Yea, that's right I paid $250.00 for The Richest Man in Babylon! I'm sure many of you have heard of this book before. The book's cover says "The success secrets of the ancients - the most inspiring book on wealth ever written". I believe this to be true. It's definitely the book that turned my financial compass north.
OK, back to how I paid $250.00 for this book :- ). This was back in the 90's. This was a time in my life where I was young and full of eagerness to explore all the wonderful ways to make money. You might say I had get rich quick fever! It was during my second venture into MLM (Multi Level Marketing). I'm sure I'll blog on the wisdom I've gained from MLM at some point, but for now let me say this about my opinion of MLM ... Although I was somewhat successful with 2 different MLM ventures, I felt I lost in the end by straining friendships in the process.
During this time my good friend (I'll call him Calvin) and I met a gentleman (I'll call him Jay). Jay was bringing us under his wing and teaching us more about MLM at first and about finances in the end. There's one great analogy he gave me that stuck and probably the single most reason I realized that MLM had to be in my history and not my future.
What Jay said was something like this:
... When you think about what MLM really is you can break it down into this: A group of individuals working to sell a product/service; A hierarchy of individuals managing the customer facing individuals; A group of individuals that started or fund the entire enterprise and make a small percentage of the overall profits. Now that's great if you're one of the founders or individuals that got in early in the game, you end up making lots of money. Otherwise you make less and less as it gets down to that customer facing final individual who's trying to build their own network. Wouldn't it be great to somehow pay one of the founders something to share in their profits?
Well, there's actually a really regulated system that exists today where you can do exactly this: The Stock Market! When you think of public companies, they have a very similar structure as MLMs, except all of the employees (sales and otherwise) are capped on what they earn. That means more profits rolling up to the top founders and managers and SHAREHOLDERS!
I'm sure I'll blog more on this topic later. Bottom line, investing in stocks (whether individual or through mutual funds) is one of the best way to have the efforts of many working for you!
Calvin and I continued to visit Jay and his family and learn more and more about finance and investing. This was the early days of the web and there weren't a lot of investment sites you could learn or research on. He had a couple of different online investment accounts. He'd try and show us how he made money day trading. He tried to show us about options. For our level of learning options was a far fancier endeavor than we wanted to get involved with. We could understand the leverage advantages, but were leery of the ultimate possibility of losing all of that options investment if it expires on you.
To shorten a long story a bit, Jay showed Calvin and I how he was making money day trading and his neighbors would drop over periodically asking advice and sometimes investing with him and letting Jay run their trades and then give them their profits. Ultimately Jay asked us if we wanted to let him invest any money for us. Calvin and I discussed this on our own and came to the conclusion that we'd invest only a small amount as we were a bit skeptical of the whole situation, but were grateful for all the time Jay spent teaching us about investing. We each gave Jay $250.00. That day we did that, Jay gave us each a copy of the book The Richest Man in Babylon and said we should read this because it was very insightful and had many lessons on building wealth.
So, exactly what happened to our $250.00? Not much, we continued to learn about investing on our own. We read The Richest Man in Babylon and both agreed that it was an amazing revelation and a milestone in each of our personal finance educations. In the end we stopped talking to Jay as it seemed that he never had any new news on our investments and finally after confronting him he said that it looks like he made a mistake and allowed our options to expire without action. Calvin and I considered ourselves fortunate that we only gave Jay $250. To this day we laugh at how much we paid for our wonderful copies of The Richest Man in Babylon. We still think it was worth it :- ) !!!
I truly say that, from that point on I had a thirst for learning new things about finance and investing and each new spoonful of wisdom started with that great book.