In the last couple of months, we have seen stocks losing almost 50% of their value from an all-time in Feb 2020, causing the famous 2020 stock market crash. I could have been the victim of the 2020 stock market crash if I hadn’t followed the advice from the book. (One of my favorite)
The economy is ever-expanding, and keeping up with it, we are continually striving to earn more money and that too quickly. But financial decisions taken in a hurry fails most of the time miserably, and I was on my way towards one such failure when the book “The Richest Man in Babylon” by George Clason came to my rescue.
When we start to become financially stable, we begin looking for opportunities to broaden our horizons further.
My Investment Story
After having a stable job for more than two years and having saved a substantial amount of money, including the emergency fund, I started to look for ways to invest to earn some more money. I referred to the best resource at my disposal – Google and searched for “ways to invest money.”
I proceeded to read up on the stock market. On familiarizing myself with NIFTY-50 (similar to S&P 500 and NASDAQ-100), I felt like I had learned quite a lot (spoiler – I hadn’t). I decided that I was ready to invest (spoiler – I wasn’t).
I picked a company from the NIFTY-50 list and invested about 60% of my savings in their stocks. (As per so-called expert advice)
Having absolutely no knowledge of the market and how it works, I had gone and compromised a big chunk of my savings, with blind faith in some articles I had found online.
But one day…
Around mid-Jan in 2020, I started re-reading (read a couple of years ago) “The Richest Man in Babylon“. And I thank God I did.
The book had a story about a young guy who works for a brickmaker. The young guy had saved some money in the last year by working in the Brickmaker’s workshop. The young man is hopeful and full of big dreams and aspirations and wants to become a wealthy merchant someday. When the Brickmaker approaches the young man with an investment opportunity, the young man all but jumps to say yes to the offer.
The Brickmaker tells the young man that he has come across a diamond-trader from a neighboring city willing to sell them diamonds at a low price. He tells him that they can buy these diamonds at a bargain and then sell them in the city for a hefty amount and make tons of profits. The young man, filled with excitement at this new opportunity, gives the Brickmaker all his savings with complete faith in their plan and begins to think about how he will spend his fortune.
After a few days, the diamond-trader comes back and sells them the diamonds and leaves the city. The young man and the Brickmaker happily make their way to the most famous jeweler in town. They show him the jewels and quote him quite a heavy price. The jeweler inspects the diamond, laughs in their faces, and tells them that the diamonds are fake.
Both the young guy and the Brickmaker lost their savings.
The story had two critical lessons
- Never take advice about diamonds from a Brickmaker.
- Always invest where the principal is 100% safe.
I thought that I was the Brickmaker, and the young man rolled into one. I did not know the stock market, much like the Brickmaker didn’t know the first thing about jewels. Similar to the young man in excitement I invested my money without proper research.
So, I took my lesson from the book and promptly pulled out all my investments the next day.
About four weeks later, the market crashed, and the stocks plummeted. When I got the news, I thanked my stars that I had pulled my investment at just the right time.
And that’s how the advice from “The Richest Man in Babylon” book saved me from the 2020 market crash.
I highly recommend that you guys read The Richest Man In Babylon and take control of your finances.
(Affiliate Disclosure: If you happen to purchase through the links above, I may get a thank you commission and maybe some good wishes.)