The six laws of wealth are fundamental financial guides for acquiring wealth. It involves guidelines on hard work, careful planning, and wise investments.
“Play repeated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest”
Naval Ravikant
The First Law of Wealth
You must keep a part of all you earn. Pay yourself first. Save at least 10%-30% of your income. Avoid the situation where people take a share of your earnings, and you have none left for yourself.
Resolve that a part of all you earn is yours to keep. Save as much you can afford and not less than a tenth.
Great wealth is like a mighty oak, and it starts with a tiny seed. The first coin you save is the seed from which your wealth will grow. The sooner you plant the seed, the sooner your tree will mature.
The Second Law of Wealth
You must put your savings to work for you. Invest it so that it will multiply. To grow wealthy, you first must save a part of what you earn. Then put your savings to work for you so that it will multiply.
Each coin generates a little coin, which, in turn, earns even more money. For if you invest your money wisely, your money will go to work for you. Each coin you save is a seed that will help your tree to grow. The more you feed and water the tree, by saving and investing, the sooner you’ll bask in contentment beneath its shade.
The Third Law of Wealth
You must avoid debt. The poor pay interest, while the rich earn interest. It is not easy to stop your spending and cut out all extravagances. Yet, the pleasure of sleeping easy at night outweighs the pain. Savings gives you the ability to control where, when and what you do in life. Wealth buys freedom, while debt is slavery. A man is a slave to his creditors no matter how rich he appears if he has purchased his luxuries on credit.
The Fourth Law of Wealth
You must not speculate on get-rich-quick schemes. Only invest in solid businesses that you understand. A business that consistently makes a profit and returns dividends to its investors. Find a business that creates value and can cost-effectively deliver to customers. If you’re interested in a business, you don’t yet understand, find someone who does or read about it.
The Fifth Law of Wealth
Invest in yourself. You must gain knowledge and skills to increase your earning power. The best investment you can make is in yourself. You must continue to educate yourself and seek out wisdom. Add new skills and experiences that will make you more valuable.
The Sixth Law of Wealth
You must safeguard your growing fortune with diversification and insurance. Create multiple income streams. These channels can comprise the main job, side hustle, and a passive income system. Also, you must take precautionary measures to safeguard your fortune by taking insurance on your life and wealth.
Practical Insights
- Start your journey to wealth by living below your means.
- Avoid debt at all costs
- Start saving today
- Invest wisely
- Engage in business that you understand
- Seek knowledge and educate yourself
- Diversity your income streams and insure against calamity
