Wealth Building Strategies

The Way To Wealth By Benjamin Franklin

Learn The Wealth Building System That Worked For Benjamin Franklin Many Years Ago, And Still Works Today

Screen Shot 2016-12-09 at 7.02.01 AMEditors Note: Benjamin Franklin was one of those rare geniuses adept at business, invention, writing, philosophy, and politics. His literature inspired intellectual and political freedom, helped found this great nation, and contributed measurably to our culture.

The Way to Wealth, written in 1757, is a summary of Benjamin Franklin’s advice from Poor Richard’s Almanac published from 1733-1758. It’s a compilation of proverbs woven into a systematic ethical code advocating industry and frugality as a “way to wealth”, thereby securing personal virtue. His advice is just as relevant today as it was 270 years ago when first written.

I love this article, and I hope you do too.

For that reason, I’ve taken pains to provide as complete a version of The Way to Wealth as is available; however, I have added some paragraph breaks, title breaks, and minor punctuation and spelling changes to increase modern day readability. I hope you enjoy it.

Way-to-Wealth-by-Benjamin-Franklin-600x400

Benjamin Franklin: The Way to Wealth (1757)

Courteous Reader,

I have heard that nothing gives an author so great pleasure as to find his works respectfully quoted by other learned authors. This pleasure I have seldom enjoyed; for tho’ I have been, if I may say it without vanity, an eminent author of almanacs annually now a full quarter of a century, my brother authors in the same way, for what reason I know not, have ever been very sparing in their applauses; and no other author has taken the least notice of me, so that did not my writings produce me some solid pudding, the great deficiency of praise would have quite discouraged me.

I concluded at length, that the people were the best judges of my merit; for they buy my works; and besides, in my rambles, where I am not personally known, I have frequently heard one or other of my adages repeated, with, as Poor Richard says, at the end on’t; this gave me some satisfaction, as it showed not only that my instructions were regarded, but discovered likewise some respect for my authority; and I own, that to encourage the practice of remembering and repeating those wise sentences, I have sometimes quoted myself with great gravity.

Judge then how much I must have been gratified by an incident I am going to relate to you. I stopped my horse lately where a great number of people were collected at a venue of merchant goods.

The hour of sale not being come, they were conversing on the badness of the times, and one of the company called to a plain clean old man, with white locks, “Pray, Father Abraham, what think you of the times? Won’t these heavy taxes quite ruin the country? How shall we be ever able to pay them? What would you advise us to?”

Father Abraham stood up, and replied, “If you’d have my advice, I’ll give it you in short, for a word to the wise is enough, and many words won’t fill a bushel, as Poor Richard says.” They joined in desiring him to speak his mind, and gathering round him, he proceeded as follows:

Industry: ...continue reading HERE

 

Which of these would you rather have in your safe?

Gun-safe-graphicLet’s say you have two equal size safety deposit boxes. 

One box you completely fill up with stacks of $100 bills. 

The other box you fill up with gold. 

Which of the two is “worth” more? 

It’s easy to calculate. A stack of 100x $100 bills is 6.14 inches long, 2.61 inches wide, and 0.43 inches tall. 

That’s a volume of 6.89 cubic inches (112.92 cubic centimeters… and we’ll use the metric system from here on out because it really does make more sense!). 

A stack of 100x $100 bills is worth $10,000. So the paper money’s ‘value density’ is about $88.55 per cubic centimeter. 

Gold, on the other hand, is much more value dense. 

A 1-kilogram bar of gold is 11.55 cm long, 5.25 cm wide, and 0.92 cm tall, for a total volume of 55.79 cubic centimeters. 

As of this morning, gold is worth $37,811 per kilogram, meaning the value density of that 1kg bar is $1,278.75 per cubic centimeter. 

So gold is clearly more value dense than paper money, i.e. you can store a LOT more value in the same amount of space with gold than you can with paper money. 

What about silver? 

A 1-kg silver bar measures 11.6 cm x 5.3 cm x 1.75 cm, for a total volume of 107.6 cubic centimeters; this is larger than the bar of gold due to its different chemical properties.  

One kilogram of silver is currently worth $550. So the value density of silver is $5.11 per cubic centimeter– much lower than both gold and $100 bills. 

I looked into a number of other currencies and assets. 

