What Can Early Civilization Teach Us About Investing?

Wherever you are in the world, no matter your wealth, chances are that somebody in your family at some point in history has made an investment. 

Investing is the act of using money or capital to make an intentional purchase with the expectation of generating income, profit, or appreciation over time. It involves allocating funds to achieve long-term financial goals, such as building wealth, funding college or retirement, or achieving specific financial objectives. 

Investing is a way to save for the future. It’s also a way to engage with your big dreams. It is important to think of investing as a long-term game rather than a get-rich-quick scheme. It requires patience, discipline, and a focus on your financial goals. The earlier you start investing, the more time your money has to grow through the power of compounding, which is when your earnings generate more earnings over time.

This blog post uses our shared ancient history as a launching point for identifying investment opportunities in today’s expansive global economy. This post will address the investing techniques used by early civilizations, key takeaways, and how we can use these same techniques to create a more equitable global future.

Our History With Investments Is Long-Established

Investors have shaped politics, trade routes, immigration, and settlement patterns around the globe as far back as 3,500 BCE. The first evidence of ancient investments can be traced back to ancient Mesopotamia, specifically in the region of Sumer (modern-day southern Iraq). The Sumerians, one of the earliest recorded civilizations, developed a complex economic system that included investment practices. 

Tablets discovered in ancient Sumerian cities such as Nippur, Ur, and Lagash provide evidence of investment-related activities. These cuneiform tablets contain records of loans, debts, and commercial transactions that involve the lending and borrowing of commodities, livestock, and money. The existence of these financial transactions suggests the presence of investment practices and the concept of capital deployment to generate returns.

Like ancient Mesopotamia, the Norte Chico civilization (a 5000-year-old civilization located in what is now modern-day Peru) and ancient Egypt were also hotbeds for investments which propelled the growth of personal and interpersonal wealth. These civilizations, among others, point to a history of investment shaping collective growth.

Early Investment Techniques Promoted Cultural Growth

Much like in modern times, ancient investment techniques varied across time and cultures. Here are some examples of early investment techniques used around the globe:

1. Agricultural Investments

   Investing in agriculture was a common practice in ancient civilizations. By investing in fertile land, seeds, and agricultural tools, individuals could generate income from crop production and livestock breeding. This investment could provide a steady supply of food, as well as surplus goods for trade and barter.

2. Trade and Commerce

   Investing in trade expeditions and commercial ventures allowed individuals to participate in long-distance trade networks. By funding or partnering with merchants, investors could potentially gain access to valuable commodities, rare goods, and lucrative trade routes. Profits from successful trade ventures could significantly increase one's wealth and status.

3. Real Estate

   Investing in real estate was another avenue for wealth accumulation in ancient times. Acquiring land or properties in strategic locations, such as near rivers or trade routes, could yield rental income from tenants or offer opportunities for development and resale. Real estate investments also provided a means of passing down wealth to future generations.

4. Art and Collectibles

   Ancient civilizations valued and invested in art, precious objects, and collectibles. Owning and trading artworks, sculptures, jewelry, and artifacts allowed individuals to accumulate valuable assets that could appreciate in value over time. These investments not only represented wealth but also served as status symbols and cultural expressions.

5. Loans and Lending

   In ancient societies, individuals could invest by providing loans to others in need of capital. By lending money, individuals could earn interest or share in the profits generated by borrowers' entrepreneurial ventures. This form of investment allowed for wealth preservation and income generation through lending activities.

It's important to note that the nature of investments and the potential returns varied depending on the specific time period, culture, and economic conditions of each ancient civilization. Moreover, the concept of investing as understood today was not as formalized or regulated during ancient times. Investments were often made through informal arrangements, partnerships, or personal connections, rather than through modern financial institutions or markets.

Key Investing Takeaways

Before investing, here are some key takeaways to consider: 

1. Diversification

   Ancient civilizations invested in various sectors, such as agriculture, trade, real estate, and art. This diversification allowed them to spread their risks and capture opportunities in different areas. Similarly, modern investors can benefit from diversifying their investment portfolios across different asset classes (stocks, bonds, real estate, etc.) to mitigate risks and potentially maximize returns. Online investment platforms like YieldStreet offer a variety of alternative investment opportunities, which can help investors diversify their portfolios.

2. Long-Term Perspective

   Ancient civilizations made investments with long-term goals in mind. For example, investing in agriculture required patience to reap the rewards of crop production and livestock breeding. Modern investors can also benefit from adopting a long-term perspective and staying committed to their investment strategies, as time allows for the compounding effect to work and potentially generate significant returns.

3. Value of Strategic Locations

   Ancient investors recognized the importance of strategic locations in their investments. Owning land near rivers or trade routes provided economic advantages. In modern times, location remains a crucial factor in real estate investments. Investing in properties with high growth potential or in areas with strong economic prospects can yield favorable returns.

4. Cultural and Historical Value

   Ancient civilizations invested in art and collectibles, recognizing their cultural and historical significance. Modern investors can appreciate the value of investing in unique and rare assets, such as fine art or historical artifacts. These investments can not only appreciate in value but also provide enjoyment and contribute to cultural preservation.

5. Relationships and Networks

   Ancient investment activities often relied on personal connections and partnerships. Similarly, in modern investing, building relationships, networking, and collaborating with trusted individuals or professionals can offer valuable insights, access to investment opportunities, and potential partnerships. Today’s investors can meet and network across a range of platforms including AngelList, LinkedIn, and other online investment communities and forums.

6. Risk and Return

   While ancient investment activities offered potential rewards, they also carried risks. Understanding and managing risks were crucial. This lesson holds true in modern investing as well. Investors need to assess risks associated with different investments, conduct thorough research, and make informed decisions to balance potential returns with acceptable levels of risk. Risk management firms like BlackRock Solutions provide insight and education that can help investors best manage their assets.

While the methods and contexts of investing have evolved over time, we can learn from our ancestors' investment practices and adapt their principles to the modern investment landscape. By incorporating diversification, long-term thinking, strategic considerations, cultural value, relationship building, and risk management, we can enhance our investment strategies and increase the likelihood of achieving our financial goals.

Conclusion

In conclusion, exploring the investment practices of early civilizations provides us with valuable insights into the origins and fundamentals of investing. From ancient Egypt to Mesopotamia and beyond, our ancestors demonstrated a remarkable understanding of the concept of investing and utilized various strategies to grow their wealth.

Understanding the historical context of investing helps us appreciate the transformative power of investments in fostering economic growth, enabling individuals to build wealth, and driving societal progress. It reminds us that investing is not a recent phenomenon but a fundamental human endeavor that has shaped our world.

As we navigate the complexities of the modern investment landscape, drawing inspiration from the wisdom of our ancestors can guide our approach. By diversifying our portfolios, conducting thorough research, staying informed about market trends, and aligning our investments with our values and goals, we can strive for financial success and a more secure future.

Ultimately, the story of investing is a story of human ingenuity, ambition, and the pursuit of prosperity. By reflecting on the lessons of early civilizations, we can cultivate a deeper appreciation for the art and science of investing and use that knowledge to forge our own path toward financial well-being.