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Jun 2, 2020

The Richest Man in Babylon by George S Clason!




Looking for the great book?  

Check out the book here at  https://amzn.to/3epZK81








It was a story that happened in the city of Babylon, where there was once the wealthiest man named Arcad.

Arcad did not inherit the wealth, instead, he becomes a self-made millionaire by himself. One fine day, two of his childhood friends approached him to ask how he becomes so rich while both his friends were also working very hard and still barely able to maintain their family.

Arcad smiled and told them that while working as a scribe, Arcad was once told the secret of wealth, of a rich man in return for his services.

Interestingly the rich man guided him to acquire wealth, The rich man shared his wisdom that you should not spend all the money you earn, rather invest it, and invest it wisely and this is what Arcad did, he saved enough money to lend to a shield builder, who then paid interest on the loan, thus increasing Arcad's wealth.


So the simple secret to building wealth is explained as per the below points.

1. Save and invest it wisely.

The secret to becoming is not only about accumulating wealth, but it is also about how to invest it wisely.

So, you should also look for investment opportunities to make wise investments.

This is because the money if you keep at home will not increase its value, even keeping it in the bank will generate only a nominal 2% of interest, and instead, you have to invest your savings in something that generates more money, such as investing stocks and stocks that may give 20 to 25% return on your invested money,  government bonds, fixed diposit where you may get 6 to 7% interest, which better than keeping the money in the bank as it may yeild good returns over the long period if the principle of compounding aplied, gold may yeld 8% to 12% or more interest depending on the inflation condition of a country and real estate the safest investment on earth with huge returns like 25% to 40% or as a cash flow per month if kept on rent or start-ups businesses, which may yeld returns from 20% to 60% or more if that business works and grows successfully over the years.

Albert Einstein famously said that compound interest is the most powerful force in the universe. He said, “Compound interest is the 8th wonder of the world. He who understands it earns it; he who doesn't pay it.” Who am I to argue with such a smart guy?

The Power of compounding applies to both Fixed Deposit and Good Stocks and Shares, when kept for a long time, provided you need to know when to sell it, otherwise it will yield exponential returns and even Berkshire Hathaway founder Warren Buffett's long-game investing strategies finally cemented his billionaire status at 56 — about 26 years after he first joined the seven-figure club. At age 87, he's now worth nearly $85 billion.

If you want to know more about the power of compounding follow the link below.

https://groww.in/blog/power-of-compounding/

The secret to being financially successful is always to believe how little you know. 

True wisdom lies in realizing how little you know and accept it. The ancient philosopher Socrates accepted that he does not know anything and that is why he is considered knowledgeable.

Also, if you want to learn more about investing and how to increase your wealth, please check the my post on the book review on the bestseller book Rich Dad Poor Dad by Robert Kyosaki.

 2. Learn the Trial and Error Theory:

You can only raise money gradually by learning through the process of trial and error, receiving money is a long process that is made up of countless small steps and often has to go through some setbacks.

This is because the world is constantly changing, especially in the area of finances. This means that you can never choose a money making strategy, such as investing only in a certain stock, and waiting for money from it.

The financial system and life itself is very uncertain, so sooner or later there will be something massive such as the stock market collapse. That means you have to adapt to the new situation and learn about new wealth building strategies.

You need to experiment and maybe fill in something, and as soon as you discover your next winning strategy, something big will happen.

But through this process of experience and adaptation, you will increase your overall ability to invest wisely as you are gaining more knowledge.

In fact, this process of trial and error is consistent with the way scientific progress is made:

3. Learn the difference between making money and receiving money:

Earning money is usually done to achieve short-term financial success, you usually only care about the things you can buy with the next salary, while the future is also a concern. But this kind of thinking has an inherent danger, what if the next salary does not come?

For example, the real estate you purchase will not bring you immediate funds, rather you must first pay the investment or wait for its value to increase. It may take a little time, but once this investment provides money, it works as long as you own it.


This type of long-term planning can help protect unexpected events such as losing your job

"Making money" describes a process where you work for money, but "getting money" means creating situations where money works for you and increasing its number.

To understand this better, imagine that you work as a manager of a profitable factory, and every month you get a very good salary.

Obviously you are making money, but are you receiving money?
If you want to receive money, you have to go through the process of saving and investing some of that money. 

For example, if you keep saving a part of your income and investing it in real estate such as home or flat and put it on rent, and the rent keeps coming every month without fail, then you will receive money, because your money will be working for you even when you are sleeping or going on a vacation.

Earning money is usually done to achieve short-term financial success, you usually only care about the things you can buy with the next salary, while the future is also a concern. But this kind of thinking has an inherent danger, what if the next salary does not come?

For example, the real estate you purchase will not bring you immediate funds, rather you must first pay the investment or wait for its value to increase. It may take a little time, but once this investment provides money, it works as long as you own it.

This type of long-term planning can help provide protection for unexpected events such as losing your job.

4. Making investments that come back with interest can be highly lucrative.

When you lend money to someone, you can expect them to pay interest for it, and this is one of the important ways in which people with money can get more money just like what the banks do and how are the banks becoming rich and making more money.

To understand that paying interest is a fact of life, you must first understand that money is a resource like employees or raw materials.

As an investor, interest is an attractive way of building wealth due to its compound nature, you can get your interest income to grow over time, as you will be earning interest on top of interest as well.

As you can see, your money not only works tirelessly for you, it also becomes increasingly effective over time.

5. How good luck and hard work are related.

Opportunity is a source of good fortune that arises more often, as opposed to chance. How would you define fate?

Many people think that luck constitutes accidental gains, serious events. But is it really always accurate?

Suppose you are playing in a tennis tournament and you have worked hard for months and made all the preparations. 

Finally, you win the final by placing a clip at the top of the net so that the ball bounces out of reach of your opponent, was it just, coincidence or fate?

Not at all, you have earned that fortune through your hard work.

Real fate needs to be separated by chance, as fate is not really random. Instead, people work hard for it and earn it.

The secret to becoming rich is to reduce your needs to save money, and to invest a part of it regularly in a way that generates interest for you.

Also, never take a loan to buy some luxury items, because once you find yourself in such unnecessary debt, it is very difficult to get out of it. If you desperately desire an item, but can't afford it, save to buy it and invest wisely.

Never hand over your, hard-earned money to an amateur, no matter how attractive an opportunity, if the person you are handing over your money is inexperienced in that area, chances are they will fail.

So you should only invest with people who have proven that they know what they are doing.

The book by Robert T. Kiyosaki on Rich Dad Poor Dad is written and based on the same principles, however explained as per the present day.

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