500-euro notes, for example, currently have value density of $373.05 per cubic centimeter based on today’s exchange rates. 

And the 1,000 Swiss franc note has value density of $827.14 per cubic centimeter. 

Let’s look at fine wine: a bottle of 2005 Petrus sells for about $4,200; with a storage volume of 1,331 cubic centimeters, the wine’s value density is just $3.15. 

The “5270G-018 Grand Complications” model of watch manufactured by Patek Philippe sells for about $145,000. 

It measures 72 cubic centimeters in total volume, for a total value density of $2,013 per cubic centimeter. 

200 rounds of 7.62mm ammunition in a bulk ammo can measures 4,014 cubic centimeters. At a cost of around $150, the ammo’s value density is about 3.7 cents. 

August 1962 edition of the Amazing Fantasy comic book featuring Spiderman on the cover (and signed by Stan Lee) sells for nearly $38,000. 

It’s a comic book, so it’s small, at just 345 cubic centimeters. So its value density is $110.14 per cubic centimeter. 

Rare colored diamonds, as you can probably imagine, are extremely expensive. A tiny 0.11 carat “fancy vivid purplish pink” measures just 12.91 cubic millimeters, or .01291 cubic centimeters. 

Most of the normal colorless or near-colorless diamonds that are sold in mass market jewelry stores are terrible investments. They’re not rare, and they’re overpriced. 

But high quality colored diamonds can be extremely rare, and that scarcity drives the price much higher. 

That’s why a tiny 0.11 carat colored diamond is currently listed at $10,573, making its value density a whopping $818,977.53 per cubic centimeter. 

So let’s look at all of these assets in order of least to most value dense: 

Value of assets in dollars per cubic centimeters: 

Ammunition: $0.037 
Fine wine: $3.15 
1-kg Silver bar: $5.11 
$100 bills: $88.55 
Rare comic book: $110.14 
500-euro notes: $373.05 
1-kg Gold bar: $1,278.75 
Luxury watch: $2,013 
1,000 Swiss franc: $827.14 
Colored diamonds: $818,977.53 

Now, in my view, given the potential costs and challenges of the other assets, gold still remains the top choice. 

Luxury watches may be more value dense than gold, but the marketplace is limited and the costs to sell are much higher. 

There are gold dealers in just about every major city on the planet, so you’d be able sell a gold bar in no time at all, at very little cost. 

Colored diamonds, luxury watches (and even comic books) could take much more time to sell, and you might need to pay steep commissions to close the deal. 

Plus, the gold price is quoted worldwide, round-the-clock. There’s never any question about how much gold is worth. 

The 1,000 Swiss franc note is more value dense than gold. And for now, Switzerland has resisted the calls to ban the note, as Europe has done with its 500-euro note. 

But I wouldn’t expect that sensibility to last forever. Between the two, gold is likely safer from a regulatory perspective… and more universal. 

But fortunately the decision doesn’t have to be mutually exclusive. You don’t need to choose between one and the other. 

So if you’re going to fill up your safe, choose a variety of assets. You can start small– silver coins and $20 bills. 

Now, there’s one asset here that I didn’t list. You might have thought of it already… it’s one that blows the rest away in terms of its value density. 

I’m talking about cryptocurrency. 

Bitcoin, for example, takes up precisely zero space. If you really wanted, you could memorize a string of digits and store millions of dollars in your head. 

Even if you wanted to print out a 250-pixel QR code and keep it in your safe, it would take up a laughable amount of space, roughly 0.21 cubic centimeters– not much bigger than a tiny diamond. 

Yet that same 250-pixel QR code could hold $1 worth of bitcoin… $100… $1,000… or even millions. 

In other words, the value density is enormous. 

Now, I’m not encouraging you to dump all of your savings in cryptocurrency– there are still plenty of growing pains ahead. 

But it’s important to understand the many benefits of cryptocurrency… and value density is just one of them. 

Until tomorrow, 

Simon Black

Founder, SovereignMan.com

also from Simon: Incredible opportunities in a hidden corner of the world

Mega Trends

arows1I have been watching the parade march by and after months of contemplation I have the following comments concerning the next 2 to 3 years.

1.US Presidential election:

The election itself was not as important as the fact that a large percentage of the population has come to realize that we are on a course that cannot continue.  Middle American decided that things must change.  Dissatisfaction with the status quo is really what the 2016 election was all about.  It was not republicans vs. democrats so much as it was globalist against nationalist.  

