This was one of the first books I read from the world of investing and wealth accumulation. I’d heard the “pay yourself first” line from my parents and a couple teachers, so it was interesting to see the original source.
Brief summary: There are two poor guys in ancient babylon, and they’re admiring a third guy’s wealth. The third guy has many, many caravans, a gajillion camels, many traders doing business for him, a massive palace, you get the picture. But spoiler alert, it turns out this wealthy merchant is actually their long-lost childhood friend. And, because he wants to see his friends prosper like he has, he tells them the secrets to his wealth (basically, frugality and compound interest). The two guys had a little bit of a hard time adjusting to the habit of saving some money rather than spending all of it. But soon, they got the hang of things, and got a few gold coins together to start investing with (while continuing to save).
Thoughts: I liked it as a motivational piece, and because it was the first time I realized how excited I get about compound interest (although I suspect everyone can get pretty excited about it. I mean, who doesn’t like the thought of having an exponentially increasing pile of money and not having to work for most of it?). And it got me excited about investing, saving, and “setting my purse to fattening.” There were a couple things that weren’t explicitly in the book that got me thinking too. One was the fact that they seemed to get returns well above what you can get in the public markets today. I think it was around 10% per month? A turning point for thinking was considering how I could create those kinds of returns for myself (essentially through entrepreneurship), rather than waiting until I’m too old to enjoy the money and the freedom it buys. If I recall, they did some combination of private loans, real-estate investing, and business ventures, all of which I want to learn more about.
The other thing that got me thinking was how a big part of how the merchant got wealthy was due to his very long compounding time-frame. By comparison, his friends could certainly grow wealthier and probably afford to stop working at some point. But by virtue of starting so much later, they’d likely never reach his fabulous level of wealth. That’s kind of depressing, and it makes me want to convince my friends now to start saving their money, since I think it will lead them to a better life.
Would I recommend the book?: Sure, unless you’ve already read something similar that got you excited about growing and compounding your money. I’m sure there are others out there, and I don’t think there was anything so magical about this one that you couldn’t get there another way. But if you like a good parable as I do, then give it a read.