(Wealth) 8 Principles of Wealth Management

Eight Principles of Strategic Wealth Management

To protect your family’s assets and make them grow, follow these guidelines:

  1. “Take charge and do it early” – Determine the values that will guide the family’s wealth management. This means digging into the details of the family’s financial condition, structuring goals that complement each other and devising a long-term strategy.
  2. “Align family and business interests around wealth-building goals and strategies” – Unified families can achieve some economies of scale, but that depends on both shared history and a shared view of the future. Aligning business and family interests will help ensure that any hired financial advisors work to advance the family’s common goal.
  3. “Create a culture of accountability” – Carefully define the wealth strategist’s responsibilities. Establish metrics to guide and assess the strategist’s performance. Objective metrics help take the sting out of criticism and keep peace in the family.
  4. “Capitalize on your family’s combined resources” – Pooling funds allows the family to access investment opportunities that would not be available if people managed their money in smaller bundles. Nepotism isn’t all bad because members of a family may have resources, networks and influence that can benefit everyone.
  5. “Delegate, empower and respect independence” – Insist that younger relatives take opportunities to grow outside the family, so they will be able to stand on their own feet and add value to the family through what they learn and accomplish. Empowerment helps members of the wealth management team and family office do a better job. Make expectations, goals and strategy clear – but don’t micromanage.
  6. “Diversify but focus” – Diversification is a prudent risk management strategy. Because most family fortunes began in one business, and such concentration is extremely risky, it is crucial to diversify. The family’s wealth managers should focus on money management so they become more competent than the professionals they might otherwise hire.
  7. “Err on the side of simplicity where possible” – Keep a strategy simple to make its strengths and weaknesses more understandable. When families opt for complex strategies, at least keep everything transparent and visible to everyone so no one has doubts about anyone else’s motives or performance.
  8. “Develop future family leaders with strong wealth management skills” -Pursue a multigenerational approach to wealth management. Nourishing and developing successors takes time and effort. Anyone entering the family business should have at least 10 years of successful performance outside so they add something of value to the family firm.

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(Wealth) Changing Economy

The Changing Faces of Work

As the economy regains its health, hiring naturally is increasing. But many full-time jobs that vanished during the economic downturn are gone forever. Far fewer people have conventional office jobs; many more are independent contractors or temporary workers.

“As the workforce becomes increasingly individualized, we’re forced to become more intentional and imaginative about how we come together and support one another.”

Freelancing

Freelancing has its advantages. You can choose your projects and, in many cases, the people with whom you want to work, although finding your gig at first would be hard at first.

Telecommuting has created more employment options. According to Global Workplace Analytics, “half of the US workforce now telecommutes at some point.” The number of people regularly working at home increased 103% from 2005 to 2014. And these trend would only increase, giving the fast development of fast internet connection and the overwhelming increased of millennial in the workforce.

Freelancing can be scary. Yet a 2014 US national survey conducted by Freelancing in America revealed that roughly eight of ten freelancers find that their earnings equal the income they made as employees and four in ten made more. Acquiring health insurance and other benefits is challenging for freelancers, but they have flexibility and can generate income from multiple sources instead of relying on a sole employer. Freelancing is a viable alternative for those with childcare obligations and other responsibilities outside of an office. Although as mentioned before, starting off could be a daunting tasks.

Honestly, in our world today, you’re likely not all that safe no matter what your job.

I say choose challenge.

Choose beauty.

Choose love.

Choose passion.


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(Story) Evil of Wealth?

HOW TO WARD OFF THE EVILS OF WEALTH

Sa’eed bin Ayman, the freed slave of Ka’b bin Sur, said, “While the Messenger of Allah was speaking to his companions, a poor man came and sat down beside a rich man. From his movement, it seemed as if the rich man were moving his garment away so that the poor man wouldn’t touch it. The Messenger of Allah’s [color] changed [from anger], and he said:

“O so-and-so! Were you afraid that your richness would transfer to him, or that his poverty would transfer to you?”

“And is richness evil?” asked the rich man.

The Prophet said, “Yes, for your richness invites you to the Hell-fire, while his poverty invites him to Paradise.”

The rich man asked, “Then how can I save myself from that?” 

The Prophet answered, “Comfort him with some of it.”

The rich man said, “I will do so then.”

The poor man then spoke, “I am in no need of it.” 

The Prophet said, “Then ask Allah to forgive your brother, and supplicate for him.”


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(Wealth) 9 Rules of Wealth for building investment portfolio

“If we want to grow rich on a middle-class salary, we can’t be average. We have to sidestep the consumption habits to which so many others have fallen victim.”

To become wealthy, says investment adviser Andrew Hallam, heed nine rules about managing your money. He offers sound, basic, practicable advice.

And here are a quick summary of his 9 rules of wealth when building your investment portfolio.

1. “Spend Like You Want to Grow Rich”

If you want to become wealthy, promise yourself to “do no harm.” Create “assets, not debts.”

