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Investing in Harmony with Biblical Principles

September 24, 2012

Several years ago, I wrote a Planner’s Corner entitled "Biblical Principles to Live by Regarding Finances"* which provided some key Biblical guidelines such as all wealth belongs to God and we are stewards to what God have given us. So how do we put those principles into practice when investing?

  1. Pray and depend upon God. It is well known that the past performance of an investment provides no guarantee of future performance. Since no one can consistently predict the direction of any market such as real estate or stocks, it is critical to acknowledge our dependence on God with respect to investing.  Matt 6:12, James 4:13-15, Psalm 37:7
  2. Seek good counsel. Get the best investment advice you can – and then think for yourself. Ask yourself who you are listening to and why.  Prov. 12:15, 15:22
  3. Have a strategy. Know why you are investing such as saving to buy a home or retirement. Ask yourself the following question “Is it consistent with God’s principles and does it reflect God’s will for my life?”  Ecc. 12:13, Psalm 32:8
  4. Examine your motives. Is the goal to get rich quick or are you investing to achieve a goal?  Prov. 23: 4-5, 28:10, 1 Tim. 6:9-10
  5. Diversify. Allocate the resources God has given you into different types of investments that will probably react differently to any particular market condition. If one area does poorly, it can be offset by gains on another.  Ecc. 11:1,2, Prov. 27:1
  6. Understand the investment. Keep it simple, invest in things you know. If you invest without understanding what you are buying, such as acting on a hot tip or a strategy that promises returns that seem too good to be true, it probably is and you are likely to lose some or all of your investment.  Prov. 13:11, 24:3-4
  7. You can make a difference. How can you use your investments to make a difference? Is investing in a tobacco company or a company that has a poor environmental track record something you want to do?  Mark 5:13-16
  8. Be realistic about your tolerance for risk. Put percentages in dollar terms. For example, if you could potentially lose 20% on a $100,000 investment, that translates into $20,000. Are you realistically prepared to lose that much money? Do you have the ability to wait for the investment to recover if at all?  Prov. 13:11
  9. Work toward being debt free.** Use debt cautiously. Examine your motive for taking on debt. Is it to keep up with friends or an image? Are you trying to take a short cut to meet a goal by trying to hit a home run vs. diligently paying down debt and investing regularly?  Luke 12:15, Phil. 4:19, Prov. 3:5-6, 22:7
  10. Prepare for emergencies. Emergencies such as car breakdowns, flights to visit ill relatives and job losses happen. Ensure you have emergency funds set aside without having to access your investments which could potentially derail your long-term goals. Prov. 27:12

This article is a compilation provided by members of Advisors with a Purpose, a network of Christian financial advisors who seek to provide advice based on Biblical principles.


* This article can be found here.

** For more information, please refer to "Risk of Leverage" found here.

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