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| Wise Cracks Commentary with Dan and John The Secret to Wealth? It's Elementary |
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Bookshelves are packed with words of financial wisdom from the astute minds of Lynch,
Bogle, Bryant-Quinn, Siegel, et al. Without a doubt all serve up heaping
portions of sound investment advice. But for our money no book cuts to the heart of
wealth accumulation better than the picture book version of the classic "The Richest
Man in Babylon."The colorful elementary school tale, adapted from the original story by George S. Clason and illustrated by Joseph Feher, recounts how one man became the richest man in old Babylon. The story begins at a reunion of old school friends at our protagonist Arkad's opulent palace. Feelings of jealousy, curiosity and anger are directed at Arkad and his seemingly lucky fate. Former classmates cannot comprehend how someone who was once their equal is now so wealthy. "Arkad, you are more fortunate than we are," his friends declare. "Why has Fickle Fate singled you out to enjoy all the good things of life?" they wonder. "Surely you must have found favor with the Goddess of Good luck," they speculate. Arkad only laughs at these declarations. In good time, he assures his guests, will the secret to wealth building be revealed. At this point we're guessing Arkad has a well diversified portfolio spread among a broad range of asset classes invested in solid, low fee mutual funds. Furthermore, we're pretty sure he has taken full advantage of employer-sponsored retirement plans. We also have a hunch that Arkad might be sitting on some oil fields. "Do you not pay the sandal maker?" the man asked. "Do you not pay for the things that you eat?" the man continued. "You pay everyone but yourself!" the man explained. After much dancing and celebration, Arkad finally begins to divulge the secret of his wealth. "It is not chance or fate," he explains, but rather that he has learned the laws that govern the building of wealth and has observed them. His audience is duly impressed and they press him for details. Arkad reminds his friends that he was not born into wealth, but that at a young age he realized that wealth was power. With wealth, he explained, one can delight the senses and gratify the soul. He then recounted laboring long and hard as a scribe in the hall of records. One day a man of great wealth came to Arkad needing records copied. Arkad suggested that in exchange for his labor, perhaps the man would bestow upon him the secret to wealth. A deal was struck and Arkad labored into the night. Upon completion of the task, the secret was revealed. Drum roll please.... In a low forceful tone, the wealthy man uttered these words: "A part of all you earn is yours to keep." So much for oil fields. Arkad was angered. "Isn't all I earn mine to keep?" he inquired. "Far from it," replied the man. "Do you not pay the sandal maker?" the man asked. "Do you not pay for the things that you eat?" the man continued. "You pay everyone but yourself!" the man explained. Pay yourself first the man instructed. "Every gold piece you save is a slave to work for you. Every copper it earns is its child that also can earn for you. A part of all you earn is yours to keep. It should be no less than a tenth no matter how little you earn." So began Arkad's path to wealth accumulation. It was not without pitfalls, however. On one occasion, Arkad trusted the brickmaker to purchase jewels for him. A most foolish decision, that resulted in the loss of all his savings. On another occasion, Arkad treated himself to a great feast of food and spirits to which his mentor laughed and scolded him, "You eat the children (the interest) of your savings. Then how do you expect them to work for you? First get thee an army of golden slaves (saved money) and then many a rich banquet may you enjoy without regret." "A part of all you earn is yours to keep. It should be no less than 10 percent." Over time, Arkad learned to successfully employ the rules of wealth accumulation with spectacular results. While he trusted the brickmaker on matters of bricks, he trusted wise men schooled in the ways of finances with his money. Most importantly, however, Arkad always saved no less than 10 percent of his earnings. For most of us, accumulating wealth is not going to happen overnight. Nor should it — lest we blow it on great feasts of food and spirits. Little feasts with Budweiser and chips are probably okay. But by paying ourselves first, no less than 10 percent, we can in time accumulate wealth — especially if we have a well diversified portfolio spread among a broad range of asset classes invested in solid, low fee mutual funds. It really is elementary. On the back of the book are listed The Five Laws of Gold. They are: |
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| 1. | Gold comes gladly and in increasing quantities to any man (and woman) who
will save not less than one-tenth of his or her earnings to create an estate for his or her future and
that of his or her family. |
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| 2. | Gold labors diligently and contentedly for the wise owner who finds for
it profitable employment, multiplying even as the flocks of the field. |
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| 3. | Gold clings to the protection of the cautious owner who invests it on
the advice of men (and women) wise in its handling. |
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| 4. | Gold slips away from the man (and woman) who invests it in businesses or purposes
with which he is not familiar or which are not approved by those skilled in its keep. |
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| 5. | Gold flees from the man (and woman) who would force it to impossible earnings or
who follows the alluring advice of tricksters and schemers or who trusts it to his own
inexperience and romantic desires in investment. |
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