’ve studied, started earning a living by putting in the work. Most of them had jobs, working for someone else. Warren Buffett worked as a securities analyst at Graham-Newman from 1954 to 1956. He started his own partnership after that. George Soros pursued multiple academic degrees between 1947 and 1954. Then, he took a job as a clerk at a small investment bank.

We all need to get started with earning money as the foundation of wealth building. It means you can create value from nothing but your skills.

Milestone 2: Lose money

The second step to building wealth is to learn how to deal with loss. This is something that most financial books and articles don’t cover. But the truth is, you will lose money at some point in your investing journey. And you need to be okay with that.

The majority of people hate to lose money. I can relate to this concept of loss aversion a lot. Growing up, our family lived paycheck to paycheck, and we were up to our neck in debt. As I grew older and started earning my own money, I started holding on to it for dear life.

This is a problem if you’re serious about investing. I can’t think of a single successful investor who did not lose money. In fact, the strategies of the majority of investors I mentioned are shaped by their losses.

Their biggest successes often came after their losses. This is a critical concept in building wealth. You must be okay with losing. Otherwise, you will never take a risk with your money. And what is investing? Taking risks.

The best investors look at wealth-building as a game. It’s just like sports—even the most successful teams in the history of the NBA, NFL, MLB, will lose multiple games on their paths to a championship. The key is to never lose big. When you invest, do everything you can to never lose more than 10% of your investment. You can always come back from that.

Milestone 3: Grow money

The third step to building wealth is to grow your money by investing in assets that appreciate in value or generate cash—or ideally have both. That’s all there is to investing. The difficulty is picking assets.

I personally started with investing in high-quality property because it’s relatively low risk, but it’s also low return. I’m currently earning a net return of 6%, after costs. That’s not uncommon when it comes to real estate.

If you go to YouTube or Reddit, thousands of salesmen want to make you believe that stocks are the best way to wealth. I don’t agree with that. It’s just one way to invest.

When it comes to the stock market, most investors agree that index funds are the way to go for most people. If you have more money, you could hire a financial planner or wealth management firm. But that pays off when you’ve acquired substantial wealth, not when you’re starting.

But what if you want to start investing by yourself without risking getting wiped out? I have a rule for that. The 90/10 rule of investing.

The 90/10 rule of investing

Most of us don’t have the desire to become full-time investors who want to beat the market. In the long-term, you’re better off putting your money in something like an S&P 500 or a Total Stock Market index fund. It’s the best way to get market returns without any effort.

But what about those individuals who want a little bit more upside? The people who are interested in the markets and want to take some risk, but don’t want to lose a lot of money. I’m like that as well. While I’ve been investing since 2007, my career is in writing and teaching. I enjoy my work and I don’t want to be a full-time trader.

But I still like to take a little bit of risk and potentially have a higher upside. We call that speculation. All the short-term success you see about Bitcoin, trending stocks, currencies, or commodities, are all about speculation. You buy an asset and hope to sell it at a higher price. Nothing wrong with that.

I just don’t want to put all my money on the line. So I created the 90/10 rule of investing, which states that you put 90% of the money you allocate to stock investing in an index fund. And you use 10% to speculate.

I take 90% of the money I want to invest in the market and put it in an index fund like Vanguard S&P 500 ETF. And I use 10% to make a few bets on things I think will take off. But since I’m taking risks with a small percentage of my money that’s meant for the stock market, I’m not taking a big hit if my riskier bets don’t pay off. And if they do? I’ll take the extra return.

Start investing: Don’t look for more answers

At some point, you must take action. But we tend to keep searching for that special piece of wisdom that makes the difference. So we keep reading more books, listening to more podcasts, and following the different investing sages.

As a result, we never take action, and we become our own worst enemy. No one said it better than Epictetus:

“Your relentless pursuit of wisdom postpones your actually possessing it. Quit chasing after tonics and new teachers. The latest fashionable sage or book or diet or belief doesn’t move you in the direction of a flourishing life. You do.”

Until you take your own money and put it on the line, you never know what it feels like to invest. I can say that I’ve made nearly all the investing mistakes one can make. I bet on popular assets that got cut in half within 24 hours. I’ve bought high and sold low dozens of times. I’ve bought low, sold a bit higher, and missed the biggest rise in price because I got out early. I’ve pulled out my money from an index fund, only to get back in when it recovered.

But Stoicism has helped me to become a better investor because it made me more level-headed. Every time you invest in something, you’re taking a risk with your hard-earned money, which will always remain scary. But no matter what happens, don’t talk yourself out of investing. You can’t afford it.

In the long term, markets still move in one direction: Up. You either take the ride up, or you stay where you are.

I hope you enjoyed this blog post and found it useful. If you did, please share it with your friends and family who might benefit from it. And if you have any questions or comments, feel free to leave them below. I’d love to hear from you.

Thank you for reading and happy investing!