You should spend wisely, but you don’t have to scrimp.

“We should all make a pledge to ourselves much like a doctor’s Hippocratic oath: above all, do no harm.”

Growing wealthy requires a strategy. You must carefully watch how you use your money so you will have some left over to invest. If you consume less than you earn, you will dramatically increase your odds of becoming financially secure.

Change the way you look at your life, so you can be happy with what you have and less inclined to spend recklessly. As you build your savings, you’ll be able to make long-term investments in the stock market. With the right returns, you could create a healthy portfolio.

“The surest way to grow rich over time is to start by spending a lot less than you make.”

Even the Holy Qur’an remind us not to spend wastefully (217:26-27)

2. “Use the Greatest Investment Ally You Have”

You might have discovered something valuable hidden in the boring pages of your school textbooks: the incredible benefits of compound interest. Warren Buffett bought his first stock at age 11 and jests that given the benefits of compound interest he should have begun investing much earlier.

As Buffett says, planning can make all the difference.

If you invest $100 and it grows at 10% compounded annually, your investment becomes $161.05 in five years and $78,974.69 after 70 years. Stock markets can move dramatically up or down, but since the 1930s, the US stock market has provided investors a return of more than 9% annually.

To start, make a note of all your expenses for three months. At the end of that period, calculate how much it costs you to live every month. Make that the basis of your fiscal plan. Pay off any high-cost loans. The sooner you begin, the better off you will be.

“Before we learn to invest to build wealth, we have to learn how to save.”

And one of the best financial advise anyone could give is

“Do not save what is left after spending, but spend what isleft after saving.”

3. “Small Fees Pack Big Punches”

You probably wouldn’t be able to compete with an expert in his or her field. But you might find one exception: the area of money management. Some financial advisers won’t guide you to the right investments. Many just want to sell you products that make the most money for them.

For example, instead of suggesting that you buy an index fund – “a single product that has thousands of stocks within it” and typically charges low fees. An adviser might recommend that you buy an actively managed mutual fund with multiple transactions and fees.

To earn better returns than most experts can provide, invest in three index funds: one from your country, a global stock market index fund and a government bond fund.

Paul Samuelson, the first American to win the Nobel Prize in economics, says that purchasing an index fund provides you with the most effective way to diversify your investments.

If you could ask Warren Buffett where you should invest, he’d suggest that you buy index funds. He has instructed his estate’s executors that he wants his heirs to invest in index funds.

“If we want to grow rich on a middle-class salary, we can’t be average. We have to sidestep the consumption habits to which so many others have fallen victim.”

Studies show that you can’t pick the best-performing mutual funds based on how they did in the past. Mutual funds that achieve outstanding results in one period can perform dismally in the next. However, you can boost your chances of success by investing in indexed mutual funds. You won’t be able to opt for an actively managed mutual fund that outperformed stock market indexes, and you could make a serious mistake if you choose a mutual fund based on its past performance. Always remember that advisers make money when they sell you actively managed funds. That’s why they counsel you to buy them.

“If we want to grow rich, we need a purposeful plan. Watching what we spend so we can invest our money is an important first step.”

4. “Conquer the Enemy in the Mirror”

If you understand how your feelings can torpedo your strategy, you’ll be able to invest more sensibly. Consider a mutual fund with average returns of about 10% over the last two decades. It might have underperformed in certain years and done well in others. That’s why it’s called “average returns”.

If the fund had 1,000 investors, you might think they’d all get about the same return. But, in fact, they don’t, because most investors pull their money out of poorly performing investments to chase better returns elsewhere.

If you don’t want to live with the stock market’s gyrations, invest in an index fund over the course of 25 years, and add the same amount to it every month.

“Sticking with index funds might be boring. But it beats winding up as shark bait, and it gives you the best odds of eventually growing rich through the stock and bond markets.”

Many people invest under the delusion that they can get into the stock market and cash out of it at just the right time to earn a big profit. Professionals call this “market timing,” and it’s difficult.

Most financial advisers stand a better chance of beating someone on the level of Roger Federer at tennis than they have of growing their portfolio by timing the market. The Vanguard Funds’ John Bogle – Fortune magazine’s choice as one of the four “investment giants” of the 20th century said that in his 50 years of investing, he didn’t know of anyone who systematically made money using market timing.

“Gold has jumped up and down like an excited kid on a pogo stick for more than 200 years. But after inflation, it hasn’t gained any long-term elevation.”

When you buy a stock market index fund, you come to own, in effect, a part of several businesses. Through them, you may own real estate, manufacturing facilities and consumer products. Understanding this gives you an edge as an investor.

A company’s earnings and the growth of its stock price may diverge at times, but they are inextricably linked. The share price of a company typically reflects the growth in its profitability.

Over the short term, stock markets can act in a variety of wild ways. If they seduce you while they’re surging upward in price, you could become much poorer when they drop.

“As far back as we have records, at least once every generation, the stock market goes bonkers.”

