“Put thy treasure to labor. Gold in a purse is gratifying to own and satisfieth a miserly soul but earns nothing.”
-Arkad, the Richest Man in Babylon.
Translation: Put your money to work for you in an interest bearing savings account or relatively safe investments. This is the 3rd of the 7 cures for a lean purse as detailed in George S. Clason’s The Richest Man in Babylon.
“The gold we retain from our earnings is but the start. The earnings it will make shall build our fortunes.”
Your savings alone will not make you wealthy. To build wealth, you need to put your money (savings) to work for you and earn more money. This is also known as the “miracle of compound interest.”
“A man’s fortune is not the coins in his purse, but the income he creates.”
True wealth is not money in the bank. It is a passive income stream that builds steadily. This can be achieved by a number of means.
Emergency savings should be put to work using the afore mentioned miracle of compounding interest, either through a high interest savings account like the ones offered by ING direct or HSBC, or by Certificates of Deposit (CDs).
After you’ve put your emergency savings to work, you should look to longer term horizons; retirement and long term wealth building. This is usually done through riskier vehicles such as stocks, bonds and real-estate. They are riskier, but generally offer higher returns, or yield, than “safer” vehicles. This is why you should never put your emergency money here, only money for long term goals goes here, because you’ll have time to recover from a dip in value.
The photo at the top ©Hector Landaeta.
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