I know a thing or two about investing. Next month will mark 29 years of professional investment experience for me. The most important thing I’ve learned in this profession is to always follow Biblical guidelines while investing. It prevents much stress and heartache. The scriptures I have mentioned above give us a clue into the importance of Biblically responsible wealth management. These principles are fundamental and have been used for thousands of years. That is what is so wonderful about following God’s word in our lives, it is tried and true. Of course, we all tend to try it our way first, until we realize how faulty our own ways really are.
Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
The earth is the Lord’s, and all it contains,
The world, and those who dwell in it.
Do not participate in the unfruitful deeds of darkness, but instead even expose them.
Proverbs and Ecclesiastes were written by the wealthiest and wisest man to have ever lived. He was so wealthy, that we still hear legends and stories about Solomon’s mines and stockpiles. However, this story was real, not just a fairytale. God’s word holds a great deal of advice, advice on the management of wealth is not an exception. These words have stood the test of time, not only in their undying existence, but in the fact they are still very relevant and helpful to us today. The Bible holds knowledge of tried and proven knowledge that has lasted thousands of years. This knowledge can help us better understand investing, building, and handling wealth, no matter what millennium in which we live.
Believe it or not, the Bible actually talks about diversified investments! Ecclesiastes 11:2 says, “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.” This is similar to that old country saying, “Don’t put all your eggs in one basket.” When your basket is dropped, every egg is compromised.
Even with this very well known advice, I still see people refuse to diversify their investments, eventually facing large consequences. What if you had all of your investments in real estate before the housing market crash? What if all of your money was in the stock market before the crash of 2000? Unfortunately that instance is common for many people. They lost almost everything because they had chosen to only invest in one endeavor. There are countless examples of non-diversified investments collapsing. There still are the the 1 in 1,000 that made it big by investing in just one venture, but it is very uncommon and statistically unwise.
Now for a real life mathematical example of the power of diversification that has been around for years and how it can work.