5. “Build Mountains of Money with a Responsible Portfolio”

You can benefit from owning an index fund, but you must balance your portfolio so you can absorb market fluctuations. If the market falls, the value of your investments will drop by an equivalent amount. That’s hard to take, especially as you near retirement.

“Every generation, it happens again. Stock prices go haywire…many people abandon responsible investment strategies. The more rapidly the markets rise, the more reckless most investors become.”

With bonds, over time, you may make less money than with stocks. However, their value fluctuates less, and that could protect you if the stock market tumbles sharply.

When you buy a bond, you’re lending money to the government or to a company. As long as that organization can pay your interest and return your money, your investment remains secure.

You can have confidence about purchasing bonds from governments in developed countries. You take on more risk when you buy corporate bonds from leading companies and even more when you buy bonds from smaller companies. They usually pay higher interest rates, but you may face a greater chance that they could default.

“A Chinese proverb [suggests] that wealth doesn’t last more than three generations.

There’s a generation that builds wealth, a generation that maintains it and a generation that squanders it.”

6. “Sample a ‘Round-the-World’ Ticket to Indexing”

“Warren Buffett famously quips: ‘Preparation is everything. Noah did not start building the Ark when it was raining’.”

Index funds relate closely to exchange-traded funds (ETFs). Both are made up of a certain amount of stocks representing a particular market, but ETFs trade, just as equities do, on the stock market. The fees for ETFs are higher than those for index funds.

Countries all over the world have index funds, but the United States offers the most. Citizens of most countries can buy index funds or ETFs listed overseas. If you live in Canada, you can evaluate the Canadian bank TD’s actively managed funds alongside its e-Series index funds; over a decade, you will find that the index funds provide a higher return. In the United Kingdom, financial institutions offer index funds with fewer benefits and they charge greater fees.

To take just one example, investor Paul Howarth didn’t want to entrust his money to an index fund, so he opened a brokerage account. He put about 30% of his funds into an iShares global bond ETF and the remainder in Vanguard’s global stock ETF. Once a year, Howarth evaluates his portfolio. If global markets rise, he cashes in his global ETF and adds the money to his bond ETF, so he can retain a balanced allocation.

“You’ve inherited a windfall. Should you invest it all at once? Or should you add the money to the markets, month by month…Nobody knows for sure. But earlier lump sum investments usually win.”

7. “You Don’t Have to Invest on Your Own”

Often, investors don’t want to expend energy in investing or they aren’t sure about their choices. They would rather someone else did it for them. Americans have to spend far less money than anyone else in the world for financial advice. As a result of Internet access, many people now understand that Wall Street professionals make money by selling actively managed mutual funds.

Consider Vanguard funds. John Bogle set up Vanguard as a nonprofit enterprise to help ordinary investors. Those who buy its funds become its owners. When you buy, you must sort through Vanguard’s list of index funds or ETFs. This makes some investors nervous and leaves them seeking guidance.

Today, “intelligent investment firms” can help you manage your finances for a low fee. Or you can build a portfolio of index funds.

8. “Peek Inside a Pilferer’s Playbook”

Even if you decide to buy an index fund, your financial advisers may produce a range of reasons for advocating against it. For instance, they could say you take on greater risk when you buy an index fund. They would note that an index fund commits all its money to the market, so if stock prices plummet, you could face greater losses. To prevent such losses, active fund managers do not invest fully in the stock market.

Your advisers could suggest that active managers can liquidate their holdings before stock market crashes and buy shares back once markets become less volatile. Such ideas theoretically denote good opportunities, but they assume that managers can successfully time the market. Consider any manager’s fees before you make a decision.

Your adviser may offer to show you mutual funds that outperformed stock market indexes.

However, research shows that mutual funds that did well in the past may or may not do well in the future. They rarely match their previous performance. Be wary of advisers who suggest that, because they understand the economy so well, they can help you outperform a collection of indexes.

The financial industry grants brokers and financial advisers a relatively low status. Some financial advisers train for only two weeks in financial planning, so be sure the advisers you select are well educated and well trained, with sound reputations.

9. “Avoid Seduction”

Keep your eye out for scams.

You can outperform most investors by participating in index funds. You open yourself up to making mistakes when you seek unconventional investments. Some people look for index funds that suggest they can outdo the market. Never succumb to sucker claims that you’ll make “easy money.”

For instance, emerging markets often offer sensational returns, but they can turn down sharply and quickly. If you don’t like this kind of volatility, choose a “total stock market index” rather than investing excessively in emerging markets. And gold can turn out to be a poor investment. If you invested $1 in gold in 1801, by 2016 your investment would have been worth only $54. 


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The Way to Wealth (Book Summary & Review)

Book Title:

The Way to Wealth by Benjamin Franklin

A little bit about the author:

Benjamin Franklin, born in 1706 is a Founding Father of the United States. He was a statesman, revolutionary, author, inventor, scientist, firefighter and chess master. 

