The 5 Laws of Gold— Fourth Law
Only Invest Where You Understand
Risk, are a part of life.
However, unnecessary risk only plays a part of in the lives of the poor and middle class— in most cases. Throughout my years and experience, I can tell you for sure that being rational is a major component in being successful!
Success is individualized. This means a success for me doesn’t have to be the same for you. On the other hand, wealth and prosperity are a mindset. This is not individualized. Although wealthy people experience great amounts of success, successful people do not necessarily experience great amounts of prosperity. It is very easy to win in the areas of money but lack in other areas of your life consistently.
Wealth and prosperity should be experienced in all areas of your life. There should be very few or no areas of lack, because prosperity is your BIRTHRIGHT. You deserve prosperity because you are breathing. No one deserves to be poor. One of the best books in the world says, “The poor will be with you always.” I’d like to think this is because someone people will never change their attitudes and mindsets towards the matters of finance. You; however, are not one of these people. After all, you are reading this blog. 🙂
Let’s see what Warren Buffet says about taking risks when it is concerned in the matters of money. The following quotes are all famous quotes said by Warren Buffett himself:
1.Risk comes from not knowing what you’re doing.
Here, you can clearly see that Mr. Buffett clearly understands that risks exist when one does not understand what they are doing. In order to invest, control your money, spend your money, etc., you need to become a master in what you are about to do, or how you are about to spend your money, and the risk will fade. Education will replace risk.
2.Diversification is a protection against ignorance.
I think he’s right on target here, and we all need this protection. We cannot simply understand everything and avoid every unforeseen danger that lies ahead. Therefore, in the matters of money, not dreams or goals, one should not put all their eggs in one basket. Diversification is a wonderful way not to lose the whole farm by better on one prize chicken.
3.Only when the tide goes out do you discover who’s been swimming naked.
Everybody’s a genius until the smoke has cleared and the dust has settled. When everyone is investing their money, and when the media is convincing everyone to run towards this stock or that investment, everyone looks smart. Yet, in a crash, you will always see who are the real genuineness. These folk will more than likely be those who have invested without impulse and emotion when everyone else did not.
4. Never invest in a business you cannot understand.
I cannot express to you enough how much I have this mistake. What an idiot I was— not because I made this mistake, but because I didn’t learn from it and made it more than a few times. Youthful ambition outweighed my logic and reason. If you don’t understand the business, don’t invest in it. If the business is too complicated to understand, or its compensation is too hard to understand, then you are more than likely looking at a business that will not last for long because simplicity is duplicated, and duplication leads to riches. Additionally, if you don’t understand the business, there are many other factors that can come into play that will help you lose your money. Take it from Warren Buffet. He has a dollar or two saved up.
5.What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.
This is more than likely the most important quote, concerning risk and investing. This is something I teach my clients all the time and I have a unique way of saying it. I also apply it to all areas of life. Here goes: In life, you do not get your level of intelligence, you get your level of awareness. There are many highly intelligent people who are not doing well in life. Of course, to “blanket”, this statement across all people is highly unfair, but barring mental diseases and serious disabilities, everyone has a chance to be successful. However, you can only get the things that are in your level of awareness. This is why there are many not-so-intelligent people who make more money than me and you combined. Intelligence isn’t everything, but a high level of awareness is. Make sure as you move forward in your life and your investing life, you work on being highly self-aware and your overall level of awareness. You will only get in life the infinite possibility of things that exist on your level of awareness. Sorry, I know this is a hard pill to swallow, but it is very true, according to hard science— quantum physics to be exact.
One of the greatest books in the world that exist on this topic is the “Richest Man In Babylon”, by George S. Clason. In this book, the list 5 Rules of Gold. I am going to share them with you and then break each one down for you. Money is your slave! Fear it no more.
The 5 Laws of Gold
Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those who are skilled in its keep. This goes hand in hand with the third rule: if you invest in stuff you don’t understand, you’re likely to lose money. Don’t buy the latest hot stock from your stockbroker; investigate and invest where you want.