The Richest Man in Babylon: Seven Cures for a Lean Purse Part 4, Guard Thy Treasures from Loss

In the third chapter of The Richest Man in Babylon the book lists and details "seven cures for a lean purse." Today, we'll cover cure #4 which is:

Guard thy treasures from loss.

The first part of the book's advice centers on protection of your principal:

The first sound principle of investment is security for thy principal. Is it wise to be intrigued by larger earnings when thy principal may be lost? I say not.

In other words, you want a decent return, but you don't need to push it so much that your principal is greatly at risk. Now any investment has some sort of risk, but what they're talking about is undue risk that could cost you a decent portion of your money. It's just not worth the risk.

The book ends this cure with the following:

This, then, is the fourth cure for a lean purse, and of great importance if it prevent thy purse from being emptied once it has become well filled. Guard thy treasure from loss by investing only where thy principal is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investments.

The Richest Man in Babylon doesn't address it directly, but I believe the concept of insurance for non-investment assets is covered in this suggestion. For more information on the proper use of all kinds of insurance, see these links:

• Saving Money on Car Insurance

• Comments: Getting Homeowner's Insurance (And Saving Money Too)

• 16 Ways to Slash Your Health Insurance Rates

• Should Retirees Carry Life Insurance?

Click here to read cure #5.

Comments

[Car Insurance]

Hello,
After visiting your blog, I believe it would be mutually beneficial to exchange links. Not only could we drive more traffic to our sites and get a boost in search engines rankings, but we would be adding value to our respective customer bases as well.

[Ethan]

It's been a while since I have read this book but I vaguely remember something about insurance (I could be thinking of something else). Regardless, I do think that fits in here well. Health insurance is a good way to protect your principal. If I have $200,000 saved up and then I get cancer, well that $200,000 can diminish very quickly. You may not always need a $20 copay or a great prescription plan but every person should at least have a catastrophe health insurance plan to cover the worst case scenarios.