He co-founded one of the earliest volunteer firefighting companies in America and served as governor of the state of Pennsylvania. Franklin became a fervent abolitionist, freeing his slaves and opposing slavery in the United States and elsewhere. A tireless public servant, Franklin risked his fortune and his life opposing England’s rule over the American colonies. He was a leader of the American Revolution and contributed to the writing of the Declaration of Independence. He was the first Postmaster General of the United States and helped establish its postal service. During the Revolutionary War, Franklin lived in Paris as the American ambassador to France. After the war, he attended the Philadelphia Convention, which produced America’s Constitution. Franklin is a signatory of the US Constitution as well as of the Declaration of Independence.

Key Reading Points:

  • The book was published as preface to Poor Richard’s Almanack, a book of advice.
  • This book showcase Franklin’s insight and thoughts which includes
    1. “Poverty will catch those who move with the slow speed of Laziness.”
    2. If you buy what you don’t need, soon after you will sell what you need the most.
    3. To learn the true worth of money, try to borrow. Be aware that going into debt means giving your creditors power over your life.
    4. Debt saps a person of honor and vitality.
    5. If you don’t pay on time, your creditors can have you thrown into jail or sold as a servant.
    6. Financial gains are fleeting, while necessary expenses endure and seldom diminish.
    7. Telling people how to act won’t change their behavior.
    8. Experience teaches hard lessons, but those are the only lessons “fools” learn.

Summary on some key reading points:

Franklin’s insight on Procrastination

Plough deep, while sluggards sleep, and you shall have corn to sell and keep.”

Which means turn focus and effort to immediate tasks now because you don’t know what obstacles the future might bring.

As Franklin put it

one today is worth two tomorrows.”

Sitting around and worrying about your problems gives them a chance to grow. Diligent work reduces every difficulty, whether it is spiritual or financial. But tending to your work means doing each task when it should be done and avoiding procrastination.

“Never leave ‘til tomorrow what you can do today.”

You would feel ashamed if your boss caught you doing nothing. In this world, regardless of the task, whether it is menial or important, you are always your own boss. You should feel a similar shame when you are idle, even if you work for yourself.

“Keep thy shop and thy shop will keep thee.”

The job before you may seem hard to do and unending, but if you stick to your tasks every day, you will see “great effects.” The more you slack off, the more work will await you when you finally labor as you should. Make “diligence and patience” your by words.

You know that “little strokes fell great oaks,” but when all those little strokes face you, you might wonder if you could take a small break. No; “since you are not sure of a minute, throw away not an hour.” Leisure comes to those who use time efficiently, and you should spend it doing something useful. Only the diligent worker can attain that kind of leisure. A lazy person will yearn for it always. “Many…would live by their wits only, but they break for lack of stock.

“Want of care does more damage than want of knowledge.”

Franklin’s insight on Trust

Those who spin their cloth without ceasing can wear as many garments as they wish. Being industrious means giving “steady, settled and careful” attention to your work and life, and using discrimination in trusting others.

The best situation is to have your own business, because “he that by the plough would thrive himself must either hold or drive.”

In your daily labors, you can choose to be the plowman (employer) or the mule(employee). And if you are the mule, you will be under someone’s yoke. However if you choose to be the plowman, you must plow every single day. Meaning, entrepreneurship is not as easy as our modern social media shows as it is.

You need to tend to that which is yours, for “want of care does more damage than want of knowledge.” Keep your eye on your workers. Leaving them to do as they please is like leaving your wallet open so they might take whatever they want. Trusting others too much is a sure path to ruin.

If you take care of your own affairs, then you know you have a supervisor you can trust. “If you would have a faithful servant, serve yourself.”

But if you supervise affairs for yourself, make sure you don’t neglect any aspect. “For the want of a nail the shoe was lost; for the want of the shoe the horse was lost; and for want of a horse the rider was lost.” What might seem like a tiny moment of carelessness or disregard can have profound, far-reaching negative effects.

“Always taking out of the meal tub and never putting in, soon comes to the bottom.”

Franklin’s insight on Frugality

Even if you are industrious and watch your affairs carefully, all will be for naught if you are not frugal. Spending what you earn on fleeting pleasures is deceptively easy, but “a fat kitchen maketh a lean will.”

If you want wealth, you must earn money and save it. Saving is far more difficult than acquiring. You should dispense with “expensive follies,” because “Women and wine, game and deceit / Make the wealth small and the want great.”

Little expenses add up. If you engage in many small indulgences, you will drain your pockets.

“Fools make feasts, and wise men eat them.”

“When the well is dry, they know the worth of water.”

At the door of the auction house, Father Abraham reminds the members of the crowd that they have gathered to buy things they do not need. “You call them goods, but if you do not take care, they will prove evils to some of you.”

If you repeatedly buy things you do not need, before long you will have to sell that which you need. And I thought Warren Buffet was the one whom came up with this quote.

