One weekend my son and I went to Minneapolis, and I had him listen to The Richest Man in Babylon. I wanted him to hear it, since it’s had such an impact on me. I couldn’t help thinking about how much rich wisdom it held.
It’s especially helpful for where farming’s at right now, when things are tight and stress is high. I just had to share what I’ve learned with you.
In the story, a really wealthy guy had a huge estate, and his son was coming of age. The father said, “I’m going to prepare you by giving you an advantage I never had. I’ll give you a bag of gold and a tablet with the five laws of gold on it. And you have to go away for 10 years.
“By the time you come back, if you haven’t learned how to to create wealth, I’m going to give all my own wealth elsewhere. If you have, then you take over the business.’”
5 laws of gold
1) 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 his family.
As you remember from last week’s blog, one of the first cures for a lean purse was to pay yourself 10% of your earnings. That’s also one of the laws of gold. There’s some overlap here, because it’s such an important concept.
Think about it: in 10 years, you’ll have saved an entire year’s worth of labor. Plus, if you use it right, the money will be working for you.
2) Gold laboreth diligently and contentedly for the wise owner who finds it profitable employment, multiplying even as the flocks of the field.
Number two basically means, “Put your gold to work.”
In the book, the wealthiest man in Babylon told a story. When he started out as a paid scribe, he would save and invest, and he would spent all the dividends that came from his investments.
A man who taught him the rules said something like, “You eat the children of your gold.” Basically, you’re eating your children. You need to make your gold work for you, and the children of your gold, and the children of the children of your gold.
3) Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
Where are you getting your financial advice? If a person comes up to you saying they have a great idea, how cautious are you?
Be wise: you’re going to be better off working with a financial advisor than someone random.
Not that you would...
4) Gold slippeth 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.
Once the kid in the story left his dad, he found himself in a merchant caravan. The merchants told of a man in town who claimed his horse was so fast, he’d bet anyone that he could beat their horse. The merchants claimed to own a horse that could beat the boastful man’s, and they offered to let the boy in on the bet as a favor.
But they were liars. He lost a good portion of his gold because the men were cheats, all in it together. That’s how they made money.
I know we don’t have that exact situation now, but compare it to all those businesses out there that fail. Someone’s money got lost. It’s just like a venture capitalist firm: they invest in a hundred businesses, hoping they have one Dropbox or Google, and the rest are losers.
If you’re a farmer, you can make a good investment in what you know. If farm prices are down, maybe it’s a good time to invest in farmland, as long as you have the money put away.
5) 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.
The trickster merchants were one example of this law. Another is anyone who says they can get you a 20% return regularly on an investment. That’s not realistic.
Unless you’ve spent your life dedicated to mastering poker, you won’t make money doing it.
People have unrealistic expectations. Can you imagine the regret of the people who pulled their money from Berkshire-Hathaway when Warren Buffett was starting up, and things were good but not stratospherically good?
The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.