Skyscrapers

Investing

Overview

Overview

The following steps should enable you to learn and implement God’s investment principles.

1. Pray and depend on God for his wisdom (James 1:5) and his direction (Psalm 32:8) when investing, because no human can consistently predict the direction of the markets (James 4:13–15).

First, Pray and Depend on God for His Wisdom & Direction

First, Pray and Depend on God for His Wisdom & Direction

Prayer and dependence upon God are required in order to develop a personalized and biblically-based investment strategy. It is well known that the past performance of investment provides no guarantee for its future performance.

Develop & Implement a Biblically Based Investment Strategy

Develop & Implement a Biblically Based Investment Strategy

A biblically-based investment strategy should meet the following two criteria:

1. be consistent with God’s principles
2. reflect God’s specific will for your life

Diversification (1 of 2)

Diversification (1 of 2)

In my experience, I’ve seen too many cases where an individual has invested the majority of retirement funds in one company or in one sector.

Diversification (2 of 2)

Diversification (2 of 2)

As explained in my previous Financial Moment, God’s Word recommends the diversification of one’s portfolio into different types of investments that will likely react differently to any particular market condition.

Use Minimal Debt - Or Better, No Debt

Use Minimal Debt - Or Better, No Debt

Over the past 28 years, I have met many investment advisers who have instructed their clients to use debt in order to increase their investment returns.

Ensure that you Understand the Investment

Ensure that you Understand the Investment

Over the past 28 years, I have had the privilege of working with 300 to 400 business people. In my experience, generally when they invest in something that they understand, and within biblical principles, they earn a profit. However, when they invest in something that they don’t understand, frequently they lose money.

Assess your Tolerance for Risk and Invest Accordingly

Assess your Tolerance for Risk and Invest Accordingly

In Ecclesiastes 11:1–6, God recommends the assumption of a reasonable amount of risk within your investment portfolio.

Avoid "Get-Rich-Quick Investments" and Hasty Decisions

Avoid "Get-Rich-Quick Investments" and Hasty Decisions

In my experience, the following are the common elements of a “get-rich-quick investment.”

1. There is a promise of an abnormally high rate of return. If the expected rate of return is unusually high, then the risk associated with that investment is also unusually high.

Obtain Biblical Counsel

Obtain Biblical Counsel

God admonishes us to obtain counsel. Proverbs 12:15 states, “The way of a fool is right in his own eyes, But a wise man is he who listens to counsel” (NASB), and Proverbs 15:22 states, “Plans fail for lack of counsel, but with many advisers, they succeed.”

Ensure that your Motives are Godly and not Worldly

Ensure that your Motives are Godly and not Worldly

It is possible for a Christian to be involved in investing with godly motives or worldly motives. Your motives for investing are important to God. “All a man’s ways seem innocent to him, but motives are weighed by the LORD.” (Proverbs 16:2)

Following God's Directives Not Human Tendencies

Following God's Directives Not Human Tendencies

Human tendency is to respond to what is happening in the financial markets or news from the media. Good news frequently provides confidence or triggers greed, which tempts us to buy; bad news makes us feel uncomfortable or fearful, which results in a desire to sell.

Giving to God's Work Produces Eternal Benefits

Giving to God's Work Produces Eternal Benefits

Giving to God’s work is an investment with eternal rewards for both the giver and the beneficiaries of the gift. In regard to the giver, Jesus said: “For the Son of Man is going to come in his Father’s glory with his angels, and then he will reward each person according to what he has done” (Matthew 16:27).

Keep a Balanced Perspective

Keep a Balanced Perspective

We are bombarded with information on investments. Every day hundreds of individuals give their opinion as to where you should invest your money. It is easy to spend excessive amounts of time and energy on investing. This is not God’s will: “Do not wear yourself out to get rich; have the wisdom to show restraint.