Vanity is a great source of foolish spending. Many people go about looking quite fine and fashionable, but with their stomachs crying out for food. “Silks and satins, scarlets and velvets, put out the kitchen fire.” Fine clothes and wares are not necessities; they’re not even “conveniences.”

By such indulgences the genteel (characterized by exaggerated or affected politeness, refinement, or respectability) sink to being beggared, and then must borrow from those they would not ordinarily bother to greet on the street. If you are industrious and frugal, then you need never borrow, since borrowing is the ruin of honor.

“A ploughman on his legs is higher than a gentleman on his knees.”

Franklin’s insight on Pride and Debt

To learn the true value of money, “go and try to borrow some.”

Someone who tries to find a loan will meet only anguish. Pride can push you past any reasonable sense of expenditure. If you acquire one lovely item, you will want 10 more. Squelching the first urge to buy is far easier than fulfilling all the desires that your first purchase will trigger. Keep to your station. Dressing above your status makes your peers envy you and your betters think you foolish.

What good is being proud of fancy clothes when they bring suffering to your family?

Pride won’t make you healthy, “ease your pain” or make you a better person.

“Fond pride of dress is sure a very curse Ere fancy you consult, consult your purse.”

Going into debt means giving away your freedom, dignity and power.

“The second vice is lying, the first vice is running into debt.”

You might like the idea of buying now and paying over a six-month span, but during those six months and likely beyond, your creditor has the true control of your life and affairs. If you must pay late, you will be too embarrassed to see the person you owe, and will sneak about, making excuses and sacrificing your honor for pennies. If you are free, you shouldn’t be fearful or mortified to encounter any other individual. But being in debt robs you of your character and your moral fiber.

“It is hard for an empty bag to stand upright.”

“A small leak will sink a great ship.”

What if the government issued a law saying you could not “dress like a gentleman or gentlewoman,” or eat a fine meal? You would argue strenuously that you should be able to wear what you please and dine as you like. Yet when you put yourself in debt, you subject yourself to an identical “tyranny.” All authority over your life resides with your creditor, who can put you in prison for debt or sell you as a servant to earn back what you owe.

You may think you have a bargain when you sign your debtor’s contract, and, with all the time the terms of your debt provide, you’ll have no problems paying. But when you owe money, time seems to move faster than usual, and money accrues more slowly.

Remember, too, “Creditors have better memories than debtors.”

Creditors pay close attention to the calendar and are ever mindful of the date. You may hope your creditors will forget the day your note comes due, but they never will. The term of your debt will inevitably feel and then prove to be much shorter than you would like it to be.

“Those have a short Lent who owe money to be paid at Easter.”

“For age and want save while you may, No morning sun lasts a whole day.”

Acquiring funds will always be difficult, but expense is perpetual – the only certainty you will face aside from death.

“It is easier to build two chimneys than to keep one in fuel.”

You are far better off going to bed hungry than waking up owing anything to anyone.

“Get what you can, and what you get, hold.”

“In the affairs of this world, men are saved not by faith, but by their want of it.”

Franklin’s insight on Knowledge and Good Advice

“Reason and wisdom” should form the basis of the “doctrine” you follow. Even if you practice being thrifty, practical and conscientious, you still need “the blessing of heaven.” Ask for this blessing with humility, and do not neglect those who clearly lack that blessing.

Act with modesty, be charitable and aid the less fortunate.

Experience “keeps a dear school, but fools will learn in no other.” You can offer wise counsel, but “they that cannot be counseled cannot be helped.”

Just because someone hears your advice does not mean that he or she is going to change. At this point, Father Abraham ceases talking and goes on his way. The people gathered had listened to him with great attention and nodded their approval at much of what he had to say.

“If you will not hear Reason, she will surely rap your knuckles.”

The minute the old man leaves their company, however, everyone who has so enjoyed his speech immediately does the opposite of everything he had advised. The doors to the auction open, the crowd rushes in and everyone begins to bid and spend.

Some spend money they possess, and others spend money that belongs to them only for a day or a month or six months, depending on the terms they could negotiate.

Richard Saunders, the author of Poor Richard’s Almanack, considers buying cloth for a new coat, after some reflection, he decides thriftily to keep wearing his old one. He leaves the auction, telling those who would read his thoughts, “I am, as ever, thine to serve thee.”

Rating & Should you read the book:

I would rate the book 10/10 for all the wonderful lessons learnt. But for language I would rate it at 7/10, the language is quite similar to the first published version of The Richest Man in Babylon. Quite difficult for speed reading but the book was awesome nonetheless.

The book full of timeless wisdom, hence, I would greatly recommend this book for everyone who want the riches the world has to offer.

The Richest Man in Babylon (Book Review & Summary)

This book is my absolute favorite, in fact, I’ve read it more than 5 times already. Therefore, I would rate it at 10/10. And yes, there’s a significant number of people who would disagree with me, but I wouldn’t care.