2. The EU (European Union)

It appears that the euro was doomed from the start.  Monetary policy was centralized but fiscal policy was not.  Merkel’s immigration policy is just the last straw for many Europeans.  Rules and regulations pouring out from Brussels are strangling the economies of all the EU countries.  There are over 1,200 regulations on a “spoon”.  There are over 1,000 regulations on “cabbages”.  These regulations are coming from the central government from unelected bureaucrats that answer to no one.  Many of the unelected ministers make over 300,000 euros / year along with their expenses.  This new mandarin class of overseers can make regulations over the objections of the elected governments in the individual countries.  The Italian banks have 18% of their loans in the non-performing category (US banks are about 2%).  Italy cannot continue much longer without some sort of change.  President Holland in France is on the way out and change is in the air for the coming election there.  The EU will collapse as more countries pull out and quit paying for the central government.  Wealth will flee Europe in the coming chaos and much of that wealth will find its way into the US markets.  It will purchase blue chip stocks, high-end real estate, bonds and precious metals.  This will cause the USD, precious metals, real estate and the stock market in the US to all go up together.  Our balance of trade will become even more lopsided as our exports become more expensive.  

3. Retirement and Life Insurance companies:

The ZIRP (the federal reserve’s zero interest rate policy) will cause retirements (both public and private) along with life insurance companies to blow up.  The Dallas police and firefighters retirement fund is just the latest disaster.  Watch for many more to follow.  Many life insurance companies are spending down decades of accumulated capital because interest rates are so low.  The math simply does not work anymore.  Government defined benefit plans will not reduce payouts and will simply demand more tax revenue while private plans will default causing a great resentment against government retirees from retirees in the private sector.  Eventually government retirements will be adjusted down but only after much bickering.  Life Insurance companies will simply go bankrupt, as they just do not have enough yield to make the math work with bonds and mortgages.  They will be forced further out on the risk curve, which will lead to failures one after the other.

4.  BRICS (Brazil, Russia, India, China, South Africa)

The BRICS countries along with several other Asian countries will continue to pull away from the USD.  Union Pay and the Asian “swift” equivalent will grow to over half of the world economy – outside of the USD and western banking system.  If you haven’t yet noticed Union Pay it is the Chinese equivalent of VISA / Master Card.  Many US merchants now accept it.  Many MENA (Middle East & North African) countries are leaning east and away from the west.  Some even predict that Germany may look east and hitch their economic wagon to Russia and China.  The neo-cons in the US are fighting the BRICS and there is a lot of saber rattling going on with the “pivot to Asia” and baiting the Russian bear right on their European border.  There has also been a recent declaration that “Russian” hacking on the internet is an act of war.  (The very nature of hacking makes it near impossible to tell where it came from.)  I pray to God that calmer heads will prevail and the neo-cons will fall out of power sooner rather than later.  

5.  Retail Trade:

Retail trade is changing and traditional retail stores such as Sears, JC Pennys, etc are continuing to get hurt by on-line sales.  Young people are more comfortable with Amazon and other on-line purchases from the comfort of their own home.  There is a larger selection available and popular sizes are rarely out of stock with on line stores.  Commercial real estate for these companies will de-value greatly in the future.  Office buildings are also changing since people can work from anywhere now.  Few new high rise office buildings can cash flow now and most sell for much less than their replacement cost because current cash flow will not support new high rise construction costs in many markets.  Many older office buildings are converting to condos and apartments.  People still have to live somewhere even though they can shop (and in some cases work) on-line.

6.  Health Care

Obama Care is coming apart at the seams with increases that are too large for most people to swallow.  Health care is now mandated by law and the fine for not having it is also going up each year.  The entire health care industry is around 12%+ (and growing) of the GDP.  This is pretty outrageous and is squeezing the middle class more and more every year. I can remember having basic catastrophic “hospitalization insurance” when I entered the workforce many decades ago.  Everything else was paid for out of pocket.  You only insured the very expensive health issues such as a long hospital stay.  You were required to pay your doctor and make arrangements with him privately.  Third party payment has completely changed all that and now everyone thinks they should not pay over $5 for anything health related.  Until we get rid of 3rd party billing and insurance except for only catastrophic illnesses we will never get heath care costs under control.  Anytime “someone else” such as an insurance company pays the bill we are going to have a problem affording health care.  Big pharma, big hospital corporations and big insurance companies are not the solution.  Private contracting of services on a one to one basis is the only way to make health care affordable.  The other direction only leads to a “free” government program with rationed care. 

