Today I finished “The Richest Man in Babylon”, an excellent book that I recommend to everyone anywhere. If I were a banker or a financial advisor, every new client would get a copy of this book. I won’t bother summarizing the book here in detail, since the book is so short that anyone could read it in two or three days at a slow pace. Furthermore, the book has hundreds of summaries available on Goodreads. Briefly, the book is written in the form of Biblical parables, using language similar to the King James Version. The book is of course, set in ancient Babylon, a city known throughout history for its vast riches, engineering marvels, and as the progenitors of finance. Throughout the book, characters often find themselves in dire straits until they wise up and apply some of the basic principles clearly stated in the book:
- Set aside at least one-tenth of your earnings for savings and investment purposes.
- Do not rush into foolish investments with people who do not have knowledge of the particular field in which they wish to make money. Only deal with experienced, knowledgeable people that know how to turn a profit.
- Guard your treasure from loss. In our day and age, this means making sure you are adequately insured, and that you are only dealing in sound investments that will probably make money. As a rule of thumb, I would be very cautious of investments the promise beyond a 15% annual return.
- Own your own home. I dispute this one as an absolute rule, since it depends on the housing market, and renting avoids much of the hassle of the upkeep of a home. Water heater busted? It’s the landlord’s problem. Own your own home? Now it’s your problem. But if you can afford to do it, and your job situation is reasonably stable, then go for it.
- Ensure a future income – plan for your own retirement. No one else will do it for you.
- Increase your ability to earn by increasing the quality of your skills and your education level.
Why I Don’t Gamble for Real Money
The book also has few good things to say about gambling, which it demonstrates always leads to the destruction of wealth, and never to the creation or keeping of a stable fortune.
And …okay, I do gamble – just not for real money. I like gambling in Far Cry 3 at the Texas Hold’Em table. And I have been to the Indian casino once or twice in my life (and one of those times, my brother bankrolled me $100). Back in freshmen year undergrad, we would play Texas Hold’em with stacks of pennies. And heck, as I have stated previously, I owe my free undergraduate education to the Florida Lottery. And lastly, I am a big user of Monte-Carlo methods in solving engineering problems ;).
But in truth, I really detest gambling and casinos, for which I have several reasons:
- After watching Steve Forte’s Gambling Protection Series, I was pretty much cured of any desire to play cards or dice for real money. A well-practiced gambling cheat is virtually impossible for a lay-person to catch. There are all sorts of tricks, from stacking the deck through skilled shuffling, to hiding and switching out cards, to trick dice shots that can land on whatever numbers the thrower wants. While the big casinos are wise to these scams, they are much more of a problem in home games. And what could ruin a friendship faster than being cheated out of your money by so-called “friends”? Even if you do catch the cheat in the act, what recourse do you have? If you beat him up, you’ll go to jail – and if he’s bigger than you, you can’t beat him up. There is only one course of action that wins you the game here.
- The Lutheran Church has little good to say about gambling and casinos. Casinos in particular bug me. They sell dreams that simply can never be. The glitz, the gold, the glamour, the bright lights – it’s all a carefully crafted illusion designed to convince you that you just might be a winner too – if you’ll just fork over your hard-earned money. Think about the commercials you see for casinos. Does anyone ever lose in them?
- Of course not. This of course, flies in the face of logic and common sense – every round or turn at a table results in someone losing and someone else gaining at their expense, be it another player, or the casino itself. Otherwise, mathematically speaking, no one would ever make any money. The opportunity cost to the gambler is immense. Instead of putting his money in sound investments that will probably make money, he instead devotes his excess income to an investment that will probably lose money.
- Casinos and lotteries are a direct wealth transfer from the poor to the middle and upper-middle classes, or the government directly. This is especially sad when one considers that habitual gamblers and lottery players are typically the innumerate and the impoverished, and by corollary, racial minorities (blacks and American Indians). If you’re wondering why some neighborhoods where blacks live are so poor, well, check to see if there is a casino nearby. That’s where all the disposable, investment-capable income has pooled up. A casino in a black neighborhood is evocative of a meteorite impact site. The bright, shining, incandescent center of the impact site is where the casino is. The dark, smoldering exterior surrounding the epicenter is where the surrounding community lives in despair and poverty.
- This is a big one – the casinos are crooked, and don’t pay up. This is especially true of computerized slot machines. Just Google “casino won’t pay jackpot”, and you’ll see what I’m talking about here. Multiple times and multiples casinos, a computerized slot machine has hit a jackpot for the customer, only for the customer to be told “Sorry, it was a computer glitch, so we’re not going to pay.” One would think the courts would hammer the casinos over this – but great riches can buy powerful friends, and indeed, the courts are allowing the casinos to get away with not having to pay up by using this utterly bogus excuse.
- Casinos are still too often mixed up with organized crime. No thanks, I have no intention of becoming buddies with two guys named Vinnie and Sal that know how to chop up a body in the bathtub without the neighbors getting suspicious.