I used to believe that following the Bible would lead to investment success. In spite of the fact that I failed miserably, I still believe the Bible holds the key to financial success. The problem is not the Bible, but in the particular prophetic scenario that I used to inform my investment decisions.
I was absolutely sure that Western Europe would be the economic powerhouse of the future. The United States would degenerate into insignificance, beset with economic cirrhosis and social unrest. In line with conventional ecological theories of the day, China and India would suffer atrocious food shortages leading to mass starvation of millions. This would be caused partially by a new ice age that we would bring on ourselves through increased use of fossil fuels, which were going to run dry by 1985.
My investment strategy for dealing with such scenarios was an obvious one: Don’t bother saving for retirement because surely “The End” would come before I could enjoy the fruits of my self-denial. But if I were to grit my teeth and invest, it would have been in European stocks (the economic powerhouse of the future), foreign currencies (the dollar isn’t worth the paper it’s printed on), gold (the universal store of value), and money market funds (then paying 18%).
The role of the investment markets, as it turns out, is to make fools out of the greatest number of people, and that’s the case here. Over the last 25 years, it was bone-headed to bet against the US economy. Europe, in spite of attempts at unification, has been a stagnate backwater in terms of economic growth. China and India are quickly entering the world as economic giants. Interest rates in the United States have declined steadily as inflation was finally cracked, and long term investors in the US stock market have averaged 10% – 12% annually. Gold, which reached $800 an ounce in the late 1970’s has never recovered to anywhere near that level.
Worse than making bad investments, millions of Baby Boomers haven’t invested at all, and frankly, they either will have to work the rest of their lives or endure a pauper’s existence on whatever the Social Security Administration feels like paying them.
The fact is, the Bible does not endorse the “eat and drink for tomorrow we die” philosophy. The Apostle Paul specifically says that such is the philosophy of despair and is reserved for those who have no hope (I Corinthians 15:32). That certainly should not describe us. What should apply to us are solid biblical principles of personal finance. We find them sprinkled like salt throughout the Bible. Here are a few, all quoted from the New International Version:
1. Ecclesiastes 11:1 — Cast your bread upon the waters, for after many days you will find it again. (Invest in the future with the hope of a return).
2. Ecclesiastes 11:2 — Give portions to seven, yes to eight, for you do not know what disaster may come upon the land. (Diversify over seven or eight different asset classes because you can’t predict the bad things that might happen during the next year).
3. Proverbs 13:11 — Dishonest money dwindles away, but he who gathers money little by little makes it grow. (There are no get rich quick schemes. There are only get poor quick schemes. Save a little from each paycheck, and let compounding work its magic).
4. Proverbs 27:23 — Be sure you know the condition of your flocks, give careful attention to your herds. (It’s not just grabbing all the dollars you can. It is also being diligent in your life’s work.)
5. Proverbs 26:13 — The sluggard says, "There is a lion in the road, a fierce lion roaming the streets!" (Don’t let fear paralyze you from taking calculated and prudent risks).
6. Proverbs 17:18 — A man lacking in judgment strikes hands in pledge and puts up security for his neighbor. (Don’t co-sign somebody’s note unless you are prepared to pay the entire balance).
7. Proverbs 13:18 — He who ignores discipline comes to poverty and shame, but whoever heeds correction is honored. (You are not as smart as you think you are.Learn from the instruction of others, and also learn from your mistakes)
8. Proverbs 13:22 — A good man leaves an inheritance for his children’s children, but a sinner’s wealth is stored up for the righteous. (Be certain to do adequate estate planning, including wills and trusts).
9. 2 Corinthians 12:14 — After all, children should not have to save up for their parents, but parents for their children. (Do plan for your retirement, and do plan for your children’s needs. Yes, you should own life insurance). I could go on with my list, but I believe I have made my point. Solid financial planning begins with universal principles that have worked for all time. Basing your financial future on prophecies seen only through a glass darkly smacks of Proverbs 26:13: I can’t do anything now! There is a lion in the street! Fear is the motivation of fools, and sadly, it is the motivation of too many Christians.