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 up those credit cards that consume our energy long after we stop enjoying what we bought with them, the sooner the better. When it comes to investing, we want easy dialing 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 he continues to give?
A century ago, American writer George S Clason took a different approach. In The Richest Man in Babylon, he gave the world a treasure trove 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 as relevant today as it was a century ago, when the collapse of Wall Street and the Great Depression were looming.
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, this is for you:
Law No. 1: Gold comes gladly and in increasing quantities to anyone who invests at least a tenth of their earnings to create property for their future and the future of their 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 a new car. That is in the long run. Your 10% may include your pension contributions, ISAs, premium bonds or any type of savings account with high interest / limited access. OK, interest rates for savers are now at historically lowest 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 him a profitable job. So if you want to invest, not 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 thing you can hope for for 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 fund managers in the form of funds, but before you part with one penny, see Laws 3, 4 and 5 …
Law no. 3: Gold is kept under the protection of a careful owner who invests it on the advice of those who handle it. Talk to a qualified, experienced financial advisor before doing anything. If you don’t know it, investigate. Check them out online. What expertise do they have? What kind of clients? Read the reviews. Call them first and understand what they can offer you, and then decide if the face-to-face meeting will work. Check their commission arrangements. Are they independent or tied to a particular company, under contract to promote that company’s financial products? A decent financial advisor will encourage you to get the basics: retirement, life insurance, where you will live, before directing you to invest in emerging markets and space travel. When you are satisfied that you have found a counselor you can count on, listen to him. Trust their advice. But check your relationship with them at regular intervals, say once a year, and if you’re not happy, look elsewhere. Chances are, if your assessment was sound at all, you will stick to the same counselor for years to come.
Law no. 4: Gold eludes anyone who invests it in affairs or purposes with which they are unfamiliar or which are not approved by those who are skilled in its safekeeping. If you have a deep knowledge of 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 share ownership plan, it makes sense to take advantage of that if you are sure your company has a good prospect. But you should never invest in any market or financial product that you don’t understand (remember the crash!) Or can’t fully explore. If you are tempted to try currency or options trading and have a financial advisor, talk to him first. If they are not up to date, ask them to refer you to someone who has. 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 who follows the tempting advice of a deceiver and conspirator or who believes in his own inexperience. Again, the fifth law follows the heels of the fourth. If you start searching the internet for financial advice and wealth-creating ideas, your inbox will soon be full of “scammers and plotters” promising you land if you invest £ 999 in their “system” to convert £ 1 to £ 1XXXXXX to Chicago trading exchange. Remember, the only one who makes money in the gold rush is the one who sells shovels. Buy the wrong shovel and you will quickly get into debt. Not only will you pay through your nose for a system that has no proven value; by following it you will probably lose much more than the price you paid for it. At the very least, you should check the original product reviews. And never buy a system, investment vehicle or financial product from any company that is not registered with a national supervisory authority, such as the Financial Conduct Authority for the UK.