25 Jul How to Use Caution to Build More Wealth
The cautious, stable investment strategy is generally the best kind. While the rest of the market makes large bets and gambles, it’s the cautious investor who is passively investing rather than taking unnecessary risks.
While the rest of the market laughed at gold and silver investors, those who continued to cautiously put their wealth into gold and silver over time experienced massive gains.
While the rest of the market chased stock market riches, those who continued to accrue gold and silver saw returns of which most hedge fund managers could only dream.
It’s counter-intuitive, but it’s how the market has essentially always worked. The greedy get fleeced and the fearful get suckered. Meanwhile, the cautious are more likely to survive any storms and profit in a more stable, systematic manner.
The Short Case for Caution and Certainty
The investment author Harry Browne was a legend in his own right, but one of his most potent sayings was:
“When you know you’re capable of dealing with whatever comes, you have the only security the world has to offer.”
In an uncertain world, caution and skepticism are the keys to survival and prosperity. If you look at most of the successful investors over time, you’ll rarely see any casino-like behavior — those strategies are generally reserved for financial institutions that are playing with other peoples’ money.
Instead, you’ll find that investors who are successful with their personal portfolios — whether they’re billionaires, millionaires, or just achieving their retirement goals — are generally content with the fundamentals and with long-term wealth building.
The difference between trying to build wealth over time and “getting rich quickly” is one of the most important lessons in all of finance.
Wealth Building vs. “Getting Rich Quickly”
One of my favorite investment quotes is from the British banker Samuel Jones-Loyd, known as “Lord Overstone”. The banker once remarked:
“No warning can save people determined to grow suddenly rich.”
This observation is one of the most powerful lessons in finance from one of the most successful British bankers in the 19th Century. The desire to “get rich quickly” is one of the most poverty-inducing desires of all.
When it comes to investing, such a desire generally leads to speculating and gambling rather than saving and investing. Unfortunately, for the vast majority of speculators, this means they will end up losing money rather than even breaking even.
This is one of the most important benefits to taking a SilverSaver® approach to gold and silver, rather than the approach many other bullion companies push.
We understand that speculating and gambling in gold and silver is no better than any other asset — the best approach is almost always to regularly, automatically, and passively save gold and silver.
Gold and silver are money. They should be saved, not gambled.
There’s no need to create unnecessary risk when dealing with gold and silver. The strength of the metals is that you don’t have to take extra risk. Gold and silver will perform over time just fine on their own.
Speculating vs. Investing
One common theme in our analysis here at SilverSaver® is that wealth building requires an approach based on investing and not speculating. This distinction is one that almost every prosperous long-term investor emphasizes, and with good reason.
For example, Ben Graham is one of the most famous investment experts in history, known for being the intellectual mentor of Warren Buffett.
While Graham never lived to see gold legalized as an investment in the United States, he still had a powerful understanding of market fundamentals for long-term investors, and was notoriously fascinated with how stable gold was compared to everything else.
One of the most important lines Benjamin Graham wrote is the following:
“The individual investor should act consistently as an investor and not as a speculator.”
Only when we understand the long-term nature of being an investor rather than a speculator can we put ourselves in a position to automatically build wealth over time. This means understanding the fundamentals of gold and silver and not just “betting on the bull” or some other risky approach.
The fundamentals of gold and silver are different than stocks or bonds. A pile of silver doesn’t face risk of bankruptcy. You don’t have to worry about your gold coins getting a rogue CEO who makes horrible choices.
All that is necessary for long-term success is regularly, automatically, passively adding more ounces of gold and silver to one’s portfolio every month. This will result in profits.
The long-term investor can then spend most of his or her time doing something else — while the average day trader spends countless hours regularly losing money. The choice between these two paths should be clear.
In the end, caution wins the day, patience is the key to long-term success, and the first step to prosperity is understanding these important points.