So, it seems odd that I’ve yet to record my notes on it properly. I was just going to bed before stumbling on my old notes in my desktop on this book which apparently I’ve forgot to publish.

This is a book of terrific story telling skill and tales of the ancient Babylon.

Here’s the key reading points:

  • the book start with some background on Babylon. Babylon was one of the world’s richest city in its time. And Arkad, its richest man, was tasked to teach his fellow citizens on how to become wealthy.

Among his teaching include

  • always save a minimum of one-tenth (1/10) of your income. And invest your savings. Which means, making your money works for you.
  • Be thrifty. Which at the moment one of my goals for 2019. I’ve too many awesome watches at the moment,but I”m thinking of getting another Tissot or maybe a Tag Heuer. Man that aquaracer looks cool. Nonetheless, the book do teach me to budget carefully and not to spend on needless things. Yup, the struggles is real.
  • Seek the counsel of knowledgeable experts before you invest. Well, this rings true always. Recently, a distant family member of mine decided to invest in a fixed return investment scheme called ARBA, they invest thousands of ringgit for a fixed monthly ‘passive’ income. Well, the passiveness stop after few months, and they left with a huge loss. If they would’ve asked for my opinion, I would them to stay away from it likes it’s a plague. Besides, from Islamic perspective, investment which promises guarantee returns are Haram (prohibited) since the nature of investment are with profit and loss, so, there’s no way a fixed return investment are legit.
  • Never put the principal that you’ve invested at unseemly risk. As if the author suggest never to take unnecessary risk with your investment. A good idea, but also you need to evaluate your risk appetite. Besides, I’ve loss a lot of money myself when the previous Malaysian ruling parties loss to so called Pakatan Harapan (PH) which could loosely be translated as The Alliance of Hope. At the moment, I’m just hoping that they wouldn’t screw up.
  • Next lesson is to increase you knowledge, expertise and skills. Soyou can earn more. It’s like what Jim Rohn said, you’ll get paid primarily on the value that you’ll bring to the marketplace.
  • Good luck comes to those who know how to seize opportunities and act on them quickly. And if you want to learn more on good luck affect on our success, read my notes on Malcolm Gladweel’s Outliers.
  • Be cautious with your money. Lend it only to those who are sure to repay it. Trust me, it’s very hard to recollect your money. So, yup, lend your money wisely.
  • Take comfort in hard work. It is your best friend.
  • If you are determined to get ahead, you will.

Now lets take a look at assorted bits and parts of the book

The story of Bansir, the Chariot Maker

As skilled craftsman, Bansir built chariots for the high and mighty of Babylon. He was a hard worker, but after years of work, he became discouraged and distraught, because he had not saved even a single coin. And when his best friend, a musician named Kobbi, asked if he could borrow some money, Bansir humbly admitted that he had none.

Then, the two friends whining about their poverty. Then Bansir suggested going to see Babylon’s richest man, Arkad, and asking how he became wealthy. Kobbi agreed to accompany the chariot maker on his visit, so he could learn how to get rich, too. Excited, Bansir and Kobbi recruited others with the same predicament as them to walk to Arkad’s regal palace. They prayed silently to the gods, asking that this visit would mark an important turning point in their lives and that Arkad would be kind enough to share his secrets. They all hoped they would learn how to become wealthy.

“Money is plentiful for those who understand the simple laws which govern its acquisition.”

A bit on Arkad the Wealthy & His Mentor, Algamish the Moneylender

Arkad was a great man, Babylon’s wealthiest in fact, but also kind and wise. He was pleased to speak with the men. He explained that they could not improve their individual lots in life if they did not understand and apply the laws of developing wealth.

Arkad told the men his history. The son of a simple merchant, he had no inheritance. As a young man, he had gone to work as a scribe in the hall of records, engraving clay tablets. One day, Algamish, the elderly moneylender, ordered a copy of the “Ninth Law,” and promised the youth two coppers when he completed the job. Arkad began working, but the passage was quite long. He did not finish on time and Algamish was furious. Arkad wanted to become wealthy himself, but he did not know how. Therefore, he promised to work all night to finish the Ninth Law if Algamish would teach him the secrets of wealth.

Algamish laughed at his boldness, but agreed.

“The first sound principle of investment is security for thy principal.”

Arkad worked straight through until morning. The next day, he gave the newly baked tablets to the pleased moneylender. Sitting Arkad down, the old man proceeded to tell him how to get rich. First, Algamish said, Arkad must always keep part of his earnings. When the young man protested that he kept everything he earned, Algamish explained that no, he did not: he paid for things he needed, like food and clothing, but he did not save anything for himself. Arkad nodded. It was true. He had no savings. Algamish told him that saved money would work for him and earn even more money, the “children” of the saved funds. When the savings, their children, and their children’s children were working for him, Arkad would be rich. Algamish told Arkad that if he could do that, and control his expenses, he would soon prosper.

Here’s the advise.

“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.”

