Guard Thy Treasures From Loss - Lesson 3

George Clason uses Arkad, one of the main characters of his book The Richest Man in Babylon, to discuss the cures for a lean purse. In lesson four, Arkad tells the men who have gathered to listen, “the first sound principle of investment is security for thy principal.” ¹

Know the Risks Before You Invest

Arkad explains that the temptation to invest in opportunities that have large earnings potential may be hard to pass up, but, he said, “the penalty of risk is probable loss.” Any knowledgeable investment advisor will tell you that risk and return are important considerations for every investment. The more risk you take can mean a higher return on your investment, while less risk will mean lower returns but greater safety. So no matter what investment option you choose, make sure you know the risks before you invest.

Always Seek Counsel From Experts

You should only invest in things that you know and understand. Ask yourself, “what is my objective for this investment?” Don’t rely on your knowledge but seek counsel from experts in the investment you are considering. Let the wisdom of “others” experienced in investing guide you. They can help protect your treasure from risky investments.

There Are Risks With Every Investment

Whether you make money or not on your investments depends on how well your investments perform. There are risks with any investment but having a good understanding of each investment and the risks involved significantly increases your chances of picking profitable investments.

Avoid “Get Rich Quick” Schemes

Arkad admonishes his audience to careful study and research to ensure, as much as possible, that you will get your investment back. He stresses the importance of investing only in things you know and do not invest in “get rich quick” schemes.

Personal Loans to Others Are Risky

And finally, in this lesson, Arkad briefly discusses a principle regarding loaning your money to other people. It is straightforward; if you make a loan to someone, make sure they have the ability to pay you back and the reputation for handling their money well.

Please join us for lesson five as George Clason, through Arkad, the Richest Man in Babylon, teaches us how to make our house a profitable investment.