In a previous article on Christian Money Management, I discussed using God’s gift of money wisely and to always determine first what proportion of your income can be given to God for the benefit of all people in the world. If you have surplus money accumulating because your income is greater than your expenses, then the issue arises of how to invest these savings.
What advice and direction does the Bible give on investing in a Christian way? We should look primarily to God’s wisdom, not conventional wisdom, for principles to guide our investment decision making. The principles God has given us are practical and relevant.
- 1 Corinthians 4:1&2 “So then, men ought to regard us as servants of Christ and as those entrusted with the secret things revealed by God to his people. Now it is required that those who have been given a trust must prove faithful.” We must each accept personal responsibility for making knowledgeable, biblically consistent financial decisions.
- The most widely quoted principle of biblical teaching to the practical issues of savings and investment, is that of stewardship. The creation narrative teaches that, while God is the source of all material resources, he has condescended to entrust their preservation and development to humanity.
- Proverbs 21:20 “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” Maintaining a proper balance between current spending and long term saving is a sign of wisdom.
- Proverbs 21:5 “The plans of the diligent lead to profit as surely as haste leads to poverty.” We should consistently invest from a carefully considered strategy, rather than impulsively on a case by case basis.
- Ecclesiastes 11:2 “Divide your portion to seven, or even eight, for you do not know what disaster may come upon the land.” We should rely on diversification – rather than a pre-occupation with market cycles – as a means of controlling risk and protecting our capital.
- Proverbs 2:4 “Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions.” We must be on guard against greed and spending our energies in a futile attempt to get the highest possible investment returns.
- Matthew 25:14-30 Parable of the three servants.
This parable applies to our use of all resources, both spiritual and material, entrusted by God to his servants until the coming of the kingdom. While the servant’s performance is assessed on the basis of financial return, the “return” spoken of is wider than just the pecuniary and includes the total good done to others. Also, the means by which profit is obtained matters to God. Any wealth that results from dishonesty, theft, monopoly or exploitation of the poor is not accepted by God. The ethics of stewardship applies not just to how productively we deploy God’s resources, but also influences to what righteous purposes we deploy them.
As we impress our minds with these guiding principles, we can apply them to help us make the day to day financial decisions. If we follow them consistently, we can have confidence that whatever the short term sacrifices may be, we are making wise spending, saving and investing choices. That frees us to leave the results with God knowing that “Godliness with contentment is great gain.” (1 Timothy 6:6). The overriding principle in investment is what your motive is – is it greed for the love of money and riches, or is it Godly investing?
Here are some issues and objectives to consider when investing.
- Preparing a financial plan of investing.
- Personal attitude to risk and security.
- Different types of investments eg savings accounts, term deposits, shares, property, international, businesses and superannuation.
- Diversification between different types of investments.
- Liquidity – having sufficient cash available to meet unexpected expenses.
- Amount of income and capital growth generated on the investments.
- Effect of taxation on different investments.
- Effect of investment income on Government allowances and benefits eg aged pension, Jobsearch and student allowances.
It is important to do your own planning and research on investments. Even if you obtain financial advice on investing, always understand the objectives of the plan and the details of the individual investments chosen.
Many investors spend considerable time in analysing the background and operations of the banks or companies invested in. This may involve researching the financial statements with ratio analysis, investigating the skills and plans of the management and analyzing the share market performance over recent periods. Similar research can be applied to investments in property.
It may be wise to start off with small investments to obtain experience in investing. It is also important to consider whether investments are “ethical” in how they treat our environment, people and life issues.
God expects us to use our talents, skills, experience, the advice of other professionals and above all, prayer in seeking his guidance to make wise decisions on investing.
Prepared by Mel Zerner
Christian Money Management 