George Clason's book "The Richest Man in Babylon" should be read by all investors. First published in 1926, the book is a classic, and reminds us that the path to riches is based on some very basic but sound principles rather than on the "New, New Thing" (as Michael Lewis chronicles) or the latest hot stock or industry sector (for example technology, commodities, or housing). The prose can be a bit archaic, partly by design as the parables are set in Babylonian times, and partly because it was written almost a century ago. That a book this old still offers sound guidance is in fact one of the important lessons - lessons that should be especially relevant to today's stock market investors, real estate speculators and those financing their lifestyles through home equity lines of credit.
Clason's wisdom is encapsulated in seven lessons: start thy purse to fattening; control thy expenditures; make thy gold multiply; guard thy treasures from loss; make thy dwelling a profitable investment; insure a future income; and increase thy ability to earn. Each lesson is covered through anecdotes and parables, and the book's short length makes it an easy read over one or two sittings. Others have provided similar guidance over the years, perhaps none so well as Canadian author David Chilton with his "Wealthy Barber" book. Chilton covers a broader range of topics (e.g. life insurance) over more pages and in a more contemporary fashion, but his basic message is still the same.
Read this original book and be reminded that the true path to riches is within everyone's grasp. The path isn't found on-line in analysis of companies' regulatory filings, or by expanding one's credit lines, or through games of chance such as lotteries, ponies or casinos. This book deserves to be read as a reminder that others before us, both in Clason's time and in Babylonian times achieved success through hard work, spending less than they earned, and investing in themselves.
