Blue began reading and studying the bible only after becoming well-versed in the tenants of financial reporting as a Certified Public Accountant. What surprised him was the degree to which doing either effectively came down to the same basic rules. Blue recently came on Breakout to share some of these proverbs and how their meanings apply to investors of any faith.
1) Establish Written Financial Goals
"The plans of the diligent lead to profit as surely as haste leads to poverty." -Proverbs 21:5
Write down your end target then determine your steps towards getting there. A little bit at a time, all of the time, is a wiser plan than taken frantic all-or-nothing shots.
Read? Dreaming of financial independence by 55!
Read? Q1 2012 Investment Performance Report
2) Save and Invest Before You Spend
"Put your outdoor work in order and get your fields ready; after that, build your house." -Proverbs 24:27
As Blue puts it, "don't spend in the short-term because you won't have it in the long-term."
Read? The Magic of Compounding???
3) Keep a Long Term Perspective
"Suppose one of you wants to build a tower. Won't you first sit down and estimate the cost to see if you have enough money to complete it?" -Luke 14:28
In other words, know what you need to set aside to reach your savings goals. Your time frame is going to vary depending what your personal goals. Saving for college may be a 15-year strategy while retirement planning could involve more than 40 years. The runs are different depending on the size of your intended tower.
Read? Visually guided long-term investing goals! (2)
4) Diversify Your Portfolio
"Divide your portion to seven, or even eight, for you do not know what misfortune may occur on the earth." -Ecclesiastes 11:2
Even when Ecclesiastes was written 2,500 years ago people needed to have diversification. Blue suggests not just a range of stocks but assets: some venture capital, stocks, bonds and real estate for example, though readers needs may vary. The goal isn't eliminating failures but anticipating them by having an assortment of investments.
Read? Portfolio Management - Diversification Is Your Friend - Part 3
5) Do Not Take on More Risk Than You Can Afford
"I have seen a grievous evil under the sun; wealth hoarded to the harm of its owners." -Ecclesiastes 5:13
If something sounds too good to be true, it probably is. Nobody knows where the stock market is going to go, says Blue. There is no free lunch. As Blue puts it, "You can't be guaranteed of returns, and if you're trying to get that you're probably taking more risk than you should."
Read? Understanding Stock Market Risks - No 7 Risk
Read? Thinking of Risks before Profit
Do you believe the Bible can help your investing success?
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I can't resist to add something from the bible:-
ReplyDelete"There is a time for sowing.
There is a time for reaping.
And we reap what we sow".
For me i believe there is a time for everything under the sun. And you are responsible for what you do. You can't escape.