The Five Laws of Gold

We live in impatient times and when it comes to money, we want more today, not tomorrow. Whether it’s saving for a mortgage or cleaning up credit cards that drain our energy after we stop enjoying the things we buy with them, the sooner the better. When it comes to investing, we want easy options and quick returns. Hence the current mania for cryptocurrencies. Why invest in nanotechnology or machine learning when Ethereum is locked in an endless upward spiral and Bitcoin is the gift that keeps on 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 treasure trove of financial principles based on what might seem antiquated today: prudence, prudence, and wisdom. Clason used the wise men of the ancient city of Babylon as spokesmen for his financial advice, but that advice is as relevant today as it was a century ago, when the Wall Street Crash and the Great Depression loomed.

Take, for example, the five laws of gold. No matter where you are in life, if you want to put your personal finances on a sound footing, these are for you:

Law #1: Gold comes happily and in increasing quantities to anyone who puts at least one-tenth of their earnings into creating wealth for their future and their family’s future. In other words, save 10% of your income. Minimum. Save more than that if you can. And that 10% isn’t for next year’s holiday or a new car. It is long term. Your 10% can include your pension contributions, ISAs, premium bonds or any high interest/restricted access savings account. Well, interest rates for savers are now at historic lows, but who knows where they’ll be in five or ten years? And compound interest means your savings will grow faster than you think.

Law #2: Gold works diligently and gladly for a wise owner who finds him profitable work. So, if you want to invest instead of saving, do it wisely. No cryptocurrencies or pyramid schemes. We focus on the words “profitable” and “employment”. Make your money work for you, but remember that the best you can hope for this side of the rainbow is steady income over the long term, not lottery wins. In practice, this most likely means stocks of established companies that offer regular dividends and a steady upward trend in share price. You can invest directly or through a fund manager in the form of a unit trust, but before you part with a penny, check out Laws 3, 4 and 5…

Law #3: Gold clings to the protection of a prudent owner who invests it with the advice of the wise who govern it. Before you do anything, talk to a qualified, experienced financial advisor. If you don’t know one, do some research. Check them out online. What experiences do they have? What kind of customers? Read the reviews. Call them first and get a feel for what they can offer you, then decide if a face-to-face meeting will work. Check their commission rules. Are they independent or tied to a particular company, under contract to push that company’s financial products? A decent financial advisor will encourage you to get the basics down before investing in emerging markets and space travel: retirement, life insurance, a place to live. When you’re happy you’ve found a counselor you can trust, listen to them. Trust their advice. But review your relationship with them regularly, say annually, and if you’re not happy, look elsewhere. Chances are, if your decision was a sound one in the first place, you’ll stick with the same advisor for many years.

Law #4: Gold moves away from a person who invests it in businesses or purposes that are not approved by those who do not know or are competent to keep it. If you have deep knowledge of food retailing, invest in a supermarket chain that is increasing market share. Likewise, if you work for a company that has an employee share ownership scheme, it makes sense to take advantage of it if you are confident that your company has good prospects. However, you should never invest in any market or financial product that you do not understand (remember Crash!) or fully research. If you are interested in trying your hand at forex trading or options trading and have a financial advisor, talk to them first. If they’re not up to speed, ask them to refer you to someone who is. It’s best to avoid anything you’re not sure about, no matter how great the potential returns.

Law #5: Gold avoids the person who seeks impossible profits or follows the attractive advice of tricksters and tricksters or relies on his own inexperience. Again, the fifth law follows the fourth law. If you start scouring the internet for financial advice and wealth building ideas, invest £999 in their ‘system’ to turn £1 into £1XXXXXX, your inbox will soon be full of ‘scammers and scammers’ promising you the world. Chicago Mercantile Exchange. Remember, it’s only the backhoe who makes money in the gold rush. Get the wrong shovel and you’ll quickly find yourself in debt. You won’t just pay through the nose for a system with no proven value; by following it, you will probably lose more than you paid for it. You should at least check the original reviews of the product. Never buy a system, investment vehicle or financial product from any company that is not registered by a national regulator such as the UK’s Financial Conduct Authority.