5 Things To Know Before You Invest

With all the financial chicanery in the banking and investment arenas . . . I’ve heard a growing number of believers question whether investing is wise or even scriptural. 

Investing is scriptural but it should not be entered into unadvisedly.  I want to give you five things you should consider before investing.

1.         Educate Yourself.

Never invest in what you don’t understand. Period.

Don’t let anyone tell you that you can’t understand.  That is absurd.  You have no business being involved with something you can’t understand.  And if someone can’t explain the investment to you . . . you don’t need to trust them especially if they say, “Just trust me.” 

You may have a best friend. . .a family member. . .a next door neighbor who understands or at least, says they understand the ins and outs of investing but that doesn’t necessarily make it the truth. 

You may have a lower threshold for pain and risk that your “brain trusts.”

You may even have a friend who is a professional in the investing business but the bottom line is . . . the money you possess to invest is not theirs . . .  it’s not even yours . . . it’s Gods.

You’re the one accountable for the stewardship of those funds. . .not anybody else but you.  So I would strongly recommend that you take the time to educate yourself on the fundamentals of investing.

For instance, if you’re advised to invest in mutual funds, then you should understand the Morningstar rating system.  You should understand never to invest in anything that doesn’t have a rating of four or five stars.

When it comes to buying stocks. . .you should decide whether you want to use a full-service stock broker or make your own buy/sell decisions utilizing organizations like Scot Trade or E*TRADE.

Stop It.  Someone just thought “I’ll never be able to learn this kind of information.”  Yes, you can.  But you must first be determined to gain some very basic information.

After all, you do have the mind of Christ.  1 Corinthians 2:16 in the Amplified Bible says:

“For who has known or understood the mind (the counsels and purposes) of the Lord so as to guide and instruct Him and give Him knowledge? But we have the mind of Christ (the Messiah) and do hold the thoughts (feelings and purposes) of His heart.”

I remember a dear lady named Emma from Memphis, Tennessee. . .she was a high school graduate who went to trade school to become a dental hygienist.  She was deeply in debt when she first joined the Debt Free Army.  Her husband was on disability and could not work . . . they had a mortgage, two vehicle payments and credit card debt.

As Emma was paying out of debt using our strategies. . .she began reading our material on the basics of investing.   Emma was determined to get out of debt and she was determined to gain a basic knowledge of investing and how it works.

Today, Emma enjoys the debt free life and looks forward each morning to reading the newspaper to see how her investments are doing.  As Emma always says, “If I can do this. . .anybody can.”

Educate yourself.

2.         A “Hot” Tip Will Get You Burned!

If the deal seems too good to be true. . . believe me . . . it is. 

The get rich quick mentality is an investment illusion as well as the fact that the scriptures continually warn against it.

When it comes to your investment mentality. . .I suggest you meditate on three verses from the richest man who ever lived, King Solomon.

Proverbs 13:11 in the New Living Translation says:

“Wealth from get-rich-quick schemes quickly disappears; wealth from hard work grows over time.”

Proverbs 28:20 in the New Living Translation says:

“The trustworthy person will get a rich reward, but a person who wants quick riches will get into trouble.”

Proverbs 28:22 in the New Living Translation says:

“Greedy people try to get rich quick but don’t realize they’re headed for poverty.”

Check your heart.  If you’re not satisfied with investment returns of 8 to 12 percent, then your investment goals are questionable if not unrealistic . . . thus revealing an impatient attitude that makes unwise decisions.

3.         Your Timing and Priorities.

It’s important to honestly and accurately determine whether or not you’re in the right place financially to begin investing.  Here’s a revelation for you. . .there will always be a great deal. . .one too good to pass up.

Ecclesiastes 3:1 in the Message Bible says:

“There's an opportune time to do things, a right time for everything on the earth.”

Before investing, I recommend you have all your high interest credit cards and consumer loans paid off.   These strategies alone will you a return of 12 to 24 percent depending on the interest rate.

It only makes sense that if you are investing money earning 12 percent and losing money at 18 percent on a credit card, you are in a losing position.  Pay it off first.

I also strongly recommend that you have the equivalent of one month’s income in your checking account and a future fund with three month’s income in an interest-bearing accounting.

Some people call what I dubbed a “future” fund. . . an “emergency or rainy day fund.”  I personally don’t like those terms because if you save for an emergency or rainy day. . .guess what you’re going to get?  I prefer to call it a “future fund.”

I can tell you that it will be tempting to use the future fund as a “put and take” account. . .but don’t.  It’s unwise to put the money in a fund and then keep borrowing against it for things such as vacations, tuition, wedding expenses, etc.

My reason is simple. . .what will you live on. . .if you’re laid off. . .if you’re injured and unable to work?  The future fund does just that. . .it will provide funds for your future.  If you need to save for tuition or weddings, include it in your plan.

One more thing. . .if you invest money before you’ve stabilized your finances, then your good deal can turn into a horrible mess.

4.         Why Are You Investing –What’s Your Strategy?

Before you begin to invest. . .you need to have clearly defined financial goals.

Are your investments for a college fund or retirement?  If so, you’re primarily interested in accumulating money for a future use.  In this instance, you need investments that will grow over time such as real estate holdings, mutual funds or zero coupon bonds.

If your goal is to create an income flow to live off of. . .then I would recommend annuities, Treasury Bills and bonds.   Your number one priority is to make sure investments are safe. . .so that you can live off the interest.

Here is a simple rule of investing. . .the greater the return, the higher the risk.  Every investor needs to determine their pain and anxiety threshold.  At what point do you worry so much about your investments that you begin to lose sleep?   That’s your anxiety threshold.   If things go south on your investments and you begin to lose money . . . what level of financial pain and suffering can you endure?

As I was writing this teaching, Psalm 131:1 in the Contemporary English Version came to mind.  It says:

“I am not conceited, LORD, and I don't waste my time on impossible schemes.”

The scripture gives some very definitive investment strategies.

Ecclesiastes 11:2 in the New Living Translation says:

“But divide your investments among many places, for you do not know what risks might lie ahead.”

Today’s New International Version of Ecclesiastes 11:2 says:

“Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.”

5.         Remember whose money you’re investing.

Pure and simple, we own nothing. . .but we get to manage everything.  We will be judged by our stewardship of what He entrusts to us.

I’ve taught the ownership/stewardship of everything on planet earth so many times. I suggest you go to www.debtfreearmy.org and search for “We Own Nothing” and “We Manage Everything” if you’d like additional teaching on this important scriptural principle. 

It’s His money. . .so you want to make sure you’re the wise servant.  Suggest you re-read Matthew 25 on the parable of the talents.

Be mindful of Ecclesiastes 5:14 in the New Living Translation which says:

“Money is put into risky investments that turn sour, and everything is lost. In the end, there is nothing left to pass on to one’s children.”

Finally, the best investment tip I can give you. . .with the absolute highest rate of return is found in Ecclesiastes 11:1 in the Message Bible which says:

“Be generous: Invest in acts of charity. Charity yields high returns.”

Don’t forget to be kingdom minded with your investments.  God has the best investment guarantees.