The last principle of the financial takeover series that we will discuss is investing. As we have seen in the past year, the stock market has been unstable, economies taken a major dip, and rising unemployment. What we thought was a sure bet is no longer one. Long gone are the hefty returns. The markets are undergoing a correction due to the unstableness in other countries. The best analysts cannot predict the market or even tell us what to buy. We have learned in this market that there are no get rich quick schemes in investing.
Wait a minute before you throw investing to the can; Investing is a spiritual principle. The Bible tells us in Ecclesiastes 11:1-2, 5 tells to, “Cast thy bread upon the waters: for thou shalt find it after many days: Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth…even so thou knowest not the works of God who maketh all.” The main point is to diversify your investments because you do not know the works of the Almighty God. No one knows how God is changing the economy, not even the experts. He is changing it for a specific purpose. A successful investment strategy must accomplish three main objectives: diversification, long-term focus and continuity. These objectives must work together. If they don’t, your investment will not generate a good return. Investing is a slow, grinding, and even a mundane process. With that, there are several different types of investments that you can use in your investment journey.
The first area is the savings account. A savings account gives you an easy method to put money away for a short time or even for emergencies. The interest on a savings account is not that terrific, but it is a great way to have your money available (liquid) for emergencies or for planned expenses. Within a savings account you can move up to a CD or money market account which will give you a greater interest rate. All of this is good for short term saving.
The next investment is bonds. Bonds are actually good for a market like this especially with the unstableness in the economy if you do not like risks. Good bonds will hold your principal balance neutral. Bonds allow you, as the bond investor, to lend certain amounts of money to a company, bank, or government agency for a predetermined time in exchange for income. Bonds can be secured through an investment firm, bank, government, or corporation. The company or bank pays you interest in exchange for your investment. Governments use bonds to finance major projects such as parks, recreation facilities, and highways. Companies use bonds to finance research and development of major products. Bonds are secured loans that have a specific time period. They don’t pay the same type of interest as a savings account; they pay at a higher rate.
The next area is stocks. Stocks are the most common instruments traded today. However, they can be risky. Buying stocks simply mean that you are buying ownership into another company. Rushing to buy a stock is risky, especially without doing the proper homework. To avoid the risk of losing money, conduct research on companies that have a long-term focus. A long-term focus enables you to buy high-quality companies, which are those that have a vision for their product, advantage over their competition, and potentially new technology that will increase future revenue. Long-term investing enables a stock to go through the roller-coaster cycle of a company’s performance, plus it reduces the risk of losing money. Investing in stocks individually will not build your assets quickly. Stocks should be a complement to your 401(k) or IRA portfolio. Seek wisdom as you invest. How much better is it to get wisdom than gold and to get understanding rather than to be chosen than silver! (Proverbs 16:6).
On the other side of stocks are mutual funds.. Mutual funds are one of the best alternatives to increase your assets. Mutual funds can double your growth over stocks each year. Unlike stocks, you do not own a stake in the company’s fund. A mutual fund is a collection of companies owned by investment firms that invest in another companies’ stocks, bonds, real estate, etc. Fund managers run mutual funds. They are certified professionals who typically spend time, resources, and efforts selecting the right companies to invest for that particular fund. Here are some advantages of mutual funds. They are easy to invest in because you don’t need a large amount of money, as opposed to stocks that you buy. Secondly, they provide instant diversification. You’re automatically diversified among many different companies. Lastly, they are easy to sell without the expenses of a stock. You can diversify in any type of fund like growth, international, bond, and index funds. There are many of them, research and pick the best one.
Lastly there is a people fund. Investing in people is the best type of fund because there is a return for that you can expect. Investing in people could be paying for college, paying a loan off or volunteering or donating to a shelter where people are directly helped. Once you start investing in people, you will see this principle come to life found in Luke 16:12 – And if you are not faithful with other people’s things, why should you be trusted with things of your own? Once you start helping others, you will get what you desire. This principle is the highest form of stewardship and investing because you have used your resources wisely for someone else and have taken over your finances.
This concludes the 4 principles of a financial takeover. Start working them and watch your finances come alive.
Cedric Dukes is an ordained deacon, author, speaker, and columnist. His book, Hostile Takeover – Manifesting God’s Plan and Purpose for Your Finances, has changed the way people think about finances and has been featured nationally. You may contact him at www.cedricdukes.com.