7.  The War on Cash

Modi in India is the latest to declare war on cash by getting rid of the 500 & 1,000 rupee notes.  Unfortunately that pulled about 85% of the circulating cash out of the economy and problems are legion.  There is currently a $600 premium per oz on gold in India as people rush out of the local currency and into gold.  Many countries are slowly trying to outlaw cash or at least discourage its use.  The banker’s and the tax collector’s ultimate dream is to outlaw cash and run every last transaction through the banking system so that the bankers can charge a fee and the taxman can take his cut.  People seem to forget that cash is freedom.  Nothing good will come from this – unless you consider a yearly asset tax, even higher bank fees and a complete loss of financial privacy a good thing.

So where do these trends leave the average investor?  Should we be careful investing in REITS specializing in shopping malls?  Should we invest in UPS to capture the on-line delivery trade?  Maybe, but asset allocation is probably the big picture that you need to consider.  While I am not a fan of residential real estate millennial that do not want to purchase a home will have to live somewhere.  Consider investing in real estate to house them.  Possibly invest in apartment complexes, quads or even a garage apartment at your residence if allowed.  

Stocks are overvalued but hot money from Europe and emerging markets will continue to pour into the US (the world’s last safe haven) and push them up for the next few years.  Consider an S&P 500 index fund with low fees from Magellan since most of us are poor stock pickers.

Build cash and get out of debt.  Spread cash around several different banks and keep a supply of cash (in small bills) on hand just in case.  Up your precious metals allocation for long-term financial insurance.

Consider the following asset allocation:

20%  real estate (income producing residential)

20%  S&P 500 index stock fund (with low fees)

20%  cash held in several local banks 

(plus a few months living expenses in cash outside the banks)

20%  gold & silver (buy the real thing and not an ETF)

20%  short term corporate AAA bonds 

(interest rates will probably go up so buy short-term bonds only)

If you don’t like this allocation then sit down and create your own mix.  Decide on a plan and stick to it.  Rebalance at least once a year in December.  Of course you may want to make small adjustments and change up your allocations every few years but think through your allocations carefully and try not to make emotional decisions based on short-term news.   

Larry LaBorde

Larry LaBorde sells precious metals through Silver Trading Company LLC. Please visit Silver Trading Company’s website at www.SilverTrading.net.

Incredible opportunities in a hidden corner of the world

“for individual investors, the Republic of Georgia is ripe with opportunity” “when the Georgian government abolished its previous Byzantine tax code and adopted a simple, low, flat tax model, government tax doubled” investors are “still earning over 7% on their US dollar deposits”

GeorgiaSimon Black sent me to the former Soviet republic of Georgia to spend some time on the ground conducting due diligence on some potential private investments.

Georgia is a fantastic country that Simon has been to several times, and the opportunities here are simply amazing.

It’s not that Georgia has more opportunities than Europe, the US, and the rest of the world. Investment opportunities are everywhere.

The difference here is that Georgia is totally off the radar of most investors.

It’s a tiny country of 4 million people with a GDP of roughly $36 billion. That’s about half the size of the economy of New Hampshire.

And the total stock market capitalization is just a fraction of Uber’s most recent market value.

This means that it’s very difficult for large, institutional investors to put money to work in this country.

They need big scale… economies where they can easily deploy billions of dollars. There simply aren’t enough of those supersized opportunities here.

That’s why you won’t see a bunch of hedge fund managers on CNBC talking about their investment positions in the Republic of Georgia. It’s too small for them.

But for individual investors, Georgia is ripe with opportunity.

….continue reading HERE

…related:

5 Tried and True Strategies For Building Wealth

5 Tried and True Strategies For Building Wealth

build-wealthThere are hundreds of resources available that claim to help you build wealth. From smart stock market strategies to investing in startups as a venture capitalist, there are numerous ways to make your money work for you.

So how do you know which ones really work? Here are five tried and strategies for building wealth, that have stood the test of time.

….read all 5 HERE

 

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