Nuggets for financial wisdom

Keen observers of the international scenes in the world of finance would agree with me that these are not the best of times (if all we see, experience and hear in the news are anything to go by). Despite frantic efforts by leaders of leading economic nations to re-instate public confidence in the governments and hitherto dying financial institutions, the public seems more skeptic about government assurances now than ever. These are the days when you see stakeholders sweating in winter as they listened to the news and read their balance sheets. Even if you did not care about what happens in China in the past, you care so much now because it’s a global malady and nobody seems to be immune from it.

The news sometimes may have been exaggerated but the fact is that the main truths are real. In the midst of this financial crisis, I think one needs to learn some financial wisdom at least to keep afloat if you can’t swim. I find this article quite useful and I believe it would inspire you as well. It was written by Nick Louth on 02 April 2008.

There's plenty of folk wisdom knocking around about money, debt and savings. A lot of the advice is hundreds of years old, but is none the worse for that. After all, those sayings that have survived must have some kernel of truth.

Common sense though, is a commodity in short-supply right now, with a global banking industry that has tied itself in knots by loading up on complex securities, secured on the flimsy mortgage payment promises of America's worst credit risks.
Perhaps, then, we should turn to our forebears and some of history's greats for a little more insight into what really we should be doing with our money.

1. Look after the pennies and the pounds will look after themselves:
You can't fault this one. The surprising thing is how quickly those savings add up, once you invest them. Just 10p a day, the cost of one text message, is worth £36.50 a year, even without any interest. Invested over the course of a lifetime, that 10p a day would be worth nearly £32,000 by the age of 60, based on typical stock market returns.

2. Neither a borrower nor a lender be; for loan oft loses both itself and friend and borrowing dulls the edge of husbandry:
In Shakespeare's time they knew as much about the problems of debt as we do today, but this phrase, given to Polonius in Hamlet is more nuanced. The obligations created by lending strain relationships in both directions, disrupting the equality of friendship.

The American radio firm Clear Channel Communications must know exactly what Shakespeare was saying. It went to court in Texas this week and won a ruling that the banks which had committed to funding its $19 billion buyout cannot now withdraw the funds just because the wider debt market is shaky. Presumably there won't be too many friendly handshakes now between the firm and its reluctant lenders.

3. A stitch in time saves nine: For cutting stock market losses, this is the perfect piece of wisdom. Act quickly and decisively when your investment is looking threadbare. Don't wait until the whole thing starts to fall apart.

To be continued...