Arkad took the moneylender’s advice. He began to save, but for his first investment he gave his savings to Azmur, a brick maker, who promised to invest the money in beautiful jewels the two of them could sell. But wily Phoenicians posing as jewel merchants tricked Azmur, selling him worthless glass trinkets instead of jewels. Algamish then warned Arkad to invest only with (known) experts that is, if he wanted to buy jewels, he should go to a jewel merchant, not a man who made bricks. When it comes to money, he said, always seek knowledgeable advice.

“A small return and a safe one is far more desirable than risk.”

Arkad started saving again. When he had put aside a notable sum, he invested it with Aggar, a maker of shields, who used it to buy bronze. Then he made and sold bronze shields, and gave Arkad a portion of the profits. Soon, Arkad was becoming wealthy. When Algamish asked if he was following the rules of wealth, Arkad could answer that he was and that he was getting rich. Algamish clapped him heartily on the back. Praising his intelligence, Algamish asked Arkad to become his partner, oversee his lands and inherit his estate. Arkad thanked the old man for his generosity.

He worked years for Algamish and was his heir when he died. By that time, Arkad had become wealthy through his own efforts. He smiled at the men who had come to his home to learn the secrets of wealth and told them these golden money tips

  • Save at least one-tenth (1/10) of what you earn.
  • Seek counsel from experts on how to make your money grow.
  • Invest your savings wisely so that they earn for you and so their earnings do the same.
  • Live within your means. Do not spend money foolishly.
  • Pursue opportunity promptly – that is the real meaning of good luck.

“Better a little caution than a great regret.”

on investing your money

King Sargon Seeking Arkad’s Counsel

Arkad counseled many people about gaining wealth, including King Sargon, who asked him to teach other Babylonians how to manage their earnings and prosper. Being poor, the citizens were restless and despondent. The king thought that if they learned about money, they could get rich and Babylon would become a great city of wealthy men.

A few days later, Arkad met with 100 of Babylon’s citizens in the great Temple of Learning. They eagerly waited to learn what he would teach them. His first rule was what he had taught the other supplicants: Save a tenth of your earnings and cut back on your expenses. He told them to invest their earnings, not to bury them in the fields for safekeeping.

“Opportunity is a haughty goddess who wastes no time with those who are unprepared.”

Arkad explained that the most important investment rule is to protect your principal. He warned the men against quick-rich schemes, and told them to be as careful choosing their investments as they were when choosing their wives. To invest, he said, they should seek wise counselors who knew about both gold and life. Arkad told them never to invest their gold in ventures they did not understand or with men who were not skilled in the enterprises they promoted.

He told them to buy homes instead of renting them, thus taking advantage of one of life’s best investments. He cautioned them to plan carefully for their later years when low energy, illness, decrepitude and age would make it more difficult to work.

Finally, Arkad advised every man present to increase his knowledge, expertise and skills, to become wiser so he could earn more. The 100 citizens thanked Arkad for his excellent advice. They all applied his ideas, and passed his knowledge along to their friends and family members. Thus, many people in Babylon became wealthy and the city became as prosperous as the King had hoped it would.

“A man’s wealth is not in the purse he carries. A fat purse quickly empties if there is no golden stream to refill it.”

Awesome

The Story of Rodan and His 50 Gold Pieces

Rodan was Babylon’s most able spearmaker. Pleased with his craftsmanship, the king gave him 50 gold pieces. Rodan was both pleased and disturbed. He was happy to be rich, but he did not know what to do with the money.

Rightly so, many people begged him to lend them gold for this purpose or that. Beleaguered, Rodan went to Mathon, a trusted wise man, for advice.

Mathon told him a wonderful story about a farmer who could understand the animals’ language. The story goes like this.

“One night he hid in the barn to listen to them. What the ox said disturbed the farmer. The ox told the mule that he worked much harder than the mule did, because he pulled a heavy plow all day, while the mule only carried the master to market once or twice a week, and could rest or play the rest of the time. The mule told the ox that he, too, could spend the day laying in his stall if he pretended to be ill when the master came to hitch him to the plow. The ox followed his advice, but the wily farmer was ready for the ox’s deception. He hitched the mule to the plow and made him pull it for the following fortnight.
At the end of the day, the ox thanked the donkey for giving him a day of rest and the donkey proclaimed that he was “like many another simplehearted one who starts to help a friend and ends up by doing his task for him. Hereafter you draw your own plow, for I did hear the master tell the slave to send for the butcher were you sick again. I wish he would, for you are a lazy fellow.”  
I believe that’s the end of the friendship between the mule and the ox.

“For a man to wish to be rich is of little purpose. For a man to desire five pieces of gold is a tangible desire which he can press to fulfillment.”

Mathon asked Rodan to guess the story’s meaning. When the spearmaker could not, Mathon explained the fable. It showed that he should never help others if it means assuming their burdens on his own shoulders. He advised Rodan to loan his gold only to those who had the means to repay him and to enable him to earn a reasonable profit from the transaction. Mathon further warned that Rodan would never regret exercising extra caution when he lent money, because lending recklessly would lead to losing his gold and weeping bitter tears.

