Have you got your high interest unsecured debt paid off? Have you got your emergency stash of cash put aside in a safe place so you can get to it when you need it? Are you accustomed yet to living on what the Lord considers NEEDS? You remember don’t you that you actually have a surplus in your cash flow [Gross Income – Needs = Surplus]. Now you can begin to invest the surplus (that God has so graciously provided) to obtain a (hopefully) higher return than your emergency savings account is earning.
The Bible does not treat “investing” as a trivial matter. Jesus tells a chilling investing story in Matt 25:14-30. The servant/slave who does a good job of investing is commended and rewarded ……. Matt 25:19-22 “And the one who had received the five talents came up and brought five more talents, saying, ‘Master, you entrusted five talents to me; see, I have gained five more talents.’ 21 “His master said to him, ‘Well done, good and faithful slave; you were faithful with a few things, I will put you in charge of many things, enter into the joy of your master.’
The servant/slave who did a bad job was punished (actually he didn’t invest or even put the money entrusted to him in a savings account at the bank) ……. Matt 25:30 “And cast out the worthless slave into the outer darkness; in that place there shall be weeping and gnashing of teeth. NAS
Jesus is making more than one point with this story but clearly, He is identifying investing as part of the steward’s job. And He is saying that those who do it and do it well will be rewarded. Maybe most important, the story is telling about slaves/servants investing their master’s money and not their own.
From this point on I will be discussing some very basic/fundamental concepts and methods associated with investing. I think I have mentioned this before but in case I haven’t, I would suggest you go out and get a copy of The Sound Mind Investing Handbook by Austin Pryor. This is a very well written book that will give you enough of the right information to get started investing God’s money.
Yes, you can do this yourself. It will require some time on your part but rocket science it is not. If you don’t want to do this yourself, there is really only one alternative and that is to hire someone to do it for you. Whatever you do, don’t just let this part of your stewardship job happen. You must deliberately take charge and make it happen, just like the other aspects of the stewardship job. Now there are lots of people (financial services professionals) anxious to help you with this. This is a huge industry. There are no doubt some people in your church who help others invest God’s surplus wisely. They are called financial planners, brokers, analysts, insurance agents, etc.
This is the first investment decision you will make: do it yourself or hire someone. I urge you to read Austin’s book and maybe explore Crown Ministries which merged with the Larry Burkett (now deceased) ministry some years ago. Here are some issues to consider as you venture into investing:
- Time. How much time do you have to devote to this responsibility? If you choose to do it yourself, the more time you devote to it the better the results will probably be up to some point of diminishing returns. I “do it myself” and on average, I spend about 8-10 hours a month. The time required will depend on the investment methods and strategy you employ and the amount of money God has given you to invest. If you choose to hire someone to do it for you, you will still have to spend some time and have to make some decisions unless you give the investment advisor total discretion (not recommended) to make all the investment decisions for you.
- Detail Orientation. Are you a detail oriented person who loves to crunch numbers? Both my wife and I are. That’s one of the reasons we “do it ourselves”. However, I know some of you out there hate it and it’s all you can do to keep track of God’s cash flow through your household. (You are doing that aren’t you? All good stewards do at least that much.)
- Cost. If you hire someone to do it for you, there will of course be a cost. Financial services professionals charge for their services in basically two ways, flat fees and/or commissions.
- Flat fees. Some of these folks simply charge by the hour for the time you spend with them and for the time it takes them to execute your decisions (or theirs).
- Commissions. Some financial professionals are employed by investment firms who pay commissions for the sale of their products. Some brokers may offer a variety of products from different investment firms and receive commissions from the sale of their products as well. Brokerage firms can also execute purchases and sales of individual stocks and bonds and charge a fee for doing it.
- Free? Doing it yourself isn’t free. How much is your time worth? The opportunity cost associated with your time may be very high. In addition to your time, you will probably spend some money on books, newsletters, magazines, transaction fees, maybe some computer software, etc.
- Intelligence. Are you as smart as the financial professionals? Most of these people are pretty smart but may not be as smart as you think. I’m not a genius and you don’t have to be one either. Genius is not really necessary in order to obtain acceptable results from your investment efforts? More about that in coming weeks.