Whether you have a thousand dollars to invest or a million, how do you go about it? What is the best approach and what should you consider? Let me share some principles I have learned.
First, I begin from the foundation that all of my money belongs to God and I am simply the steward of it. Second, I do not seek to make the story of my life about money, rather about God and His kingdom. From this foundation, let’s talk about investing money. Consider the following:
- The younger you are, the greater risk you can take to make your money earn more. If you are approaching 50, maybe you want to be a bit more conservative about risking all you have. Having said that, always trust the Lord. Don’t be scared. If the Lord guides you to a certain investment, go for it.
- There are three types of investment categories and three levels of risk. First, there’s the market (mutual funds, stocks etc). Second, there’s real estate. And third is business (meaning, owning a business, fully or partially). For each of these three areas of investment, there are three levels of risk: low, medium, and high.
- When I get “extra” money to invest, I like to consider my allocations to the above categories. Look at your skill sets as you make decisions. I like business and have had some level of success in it. So if I put all my money in safe marketplaces (like bonds), then I am not capitalizing on my strength, which is business.
- Financial advisors usually want you to figure out how much is “enough” to live on should you become unable to work, then try to slowly (or quickly) save and grow that money in a safe vehicle.
- Another good piece of advice I received is this: Early in life, risk your assets to make more money. Later in life, do not risk the portion of “enough” that you may have accumulated.
- Investing well takes time to study and develop. If you do not have adequate time to spend in time-consuming vehicles, then do not do that. If you have a fulltime job, you need to fulfill that requirement of 40-60 hours per week first. Just remember that as in any area you wish to grow, investing money is a journey of trial and error.
A quick note on investing in the business of friends and family, in start-ups, and the like. I made two investments in which I gave money to friends who had businesses. I lost all that money. I’ve learned that if I invest money in someone else’s business to retain a majority stake in that company, I can leverage what I know in business and make final decisions when needed.
Finally, as a Christ-follower (or even if you’re not), when you have any amount of wealth, never forget that it can be lost. Do not become attached to money. Do your best to protect it and steward it. But, never give it priority over God, which is to worship it.
