All your life you have been working for money. But did you know that it can be the other way around? Yes, you can make money work for you instead. In order to do this, you need to learn to invest your money. However, investing your money is not as easy as it sounds. There are certain rules that govern investing. In ancient times, the residents of the city of Babylon understood this. They appreciated the value of money and applied some wealth rules. Thus, the city of Babylon was the wealthiest city in the world during that time. So, how to build personal wealth? What are the investing rules from The Richest Man in Babylon?
Best-selling author George Clason narrated the teachings of Arkad, the richest man in ancient Babylon in his book The Richest Man in Babylon. The story is filled with ancient yet timeless wisdom and knowledge. The book contains practical lessons and advice that can still be applicable even in this modern world.
Here are the the investing rules from the Richest Man in Babylon coined as the Five Laws of Gold:
1. Save 10% of Income.
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 the first step in the road towards financial freedom. That is to save 10% of income. This money will serve as the seed of your money tree. Consistency is the key. By consistently setting aside 10% of your income, you are slowly building your wealth.
Those who do not save will forever find themselves in the rat race, living from paycheck to paycheck. The key is to spend less than you earn. Many people save what is left after expenses. That should not be the case. Rather, as soon as you receive your income, you should automatically set aside 10% for savings first.
2. Invest Your Money
Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
The second step is to invest your money. Putting your money under your bed or depositing it on a regular savings account is never a good idea because of inflation. Your money will soon lose its value over time. It is only through investing will you be able to take advantage of the power of compound interest and make money for you instead of you working for money.
There are many investment vehicles available out there. Choose one that will best suit your interest and risk tolerance. You can choose from bonds, funds, stocks, stock options, cryptocurrencies. Fixed properties such as real estate or movable properties such as jewelries, antique and vintage items, artworks and luxury watches are also good options. You can even start your own business.
3. Seek Expert Advice / Have a Mentor
Gold Clingeth to the protection of the cautious owner who invests it under the advise of men wise in its handling.
Who do you ask for advice? This is one area where most people fail, especially when it comes to money. People have the tendency to ask for money advice from people they are familiar and comfortable with. However, that should not be the case. Instead of asking someone that you are comfortable with, learn to seek the advice of financial experts.
Have a mentor. A mentor is someone who has already achieved your goals. For example, you want to learn how to play tennis. Will you get a coach who does not know how to play the sports? Of course not! Another example is if you are failing math in class, will you hire an English tutor to teach you math? It is the same way in life, seek the advice of experts. Be choosy when finding a mentor. Do not ask a friend who is broke for money advice.
4. Only Invest on Something That You Are Familiar With
Gold slippery 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.
Have you heard of stories of people losing all their investments? Yes, it happens. It is possible to lose all your hard-earned money if you are going to invest on something that you are not familiar with.
This fourth rule of the laws of gold takes investing to the next level. It implies that it is not enough to simply ask advice from other people. It also entails the investors to know, learn and understand what they are getting into. Don’t just blindly trust others. Do your homework too. Study the market. Do research. Enroll in classes. In short, learn, learn, learn.
5. Do Due Diligence
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.
Due diligence means investigating, reviewing and checking the facts. Many people lost a lot of money because they did not bother doing a background check on the seller and the investment. For example, in real estate investing, research first before buying a property. Verify the deed on the land registration bureau. Bring an engineer or architect to inspect the property for any unseen damage. Check the surrounding community if it is a safe environment. Ensure that it is not a flood zone. Talk to the neighbors for a brief history or stories of the house. This is what due diligence is all about.
And always remember before you invest in anything, if something is too good to be true, chances are it is. Don’t let others fool you.
Apply the investing rules from the Richest Man in Babylon and soon you will be on your way to building your personal wealth.
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