The five laws of gold

We live in an impatient age and when it comes to money, we want more of it now, today, not tomorrow. Whether it’s a mortgage deposit or clearing those credit cards that drain our energy long after we stop enjoying what we bought with them, the sooner the better. When it comes to investing, we want easy choices and quick returns. Hence the current obsession with cryptocurrencies. Why invest in nanotechnology or machine learning when Ethereum is locked in an endless upward spiral and bitcoin is the gift it continues to give?

A century ago, the American writer George C. Clayson took a different approach. In The Richest Man in Babylon, he gave the world a treasure trove — literally — of financial principles based on things that may seem old-fashioned today: prudence, caution, and wisdom. Clayson used the sages 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 collapse of Wall Street and the Great Depression loomed.

Take, for example, the five laws of gold. If you want to put your personal finances on a solid footing, wherever you are in life, these are for you:

Law №1: Gold comes with pleasure and in ever-increasing quantity to anyone who invests at least one-tenth of his profits to create an estate for his future and that of his family. In other words, save 10% of your income. At least. Save more than that if you can. And those 10% are not for next year’s vacation or a new car. This is for the long term. Your 10% can include your pension contributions, ISAs, bond premiums or any type of high interest / limited access savings account. Okay, now interest rates for savers are at historically low 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 №2: Gold works diligently and contentedly for the wise owner, who finds him a lucrative job. So if you want to invest rather than save, 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 for this side of the rainbow is a stable long-term return, not lottery winnings. In practice, this is likely to mean shares of established companies that offer a regular dividend and a steady upward trend in the share price. You can invest directly or through a fund manager in the form of unit trusts, but before parting with a penny, see Laws 3, 4 and 5 …

Law №3: Gold adheres to the protection of the prudent owner, who invests it under the advice of the wise in handling it. Before you do anything, talk to a qualified, experienced financial advisor. If you don’t know one, do some research. Browse them online. What expertise do they have? What customers? Read the reviews. Call them first and feel what they have to offer, then decide if the face-to-face meeting will work. See their commission arrangements. Are they independent or tied to a particular company, with a contract to sell the financial products of that company? A decent financial advisor will encourage you to take the basics: retirement, life insurance, live somewhere 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 review your relationship with them at regular intervals, say annually, and if you’re not happy, look elsewhere. It is likely that if your judgment was sound in the first place, you will stick to the same counselor for many years to come.

Law №4: Gold eludes anyone who invests it in a business or purpose that they are unfamiliar with or that are not approved by its custodians. If you have in-depth knowledge of food retail, be sure to invest in a supermarket chain that increases market share. Similarly, if you work for a company that has an employee equity scheme, it makes sense to take advantage of it if you are sure that your company has good prospects. But you should never invest in a market or financial product that you don’t understand (remember the crash!) Or can’t fully explore. If you are tempted to try your hand at currency trading or options trading and have a financial advisor, talk to him first. If they don’t know, ask them to point you to someone who is. Best of all, avoid anything you’re not sure about, no matter how big the potential return.

Law №5: Gold flees from one who seeks impossible profits or who follows the tempting advice of cunning and cunning people or who trusts his own inexperience. Again, the fifth law follows the fourth. If you start surfing the internet for financial advice and wealth-creating ideas, your mailbox will soon be full of “scammers and tricksters” who promise you land if you invest £ 999 in their “system” to convert £ 1 at £ 1XXXXXX on the Chicago Board of Trade. Remember that the only one who makes money in 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 the 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 real product reviews. And never buy any system, investment instrument or financial product from a company that is not registered with a national supervisory authority, such as the UK Financial Conduct Authority.