Delivering Innovation

We live in an impatient age, and when it comes to money, we want more now, today, not tomorrow. Whether it’s putting down a mortgage or paying off those credit cards that drain our energy long after we stop enjoying what we buy with them, the sooner the better. When it comes to investing, we want easy profits and quick profits. Hence the current mania for cryptocurrencies. Why invest in nanotechnology or machine learning when Ethereum is stuck 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—literally—of financial principles based on things that may seem old-fashioned today: caution, prudence, and wisdom. Clason used the wise men of the ancient city of Babylon as mouthpieces for his financial advice, but that advice is just as relevant today as it was a century ago, as the Wall Street Crash and the Great Depression loomed.

Take, for example, 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 No 1: Gold comes with pleasure and in increasing quantity to anyone who invests at least one tenth of their earnings to create a heritage for their future and that of their family. In other words, save 10% of your income. Minimum. Save more than that if you can. And that 10% is not for next year’s vacation or for a new car. It is for the long term. Your 10% can include your pension contributions, ISAs, premium bonds, or any type of high-interest/restricted-access savings account. Well, interest rates for savers are now at record lows, 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 No2: Gold works diligently and satisfactorily for the wise owner who finds profitable employment for it. So if he’s looking to invest rather than save, do so wisely. No cryptocurrencies or pyramid schemes. We are focusing on the words “profitable” and “employment”. Make your money work for you, but remember that the best you can hope for on this side of the rainbow is consistent long-term returns, not lottery wins. In practice, this is likely to mean shares in established companies that offer a regular dividend and a steady upward trend in share price. You can invest directly, or through a fund manager in the form of mutual funds, but before parting with a single penny, check Laws 3, 4 and 5…

Law No3: Gold clings to the protection of the cautious owner who invests it under the advice of the wise in its management. Before you do anything, talk to a qualified and experienced financial advisor. If you don’t know one, do some research. Check them out on the internet. What experience do they have? What kind of clients? Read the reviews. Give them a call first and get an idea of ​​what they can offer you, then decide if a face-to-face meeting will work. Take a look at their commission agreements. Are they independent or tied to a particular company, under contract to drive that company’s financial products? A decent financial adviser will encourage you to get the basics—pension, life insurance, a place to live—before turning you toward investing in emerging markets and space travel. When you’re satisfied you’ve found an advisor you can count on, listen to them. Trust their advice. But review your relationship with them at regular intervals, say annually, and if you’re not satisfied, look elsewhere. Chances are, if your judgment was correct in the first place, you’ll stay with the same advisor for many years.

Law No 4: Gold escapes those who invest it in businesses or purposes with which they are not familiar or are not approved by the experts in their custody. If you have a thorough understanding of food retailing, by all means invest in the supermarket chain that is increasing its market share. Similarly, if you work for a company that has an employee share ownership scheme, it makes sense to take advantage of it, if you are sure your company has good prospects. But you should never invest in any financial market or product that you don’t understand (remember the Crash!) or can’t fully research. If you are tempted to try your hand at forex trading or options trading and you have a financial advisor, talk to him or her first. If they are not up to date, ask them to recommend someone who is. Best of all, stay away from anything you’re unsure about, no matter how big the potential wins.

Law No5: Whoever seeks impossible profits or who follows the seductive advice of tricksters and intriguers or who trusts in their own inexperience, flees from gold. Once again, the fifth law follows in the footsteps of the fourth. If you start searching the internet for financial advice and wealth building ideas, your inbox will soon be full of “cheaters and schemers” promising you land if you invest £999 in their “system” to turn £1 into £1XXXXXX in the Chicago Mercantile Exchange. Remember, the only one who makes money in the gold rush is the one who sells shovels. Buy the wrong shovel and you’ll quickly be in debt. You won’t just 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 out the genuine reviews of the product. And never buy any system, investment vehicle or financial product from any company that is not registered by a national watchdog, such as the UK Financial Conduct Authority.

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