The Five Laws of
Gold are based on the book The Richest Man in Babylon by
George S. Clason. The book was originally written in 1926, however, the
principles taught in this great literary work are still applicable today.
When you decide that you want to create wealth for yourself and your family, it
is imperative that you understand money and how it works. It is no
coincidence that there is only a small percentage of the world who are
considered wealthy. These individuals have taken the time to learn and
understand the principles of money, and they have applied those principles to
create their wealth. In Clason’s book, he provides several lessons on how
to accumulate wealth and also how to maintain it. Below is one of the
lessons in which the five laws of gold are explained.
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.”
This is a fairly
easy concept to understand. It is to simply save one tenth of whatever
you earn. So if you have income of $2,000 a month, then you should be
saving $200. Leaving you with a sum of $1,800 to live on. Although this
concept is simple, I can attest that it is much easier said than done.
However, I can also think of more challenging task in life than living off only
90% of your earnings. This rule translates in today’s society as, “PAY
YOURSELF FIRST.” The next rules explain what to do with the earnings that
you accumulate as you continue to pay yourself first!
2. “Gold laboreth diligently and contently for the wise
owner who finds for it profitable employment, multiplying even as the flocks of
the field.”
I’ve read that
those who have reached financial independence don’t work as hard because they
let their money do the heavy lifting. This was true in the prosperous
days of Babylon. The same holds true today in America, where there is an
increasing number of first generation millionaires. Money loves to be
around more money. The more the merrier! In order for this to happen, you must
find employment for your money, so that it can earn and gain more money.
Today, millionaires invest their money in stocks, franchises, and real
estate. And venture capitalist, like Tai Lopez, invest in startup companies that have the potential to be
profitable in the future. Investing your hard earned money can be very
risky, so you should do your homework and invest wisely.
3. “Gold clingeth to the protection of the cautious owner
who invests it under the advice of men wise in its handling.”
If I were to break
my leg, I can assure you that I wouldn’t be able to repair it myself and would
have to see a doctor. The same rule applies to investing. It would be
wise to seek someone who invests money for a living. If you wanted to
invest in real estate, it would be wise to seek an experienced real estate
investor. It’s ok not to know everything in the world about investing your
money. However, as the 3rd rule says, money will cling to you if you invest
under the advice of those who are wise in its handling. I don’t know
about you, but I definitely want money to cling to me!
4. “Gold slippeth away from the man who invest it in
business or purposes with which he is not familiar or which are not approved by
those skilled in its keep.”
Perhaps the most
successful investor in our time, Warren Buffet, stated in a letter to his
shareholders that he does not invest in any business which he does not
understand. This is another simple rule to understand. As
much as I admire @ElonMusk, I probably would
not invest in his company SpaceX (was funded by venture capitalist)
because I am not a rocket scientist and I’m not knowledgeable in rockets
and the science applied to them. Although I have to admit, it does sound
interesting. I would however invest in WingStop, (ticker symbol: WING) because I know chicken wings very
well! Too often people invest in things that sound cool or because they
heard Jim Kramer say that it was a great stock. If you’re going to put
your money into an investment, it would make sense to understand the company.
Another good example is Subway, as I often dine at Subway for lunch. I know
that if you were to franchise a Subway (must franchise, privately held company)
the likelihood of you going out of business is slim to none.
5. “Gold flees the man who force it to impossible
earnings or who followeth the alluring advice of tricksters and schemers or who
trust it to his own inexperience and romantic desires in investment.”
The last law is
very important, especially in today’s day and age. Before I disconnected
my cable, one of the shows that I often watched was CNBC’s American Greed. If you’re
not familiar with the show, it is about white collar criminals who normally
deceive people out of millions of dollars, commonly known as Ponzi
Schemes. The show usually shows the persons demise due them being greedy.
One of the most notorious Ponzi Schemes was orchestrated by Bernie
Madoff. Madoff, currently in prison, deceived many investors of nearly 65
billion dollars! Unfortunately, in our world today, we have to be
cautious of whom we invest our funds with; and in most cases, if the investment
sounds too good to be true then it most likely is.
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