I recently pulled an old book off the shelf and was intrigued by all the things I had forgotten. “The Richest Man In Babylon” has always been a great read and is so jam-packed with financial wisdom, it’s nearly impossible to remember it all. As I perused the pages, the title regarding the ‘rules of gold’ very much appealed to me, and I thought I would share them with you today.
1) Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
First of all, yes, the reading is a bit old-timey… but this is ancient Babylon here – they talked a little different back then.
If a man invests at least 10% of his income, he will surely create great wealth and be able to live on the interest in his later years.
2) Gold laboreth diligently and contentedly for the wise owner who find for it profitable employment, multiplying even as the flocks of the field.
The natural tendency is to work for your money, but few consider that money could work for us! Once we save our 10% from our earnings, we can now put it to work in an investment of our choice. Perhaps this is real estate, the market, or a personal business; if you allow your money to work for you, life will soon become much easier.
3) Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
Since I have a degree in Finance, I often think that I have an upper hand when it comes to the market. This simply isn’t true. Even the most intelligent minds can lose money in stock trading. Only when I begin to think humbly do I consider the wise options. Always consider the source from which advice is given! If your broke friend tells you not to pay off your debts, that there’s plenty of time to do that later in life, please do not listen to him. He’s broke!
Consider the counsel of those who have already traveled the road and have succeeded along the way. Offer to take them out to lunch in return for some advice. Most likely, they will be honored and gladly offer their wisdom.
4) Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
Simply put, don’t put money toward something that you don’t understand. If your advisor tells you that the investment will be a great tax write-off, run the other direction! If you simply cannot understand the investment, it was probably made that way for a reason. Most likely, you will lose money if you invest in it.
5) Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
Those that are new to investing are often looking for the investment that will net them 50% in their first year. This just isn’t likely to happen, and if someone promises this to you, they are either a liar, or they are being bamboozled themselves. Be content to earn a modest gain. It will not be fun and exciting in those first few years, but once that interest starts compounding, fun will come in the form of dollar signs.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.