Great guiding principles when it comes to investing...

This week we have been talking about a very practical and yet misunderstood aspect of how we manage the money, possessions, and treasure we have been given. And that aspect involves the issue of investing. We looked at a section of a letter that is recorded for us in the Old Testament of the Bible called the book of Proverbs, where a man named Solomon revealed for us a timeless principle when it comes to the issue of investing in that when it comes to treasure, those who fail to plan for the future financially plan to fail financially in the future.

We talked about the reality that Solomon wanted his son, and humanity throughout history, to clearly understand that there are seasons in our lives where we have the ability and opportunity to prepare financially for the seasons in our lives where will not have the ability or opportunity to do so. Those who plan and prepare for the future by investing in short and long term savings demonstrate the wisdom, the developed skill for living life, that brings the positive result of being prepared for that future when it arrives. Those who fail to plan and prepare for the future by investing in short and long term savings reveal the reality that followed a faulty plan that resulted in them failing to be prepared financially for that future when it arrives.

Now, just as it was last week, you might be here this morning and you are thinking “well Dave that is great; thanks for telling me this now, but where were you five years ago? And how am I supposed to invest anyways?” If that question is running through your mind, I have good news for you. And that good news is this: The Bible also provides some guiding principles when it comes to investing. We discover a guiding principle a little further in the book of proverbs, in Proverbs 21:5:

The plans of the diligent lead surely to advantage, But everyone who is hasty comes surely to poverty.

In this proverb, we see Solomon provide for us a contrast of two types of investors. One type of investor is diligent. Diligence, simply put, is thoughtful and industrious plodding. This is a person who carefully and thoughtfully makes calculations and plans when it comes to investing. Solomon states for this type of investor, the result is advantage. In other words their investments make steady progress over time that leads to abundance. 

Solomon then contrasts the diligent investor with the hasty investor. The hasty investor makes quick decisions without careful thought. The hasty investor is making the plan up as they go along and often changes that plan without much thought as they go along. The hasty investor is looking to get rich quick. Solomon states that for this type of investor, the result is poverty.

Solomon here is revealing for us the reality that investing requires diligence. Investing is not a get rich quick endeavor. Investing requires careful and thoughtful planning and the diligence to stick with the plan and not become distracted by a get rich quick scheme. Because usually, the people who become rich in the get rich quick scheme is not the investor, it is the one who is running the investment. Take Bernie Madolf, as the most recent example.

But not only does investing require diligence; in Ecclesiastes 11:1-2, we see Solomon reveal for us a second guiding principle when it comes to investing. Let’s discover that guiding principle together:

Cast your bread on the surface of the waters, for you will find it after many days. Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.

Here we see Solomon paint for us a word picture designed to reveal a guiding principle in investing. To fully understand the word picture, however, we first need to understand what Solomon means when he uses the phrase “Cast your bread on the surface of the waters, for you will find it after many days”. In Solomon’s day, as it is today, some trade and commerce was conducted over the waterways. Unlike today, however, maritime trade involved to use of wind power. In addition, ships were made of wood.

As a result, maritime commerce was much riskier that commerce conducted over land. Solomon uses this word picture to explain that just like maritime trade, investing is risky. Just like maritime trade, there is the possibility of loss when it comes to investing. Yet, in spite of the risks that are involved, the Jewish people still went ahead and engaged in maritime trade. And in the same way, despite the risks of investing, we should engage in investing.

Solomon then described how we should engage in investing so that we manage the risk of investing in verse 2. Because there is danger in maritime trade, what traders would do is run several small ships that left at differing times instead of running one larger ship on a single load. That way, if misfortune struck, you would not lose the entire product that was being traded. 

Solomon uses this word picture to reveal for us the reality that investing requires diversity. Instead of investing all of our resources in a single investment, we reduce the risks that come in investing by diversifying our investments. We even have a phrase in our culture for this, don’t we? “Don’t put all your eggs in one basket”. 

When we diversify our investments, we reduce risk and demonstrate wise management and planning for our future that results in a positive return on our investment. And there are many financial advisors that apply the principles of diligence and diversity when it comes to investing. Because, the timeless reality is that when it comes to treasure, those who fail to plan for the future financially plan to fail financially in the future.

So, how are you doing when it comes to investing? Are your planning for the future financially?