The future of our world seems to be looking more and more uncertain. Cost of living pressures along with interest rate rises are causing a lot of people to feel financial stress. However, the good news is there are some timeless investment strategies that can get us through these tough times.
As Christians, what are some top tips we can follow on biblical investing? Alex Cook from Wealth With Purpose recently joined us on 20Twenty to share some different categories and themes on investing that we might not necessarily be familiar with.
Alex believes when it comes to investing, our first priority should be to use our time wisely. Investing is a process that takes time and skill. From a biblical perspective, Matthew 25 is a great passage on stewarding what God has given us.
Use Your Time Wisely
‘You’ve got to steward your time, your talent and your treasure,’ says Alex. ‘When it comes to investing, there’s a bit of all three. You’ve got to use some talents and learn some skills. The first key tip is to harness the benefit of compound interest.’
Compound interest is a simple concept of earning interest on interest. The point here is to let time do the work. Whatever we choose to invest in, with enough time our investments will eventually grow exponentially. It’s a fantastic way to start building wealth.
‘If you think about the share market,’ says Alex, ‘most companies produce dividends. Your share in the profits of a company can be reinvested back into your share holdings. Many companies offer dividend reinvestment plans, and essentially that’s a form of compound interest.’
Historically, both the share market and property have been proven long-term investments that benefit from compounding. But how does all this fit in with a Biblical foundation? How should we as Christians manage and steward our money?
Wealth For A Purpose
‘This is a very common concern amongst Christians,’ says Alex. ‘But I would argue that’s a biblical responsibility. We don’t grow wealth just for the sake of it, it’s got to be grown for a purpose. As believers, we want to sow into things that have lasting value.’
In Alex’s opinion, the key to successful investing is to have a long-term focus. As Christians, we want to then take it a step further and have an eternal perspective. We want to make sure that part of our strategy includes advancing in kingdom projects.
‘Another key thing is asset choice,’ says Alex. ‘The Bible actually gives fantastic wisdom here. In Ecclesiastes 11 it says to invest in many ventures because we don’t know what disaster may come upon the land. The need to diversify is quite clearly biblical wisdom.’
Keep A Long-Term Focus
Diversification of our investments helps reduce volatility. Investing in shares and real estate can feel a little riskier, but the returns over the longer term compensate for that. Understanding the dynamics and choosing your assets wisely will help minimise risk.
‘Economics and investing are ruled by cycles,’ says Alex. ‘And if you look in scripture Israel as a nation goes through periods of disobedience and coming back to God. It’s the same thing with investing and economics. You will experience setbacks, but the reality is often these cycles are opportunities.’
Another key to successful investing is learning to control our emotions. Worrying can have an enormous impact on our decision making, and we need to remember that ultimately God will provide for us. One simple thing we can do is not watch our investments too closely.
‘Make sound investment choices and hold them for the long term,’ says Alex. ‘But don’t watch them every day. Don’t feed the fears that are likely to lead you to poor decision-making over time. Try and keep your emotions out of it.’
‘I advise people to use their biblical understanding on how to accumulate wealth and honour God in the process.’