Bible and Investing
The Bible has a lot to say about money and among many areas of Biblical finance we find guidance for investing. Christians who want to exercise wise financial stewardship in managing their personal finances can learn from important principles of steady plodding, avoiding risky investments, diversification and always knowing the status of your investments.
Definition of investing
But first, what is investing? People sometimes confuse savings and investing. Wikipedia provides us this definition of investing:
Investment is the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in form of interest, income or appreciation of the value of the instrument.
The most common example of investing might be in investing money into the stock market by purchasing company stock or mutual funds. Obviously, investing for retirement typically involves such purchases. Investing in real estate is another common example which might include the purchase of a house, or rental property.
Definition of saving
Saving, on the other hand, is different than investing. Wikipedia also provides us a pretty good definition of savings:
In terms of personal finance, saving specifies low-risk preservation of money, as in a deposit account, versus investment, wherein risk is higher.
So, a good example of saving includes saving money for emergencies in a savings account. Saving would also include putting money aside for future purchases such as a car, or Christmas presents.
As I mentioned, the Bible clearly gives us some principles to follow when we commit money or capital to the investment of financial instruments or assets.
Consistent, steady plodding and avoiding risky investments
Steady plodding brings prosperity, hasty speculation brings poverty (Proverbs 21: 5 TLB)
Savings, as mentioned above, is always a lower risk preservation of money.
Investing typically requires a commitment to growth over a longer period of time. The rewards can be in the form of appreciation of the asset and building of future wealth. It doesn’t include hasty, risky, or get rich quick schemes that often promise to make you rich over night.
The man who speculates is soon back to where he began – with nothing (Ecclesiastes 5: 13-15 TLB)
Rather, scripture tells us we have to make commitment through steady plodding, or consistent monthly investing that will take time to grow and earn a significant return.
Starting early is important, but it is never too late to start investing for the future. An easy way to get started is to invest in a company retirement plan such as a 401(k). If you can still make progress on your Money Map journey, invest at least any minimum amount required to receive the company match.
When it comes to investing, diversification is often an important subject of the conversation. The Bible provides us a diversification principle too.
Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on earth (Ecclesiastes 11:2).
It’s important to remember that no investment is a guaranteed return. Home values can decrease, the stock market can experience losses and other investments can lose their value.
That’s why it’s important to avoid putting your eggs all in one basket, as they say. As you work with a financial advisor or investing professional, they will help you diversify your investments across different financial instruments based on your investing objectives and timeline.
Know the status of your assets
It may be easy to work with a trusted financial advisor and turn over all of your investing decisions and the management of your portfolio. However, that’s generally not a good idea. Why? While you may be working with a trusted financial advisor, scripture tells us we still need to know the condition of our assets or investments at all times.
Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all generations (Proverbs 27:23-24).
It’s a good idea to meet with a financial advisor a few times of year (maybe more depending on your life stage and goals) to review your investment performance, his or her investment strategy and discuss any changes to your goals or objectives.
Final thoughts on investing principles in the Bible
To wrap up, we need to use the Bible has our investing handbook. While it won’t tell us which stocks to choose or how much we should invest, there are plenty of qualified personal finance advisors who can help you make those specific decisions.
Remember, the Bible provides principles for managing money. If you invest and follow these Biblical financial principles you can be certain you’re managing your resources wisely and investing in the far greater reward which is your relationship with God.
What do you think about these Biblical principles for investing?