We live in an impatient age, and when it comes to money we need more of it now, now, not tomorrow. When it is a deposit for a mortgage or draining those credit cards that sap our energy after we stopped enjoying what we bought together, the sooner the better. When it comes to investing, we need easy pickings and fast returns. Hence the present mania for crypto-currencies. Why invest in nanotechnology or machine learning if Ethereum is locked in an endless upward spiral and Bitcoin is the gift that keeps on giving?
A century ago, the American author George S Clason took another approach. From The Richest Man in Babylon he gave the world a treasure trove – literally – of monetary principles based on things which may appear old-fashioned today: caution, prudence and wisdom. Clason utilized the wise men of the ancient city of Babylon as the spokesmen for his financial advice, but that advice is as important today as it was a century ago, when the Wall Street Crash and the Great Depression were looming.
Take for instance, the five laws of gold. If You’re looking to put your personal finances on a solid footing, wherever you are in life, these are for you:
Law No1: Gold comes thankfully and in increasing amount to anybody who places by at least a tenth of their earnings to create an estate for their future and that of the loved ones. To put it differently, save 10 percent of your earnings. Minimum. Save over that if possible. And that 10% isn’t for next year’s vacation or a new car. It is for the long-term. Your 10% may include your retirement gifts, ISAs, premium bonds or any type of high interest/restricted access savings accounts. OK, interest rates for savers are at historical lows today, but who knows where they will be in five or ten years? And compound interest means your savings will grow quicker than you think.
Legislation No2: Gold labours faithfully and contentedly for the smart owner who finds lucrative employment for it. Therefore, if you’re trying to invest as opposed to save, do it sensibly. We are focusing on the words”profitable” and”employment”. Make your money work for you but remember the best you can expect for this aspect of the rainbow is steady returns over the long run, not lottery wins. In practice this is very likely to mean shares in based companies offering a normal dividend and a steady upward trend in share price. You may invest directly, or through a fund manager in the kind of unit trusts, but before parting with one cent, see Laws 3, 4 and 5…
Legislation No3: Gold clings to the security of this careful owner who invests it under the recommendation of those wise in managing it. Before you do anything, speak with a qualified, experienced financial advisor. If you do not know one, do some research. Check them out Online. What experience do they have? What type of clients? Call them first and get a feel for what they can provide you with, then decide whether a face to face meeting will operate. Check out their commission agreements. Are they independent or tied to a specific company, under contract to drive that provider’s financial products? A good financial advisor will encourage you to get the basics in place: retirement, life insurance, somewhere to live, before directing you towards investing in emerging markets and space travel. When you are satisfied that you have found an advisor you can depend on, listen to them. But review your connection together at regular intervals, say annually, and if you are not happy, look elsewhere. Odds are, if your judgment was sound in the first place, you are going to stick with the exact same adviser for several years to come.
Legislation No4: Gold slips away from the person who invests it in companies or intentions by which they not familiar or which aren’t accepted by those skilled in its own keep. In case you’ve got a deep understanding of food retail, by all means invest in the supermarket that is increasing market share. Likewise, if you work for a business that has an employee share ownership scheme, it is logical to take advantage of it, if you are positive your company has good prospects. Nevertheless, you shouldn’t invest in any industry or financial product that you don’t know (remember the Crash!) Or can not fully research. If you’re tempted to try your hand at money dealing or options trading and you have a financial advisor, speak with them first. If they are not up to speed, ask them to refer you to someone who is. On top of that, steer clear of anything you are not sure about, however big the potential yields.
If you begin scouring the web for financial advice and wealth creation ideas, your inbox will soon be filled with”tricksters and schemers” promising you the ground if you will spend #999 in their”system” for turning #1 to #1XXXXXX on the Chicago Mercantile Exchange. Bear in mind, the only one who makes money in a gold rush is the 1 selling shovels. Buy the incorrect shovel and you will quickly dig yourself into debt. Not only are you going to pay through the nose for a system which has no proven value; by following it you will most likely lose a whole lot more than the price you paid for this. At the very least you need to check real reviews of the item. And never get any platform, investment vehicle or financial product from any company which isn’t registered by a national watchdog, like the Financial Conduct Authority for the United Kingdom.
These five laws are of higher value than gold … Next time we will look at George S Clason’s seven remedies to get a lean purse.