This is only an attempt to create interest in reading. We may not get the time to read all the books in our lifetime. But such reviews, talk and synopsis will at least convey what the book is all about.
This title was published in 1926. It hands out a niche financial advice through a collection of parables set some 4,000 years ago in ancient Babylon. The book remains in print even after a century, after the parables were originally published. It is regarded as a classic on personal finance, and is a great book for investors says the Wall Street Journal.
The parables are narrated by a fictional Babylonian character by the name Arkad, who is a poor scribe but goes on to become the “richest man in Babylon.” Encompassing, Arkad’s advice, are the “Seven Rules” on how to generate money and wealth. The book also has “Five Laws of Gold” that is how to protect and invest your wealth. A central part of Arkad’s advice is around “paying yourself first,” “living within your means,” “investing in what you know,” the importance of “long-term saving,” and “home ownership.”
The content is extracted from a series of pamphlets distributed by U.S. banks and insurance companies in between 1920–24. The pamphlets were bound together and published as a book in 1926. The book since then is often referred to as a classic of ‘personal finance.’ It appears, in latest recommended, reading lists, on personal finance, and wealth management, and that has kept the book in print for almost 90 years after its first edition with over 2 million copies sold.
Clason himself published an illustrated hardback edition in 1930 titled The Richest Man in Babylon and other stories which now sells for USD 1,250. The unusual structure of the book has inspired many modern derivative works providing further discussion and insights on the parables.The original 1926 book groups the parables into general themes of advice, and particularly “The Seven Rules” and the “Five Laws of Gold.”
Some themes do overlap e.g. The First Rule is similar to the First Law of Gold. The book goes on to detail the ‘Seven Rules For a Lean Purse.’
- The First Rule: Start thy purse to fattening.
Arkad advises on saving 10% of your annual income to start building up your wealth, and he uses the word purse. “For every ten coins thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will make you feel good in thy hand and bring satisfaction to thy soul.”
- The Second Rule: Control thy expenditures.
Arkad advises against luxury expenditures that ultimately get confused with necessities. The gold that we may retain from our earnings is but the start, and what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary, and confuse not the necessary expenses with thy desires.”
- The Third Rule: Make thy gold multiply.
Arkad advises to invest and compound the investment return from these savings: “The earnings it will make shall build our fortunes. Learn to make your treasure work for you. Make it your slave. Make its children and its children’s children work for you.”
- The Fourth Rule: Guard thy treasures from loss.
Arkad warns against taking a risk of loss and investing in popular get-rich-quick schemes. It is wise to be alarmed of larger earnings where thy principal may be lost? The penalty of risk is a probable loss. Study carefully, before parting with thy treasure. Don’t be misled by thine own romantic desires to make wealth rapidly.
- The Fifth Rule: Make of thy dwelling a profitable investment.
Arkad advises buying versus renting your principal residence, and to use your residence to establish a business: “I recommend that every man own the roof that sheltereth him and his”, and, “Nor is it beyond the ability of any well-intentioned man to own his home.”
- The Sixth Rule: Ensure a future income.
Arkad advises on having a pension and future retirement income. “Therefore do I say that it behooves a man to make preparations for a suitable income in the days to come, when he is no longer young, and to make preparations for his family should he be no longer with them to comfort and support them.”
- The Seventh Rule: Increase thy ability to earn.
Arkad advises to keep developing your own skills to increase your investing wisdom and also to increase your earnings power. “The more of wisdom we know, the more we may earn”, and, “That man who seeks to learn more of his craft shall be richly rewarded.”
The author also goes on to explain the five golden laws of Gold.
- The First Law of Gold: 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 that of his family. Basically it talks about saving. Arkad’s advice here is very similar to the First Rule, which is that saving is the beginning towards building wealth.
- The Second Law of Gold: Gold laboreth or labours diligently and contentedly for the wise owner who finds for it profitable employment, multiplying, just as the flocks of the field.
Arkad’s advice here is very similar to the Third Rule, which is that savings can themselves grow and compound your wealth.
- The Third Law of Gold: Gold clingeth, or clings on to the protection of the cautious owner who invests it, under the advice of men wise in its handling. Arkad’s advice here is similar to the Fourth Rule, which is about being patient and having a long-term view.
- The Fourth Law of Gold: Gold slippeth or slips 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. Arkad’s advice therefore is about investing in what you know about and what you understand about.
- The Fifth Law of Gold: Gold flees the man who would force it to impossible earnings or who followeth or follows the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment. Arkad’s advice here is about avoiding get-rich-quick mentality or very aggressive wealth creation strategies.
The Babylonians were clever financiers and traders. So far as we know they were the original inventors of money as a means of exchange, and of promissory notes and written titles of property.
The town of Babylon is located along the Euphrates River in present-day Iraq, about 50 miles south of Baghdad. Babylon was the capital city of the ancient Babylonian Empire.
Babylon was never entered by hostile armies until about 540 years before the birth of Christ. Even then the walls were not captured. The story of the fall of Babylon is most unusual. Cyrus, one of the great conquerors of that period, intended to attack the city and hoped to take on its impregnable walls. Advisors of Nabonidus, the King of Babylon, persuaded him to go forth to meet Cyrus and give him a battle without waiting for the city to be besieged. In the succeeding defeat to the Babylonian army, it fled away from the city. Cyrus, thereupon, entered the open gates and took possession without resistance.
Thereafter the power and prestige of the city gradually waned until, in the course of a few hundred years, it was eventually abandoned, deserted, left for the winds and storms to level once again to that desert earth from which its grandeur had originally been built. Babylon had fallen, never to rise again, but to it the civilization owes much. The eons of time have crumbled to dust the proud walls of its temples, but the wisdom of Babylon endures.
This is a book that holds the secrets to acquiring money, keeping money, and making money earn more money. A sizable part of the book uses ecclesiastical and archaic literary language.
The book brings to mind the famous song of Boney M … By the rivers of Babylon
Where we sat down
And there we wept
When we remembered Zion.
I would give this slim book of a hundred and forty four pages a rating of seven out of ten.
By Kamlesh Tripathi
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