On July 9, I became the proud new father of a lovely baby girl. Amidst the sleep-deprived meditations during the 3:30 a.m. soothing sessions, I decided success is nearly guaranteed for investors who protect their assets like a newborn baby.

My wife and I spent a long time preparing for and nurturing our little darling while she was in the womb. This process takes even more time and energy during the accumulation of assets. In the case of the newborn, we protect our little munchkin with all our heart and soul. So, why don't we use the same vigor when protecting our hard-earned nest egg?

For example, if you wouldn't let your newborn outside without the proper clothes, hat, and blanket, why would you let your securities sit naked on the jungle floor of the global markets? A baby can easily get sick (or worse) when we don't provide protection. As many investors learned in 2000 and 2008, the same can happen to a portfolio subjected to the whims of unethical management, speculative manias, and unconfident consumers.

Thus, like raising a newborn, successful investing is one perpetual exercise in mitigating risk. We need to use tender care and due diligence when choosing our investments or investment advisors. Ask yourself, "Would I trust my newborn with this company or investment advisor? Would I leave my child with the CEOs of Google (GOOG), Apple (AAPL), Electronic Arts (ERTS), Coach (COH), or US Steel (X)? If not, then you shouldn't allow them to coddle your cash, either!

I know this isn't the simple, get-rich-quick answer most people want to hear. However, this is the cold truth. It's a major lifelong challenge to raise a child as well as a nursery of assets on which you can retire.

The key is using vigilant attention to monitor each investment. These are just some of the questions you should be asking on either a monthly or quarterly basis: 

1. Has management changed?

2. Has the core product line changed or lost favor?

3. Does your investment advisor submit to the most rigorous oversight standards?

Lastly, like a good health insurance policy for a little baby, every investment needs a stop-loss point at which you can minimize your damage. As I always say, "You can always repurchase an investment, but if you don't get out, it can go against you forever."

Take some time to consider that. If you never allow any single investment to lose more than 10-15%, you'll never have to worry about the existential nausea which accompanies a dramatic 50% loss. That, my fellow asset-rearers, is the best financial health insurance policy you will ever purchase.

So take a few moments to consider what it takes to be a successful parent (and you don't need children to know the answer). Now, imagine how happy and healthy your portfolio will look if you apply the same tender love and care.