We live in an impatient age and when it comes to money we want it more now, today, not tomorrow. Whether it’s a mortgage deposit or clearing those credit cards that consume our energy long after we stop enjoying what we bought them, the sooner the better. When it comes to investing, we want easy selection and a quick return. Hence the current craze for cryptocurrencies. Why invest in nanotechnology or machine learning when Ethereum is locked in an endless upward spiral and Bitcoin is a gift that keeps giving?
A century ago, the American writer George S. Clason took a different approach. In the richest man in Babylon, he gave the world a treasury of – literally – financial principles based on things that might seem old-fashioned today: caution, prudence, and wisdom. Clason used the sages of the ancient city of Babylon as spokespersons for his financial advice, but that advice is just as relevant today as it was a century ago, when Wall Street crashes and the Great Depression loomed.
Take for example the five laws of gold. If you want to put your personal finances on a sound footing, wherever you are in life, these are for you:
Law no. 1: Gold gladly comes in increasing quantities to one who puts in at least a tenth of his earnings to create property for his future and family. In other words, save 10% of your income. Minimum. Save more than you can. And that 10% is not for next year’s vacation or for a new car. It’s long-term. Your 10% can include your pension contributions, ISAs, premium bonds or any type of savings account with high interest / limited access. Okay, interest rates for savers are now at historic levels, but who knows where they will be in five or ten years? And compound interest means your savings will grow faster than you think.
Law no. 2: Gold works diligently and contentedly for a wise owner who finds a lucrative job for him. So if you want to invest more rather than save, do it wisely. There are no cryptocurrencies or pyramid schemes. We focus on the words “profitable” and “employment”. Let your money work for you, but remember that the best you can hope for from this side of the rainbow is a stable return in the long run, not winning the lottery. In practice, this probably means stocks in established companies that offer a regular dividend and a steady upward trend in stock prices. You can invest directly or through a fund manager in the form of a fund share, but before you part with one penny, look at laws 3, 4 and 5 …
Law no. 3: Gold adheres to the protection of a careful owner who invests it under the advice of those wise in handling it. Talk to a qualified experienced financial advisor before doing anything. If you don’t know it, research it. Check them out online. What expertise do they have? What kind of clients? Read the reviews. Call them first and feel what they have to offer, and then decide if the face-to-face meeting will succeed. See their agreement on the commission. Are they independent or are they contractually bound to a particular company to promote that company’s financial products? A decent financial advisor will encourage you to set the basics: retirement, life insurance, somewhere for life, before directing you towards investing in new markets and space travel. Once you’re sure you’ve found a counselor you can count on, listen to them. Trust their advice. But regularly review your relationship with them, say annually, and if you’re not happy, look elsewhere. Chances are, if your judgment was valid at all, you will stick to the same counselor for many years.
Law no. 4: Gold eludes anyone who invests it in jobs or purposes for which they are unfamiliar or which have not been approved by experts in its safekeeping. If you are deeply familiar with food retail, be sure to invest in a supermarket chain that increases market share. Likewise, if you work for a company that has an employee ownership scheme, it makes sense to take advantage of this if you are sure that your company has a good prospect. But you should never invest in any market or financial product that you don’t understand (remember the fall!) Or can’t fully explore. If you are tempted to try currency trading or options trading and have a financial advisor, talk to them first. If they are not in a hurry, ask them to refer you to someone who is. Best of all, stay away from anything you’re not sure about, no matter how much potential comes back.
Law no. 5: Gold flees from one who seeks impossible earnings or from those who follow the tempting advice of deceivers and intriguers or who believe in their inexperience. Again, the fifth law follows the heels. If you start searching the internet for financial advice and wealth creation ideas, your mailbox will soon be full of “scammers and conspirators” promising you land if you invest £ 999 in their system to convert £ 1 to £ 1XXXXXX on the Chicago Mercantile Exchange. Remember, the only one who makes money in gold rush is the one who sells shovels. Buy the wrong shovel and you will quickly bury yourself in debt. Not only will you pay through the nose a system that has no proven value; by following it you will probably lose a lot more than the price you paid for it. At the very least, you should check for true product reviews. And never buy any system, investment vehicle or financial product from any company that is not registered with a national supervisory authority, such as the UK Financial Conduct Authority.