Becoming a Wise Investor — Part 3 of 3

The final step to becoming a wise investor

In last month’s article, I took you to Investment Street, Anytown USA, and gave you the first five questions to consider before crossing. They were 1) Where do I want to go? 2) How much time do I have? 3) What risk can I tolerate? 4) Are there other ways of crossing? and 5) Have I carefully studied my route? Now let’s look at the final four questions to ask before you cross this busy street.

#6-Systematic Investing

Am I investing in a disciplined manner? Markets go up and markets go down. They can even be flat for extended periods of time. This is normal. Systematically investing at regular intervals regardless of what the markets are doing is called dollar cost averaging. While systematic investing is no guarantee, it has the potential to reduce some risk and produce better results over the long run. Investors should always consider their ability to continue purchases through periods of low price levels or changing economic conditions because that’s what it takes to benefit from this principle.

#7-Values

Does this investment decision align with my values? There are clearly investments that violate values you hold dear so as you look for investment opportunities, look for ones that can both advance your goals and at the same time align with your values. In this way, you can actually become part of the solution in causes close to your heart. For example, perhaps you might invest in a company with a sustainable model for delivering clean water around the world or one that addresses critical infrastructure needs. There are many reasons to invest in companies, affinity groups, or funds that are both profitable and do a tremendous job of producing value-based results.

#8-Motivation

Is either greed or fear driving this investment decision? These two extremely dangerous twins can derail a sound investment plan very quickly.

Greed quite often trips us up with the allure of a get-rich-quick scheme. I caution you to run from betting on the “big one” or buying just because everyone else is — think housing bubble! Proverbs 28: 20 warns us that “…one eager to get rich will not go unpunished.”

Fear is the other extreme and equally dangerous. Fear plays itself out in the following common investor behavior — you want to participate because stocks are steadily going up in value, so you buy “high”, but then when there is a market correction or crash, you can’t get out fast enough and sell “low”. This buy high/sell low” cycle is completely the opposite of what a wise investor should be doing.

Greed-driven or fear-driven decisions have no basis in a sound investment plan.

#9-Counsel

Do I need professional counsel? If this series leaves you scratching your head and wondering just where to go from here, let me suggest the importance of surrounding yourself with people who can speak wisdom and truth into your life. If you are married, wise counsel begins by exploring these concepts first as a couple. Next, consider the importance of professional counsel. As you begin your search, make sure you’re consulting with qualified, competent, and genuinely wise men and women who share your worldview. If you are looking for a biblically-wise financial advisor, a great place to begin your search is through a resource like Kingdom Advisors (www.kingdomadvisors.org). Their mission is to engage, equip, and empower Christian financial professionals to communicate biblical wisdom to their clients while applying high professional standards in their practices. Engaging an advisor who meets high professional standards while intentionally integrating God’s wisdom with your priorities can make a great deal of difference!

I began this series with this premise: YOU are an investor — we all are. Every day you are trading something of present value for the hope of a future reward. So ask yourself “What do I have to invest?” and “What am I going to do about it?” If you need help, seek qualified help. If you like to do this yourself, use these principles to evaluate your alignment with prudent investment practices. Above all, commit to taking judicious risks with your time, talent, and treasures.

Are you still standing on the curb, ready to take the first step? I encourage you to proceed — not just with caution, but with great anticipation of the possibilities that await you on the other side!

Talk with us about your portfolio or financial plan here: Talk with an advisor

More Reading: Before you Pull the Trigger on Retirement

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