10 Keys to Successful Investing
The Bible has great advice for us on long term investing. I want to highlight some foundational verses and 10 keys that we have learned over the past 35 years.
Foundational Bible Verses
Proverbs 21:5 Steady plodding brings prosperity, hasty speculation brings poverty (TLB)
Proverbs 27:23-24 Know well the condition of your flocks, and give attention to your herds, for riches do not last forever. (ESV)
Proverbs 27:12 - The prudent sees danger and hides himself, but the simple go on and suffer for it (ESV)
10 Keys
Key 1 - Keep your Income Engine well tuned!
In order to have a successful long term investing program, we need to optimize our income. The best way to do this is to excel at our vocation and put ourselves in the best situation to maximize our income. We should be among the best at what we do! Colossians 3:23 tells us to work hard (with all our heart) at whatever we do as if we are working directly for the Lord.
Key 2 - Live Smart
Investing involves sacrificing funds we could spend now in order to invest for something more valuable in the future. Delayed Gratification is the key to financial maturity! We need to live frugally now so we can have the funds to set aside for long term investing.
Key 3 - Know your Focus
God’s calling and plan for each of us is unique. Our long term investing plan needs to fit with our unique calling and Focus. Some of us may feel led to invest funds to be able to start a business down the road. Others may want to save so they can be in full time ministry and self supporting. Some may feel led to invest to leave a legacy for their children and grand children. Our investing goals need to be prayerfully determined and linked to our God given Focus.
Key 4 - Invest in areas of interest
We should avoid investing in areas we don’t understand or feel a connection too. Personally we invest in farm land since I grew up on the farm and have a good network in this area. We also invest in mountain real estate since we spend a lot of time there and understand the market. We also enjoy participating in the broader economy and invest in stocks of good companies with growth potential through a financial planner that does the research we don’t have time to do. Find areas that you feel a connection too and have advisors that can help you make good investment choices.
Key 5 - Find trusted advisors
For each investment segment you wish to participate, seek out trusted advisors that can provide you with good advice. Don’t invest in an area until you have this support network in place.
Proverbs 20:18 - If you solicit good advice, then your plans will succeed (TPT)
Key 6 - Invest with cash
Whenever possible we want to avoid using debt for investing, as leverage increases our risk in the event of a downturn in our investment value. If we invest with cash we can afford to be patient when downturns occur.
Key 7 - Be patient
Since we began investing we have been through multiple downturns that have caused the market value of our investments to fall significantly. The worst was the Financial Crisis of 2008 caused by the meltdown in the US Mortgage market. On paper we lost a significant amount of money, but we did not panic and sell our investments like many did, and by 2010 the market value was back to showing a gain. This pattern has repeated through several downturns since then. Stay calm and don’t do panic selling during a down turn, as long as the investment fundamentals are still sound.
Key 8 - Compounding
Compounding is an amazing principle that requires time. Start your investing program as soon as you can and give your investments decades to compound and grow. If you can earn 7% a year on your investment it will double in value every 10 years!
While starting as soon as possible is key, it is also important to have the right building blocks in place first. Ensure you have a solid budget that works well, you have an emergency fund in place for surprises, and your consumer debt (credit cards, car loans, etc.) are paid off.
Key 9 - Know when you have enough
We need to prayerfully ask the Lord to confirm how much is enough (since our money and investments all belong to Him). When we get to that point we need to shift our focus to increasing our giving (remembering that we have been giving faithfully all along) and enjoy being his vessel of blessing to other individuals and organizations.
Key 10 - Remember the Best Investment
Our best investment will always be giving as it will produce dividends for us for eternity.
Proverbs 11:24 - Generosity brings prosperity, but withholding from charity brings poverty.
T. Payne - The Path Forward Financial Inc.