Friday, March 12, 2010

Guard thy treasures from loss

Guard thy treasures from loss. This is the fourth of the seven rules that George S. Clason lays out in The Richest Man in Babylon.

Like Clason's previous rules, this one builds on the last, which said to make thy gold multiply by putting it to use through investments.

The fourth rule is a warning attached to the third. While you should make thy gold multiply, be careful in the investments you make.

The first sound principle of investment is security for thy principal. Is it wise to be intrigued by larger earnings when thy principal may be lost?

Guard thy treasure from loss by investing only where thy principal is safe, where thou will not fail to collect a fair rental. Secure the advice of those experienced in the profitable handling of gold.

What Clason warns against is trusting your money to people who promise unrealistic gains or who aren't experts in their area of investment. For example, don't invest or take investment advice from a farmer on shield making. Take advice or invest in a shield maker.

These seems really simple, but way too often, we hear about people who trust their money to smooth talkers who can't lay out a good plan for repaying or growing the loan.

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