“That which each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary.”

The Story of Dabasir, the King of Camels

One day in the market, Dabasir, Babylon’s most famous camel trader, approached Tarkad, a young man who owed him money. When Dabasir asked for the copper and gold he had lent Tarkad, the young man hung his head in shame and confessed he did not have the money. Dabasir urged him to go get it. When Tarkad said that was impossible, Dabasir told him a story.

“‘Fickle fate’ is a vicious goddess who brings no permanent good to anyone.”

He was once a slave, and still would be one if not for the kindness of his mistress, who took pity on him and helped him gain his freedom. She gave him two camels, some bread and a jug of water, and told him to ride across the desert to flee for his freedom. He was greatly afraid because the desert is vast and cruel. Then his mistress asked him if he had the heart of a free man. If so, she said, you will take your chance. If not, you will stay here and remain a slave.

Dabasir took her dare and rode into the desert. He journeyed for weeks, his food and water long gone. He thought often of death, but the words of his mistress spurred him forward. He vowed to trek on until he was safe and free.

“Good luck waits to come to that man who accepts opportunity.”

He finally made his way to Babylon. From that day on, he always used his learned determination to move forward, no matter what difficulties lay in his way. Dabasir looked hard at the young man by his side and told him that he, too, had either the heart of a free man or that of a slave, and that a free man would find a way to repay his debts.

Tarkad rose and thanked him for the story, assuring him that as a free man he would repay the money.

The next day he did. Where there is a will, there’s a way.

“Without wisdom, gold is quickly lost by those who have it, but with wisdom, gold can be secured by those who have it not.”

The story of the Merchant, Sharru Nada

Sharru Nada was the richest merchant in Babylon, but few knew that he also had once been a slave. Many years before, his master had chained Sharru Nada to two other men: Zabado, the stealer of sheep, and Megiddo, a burly farmer.

The master took the three slaves to Babylon to sell them. As they approached the great walls of the city, Megiddo, the oldest, advised the other two slaves to talk to any potential new master, to explain that they were hard workers and that the man would never regret buying them. Then, he said, they should become hard workers, because hard work is a man’s best friend and all good things derive from it.

Zabado laughed, and said he would not proclaim himself to be a hard worker lest he end up among the slave crews repairing the great wall, breaking his back carrying brick and mortar all day. But Sharru Nada thought long and hard about Megiddo’s advice.

Later that day, Nananaid the baker asked the slave dealer if any of the slaves for sale were trained as bakers. Sharru Nada quickly spoke up and urged the man to buy him, promising to work hard and willingly, even though he was not trained as a baker. Nananaid liked Sharru Nada’s bold spirit. He bought the young man and taught him to bake.

As he promised, Sharru Nada worked hard every day for his new master. Years went by. He always remembered what Megiddo had taught him. He treasured work the way other men treasure jewels and gold. Eventually, Sharru Nada was able to convince Nananaid to let him go into the city in the evening hours to sell honey cakes he baked on his own time. Nananaid let Sharru Nada keep one-fourth of the money he made. This proved profitable for both men.

Little by little, Sharru Nada’s savings grew. One of his customers was Arad Gula, a rug merchant who was so impressed with Sharru Nada’s enterprise that he bought the young man from Nananaid and gave him his freedom. He made Sharru Nada his partner so they could prosper together. And so they did, all because Sharru Nada learned the value of hard work.

And that’s it. The notes on this awesome book, one which without doubt one of the best read I’ve had.

A perspective on Wealth

One day, the father of a very wealthy family took his son on a trip to the country with the express purpose of showing him how poor people live.

They spent a couple of days and nights on the farm of what would be considered a very poor family.

On their return from their trip, the father asked his son, “How was the trip?”

“It was great, Dad.”

“Did you see how poor people live?” the father asked.

“Oh yeah,” said the son.

“So, tell me, what you learned from the trip?” asked the father.

The son answered:

“I saw that we have one dog and they had four.

We have a pool that reaches to the middle of our garden and they have a creek that has no end.

We have imported lanterns in our garden and they have the stars at night.

Our patio reaches to the front yard and they have the whole horizon.

We have a small piece of land to live on and they have fields that go beyond our sight.

We have servants who serve us, but they serve others.

We buy our food, but they grow theirs.

We have walls around our property to protect us, they have friends to protect them.”

The boy’s father was speechless.

Then his son added, “Thanks Dad for showing me how poor we are.”

Isn’t perspective a wonderful thing? Makes you wonder what would happen if we all gave thanks for everything we have, instead of worrying about what we don’t have.

Appreciate every single thing you have Allah has blessed you with, especially your sincere friends!

Pass this on to friends and acquaintances and help them refresh their perspective and appreciation.

“Life is too short and friends are too few.”

Source: thekhalids.org