King Solomon was one of the wisest and richest kings over Israel. We can draw three key principles of investing from passages of scripture he wrote.
2. Ethical investing
3. Wise counsel
Investment Principle #1: Diversification
Invest in seven ventures, yes, in eight;
you do not know what disaster may come upon the land.
v Do not place all your investment in one area, but several
v Investing in many areas spreads risk
v Invest in different types of investments: bonds, domestic and foreign stocks, real estate. Mutual funds offer a high degree of diversification within a single fund. Even there, invest in different types of funds: small-, mid-, and large-cap funds, emerging markets, growth and income, etc.
Investment Principle #2: Ethical Investing
Now all has been heard;
here is the conclusion of the matter:
Fear God and keep His commandments,
for this is the duty of all mankind.
v Ask yourself if investing in this company or product pleases God
v Hospitals or medical clinics that perform abortions, cigarette manufacturers, casinos
v Mutual funds - The Social Investment Forum tracks mutual fund companies that strive to adhere to Judeo-Christian values on a regular basis. You can also check Sound Mind Investing newsletter.
Investment Principle #3: Wise Counsel
Plans fail for lack of counsel,
but with many advisers they succeed.
v Utilize financial planners and investment counseling
v Join an investment group
v Always use more than one adviser, including your spouse.
v Know, understand what you are investing in
v Do not risk money you cannot afford to lose
v If a loss will cause bills not paid or family stress – do not invest
v Do not make a hasty decision
Once you have enough in savings for 3-4 months of expenses, investing can grow your money for retirement, college and generous giving.