It is remarkable that many people who have shown great insight in running a financially successful business should exhibit the judgment of children when it comes to making sound investments. These people make fortunes in the profession for which they have both the knowledge and the experience to succeed, only to lose those fortunes by making investments in areas about which they know absolutely nothing except for what a smooth-tongued promoter tells them.
As investments are essential to maintaining financial security, it is important to understand the basics of what makes them sound.
When considering basic savings, it is important to note that there is a great difference between saving intelligently and hoarding through a spirit of miserliness. Every wage or salary earner, regardless of the size of his compensation, should try to lay aside something of that amount as a fallback for difficult times. No matter how small the amount he puts away after paying for life's necessities and meeting all his financial obligations, he is to that extent a capitalist, a topic which we will address momentarily.
The miser would hide his savings out of reach, but the man with foresight will usually have the judgment to place these savings where they will do more than collect dust, where they will grow by producing an additional amount known as interest.
The individual who places his accumulations in a savings bank has begun a form of investment that may, if continued over time, place him above want, even if it does not entitle him to a place on the list of great capitalists.
