Finances – The Lowedown

Ecclesiastes 11

²Divide your gifts among many, for you do not know what risks might lie ahead. (Ecclesiastes 11:2, NLT)

The Daily DAVEotional

The Bible has a lot to say about money and wealth. Despite what many people in our culture think today, the Bible doesn’t condemn wealth or making money. Actually, Jesus himself encourages the wise steward to multiply the resources entrusted to him/her by God and to seek to make a profit. I’ve written a number of blog posts on the subject of whether wealth is immoral. You can read my previous posts here, here and here. Additionally, I wrote about God’s stance towards the rich here.

Though the Bible encourages people to make a profit and to multiply their financial resources, it doesn’t give a lot of guidance on how exactly we’re supposed to do that. When it comes to investing, the Bible has little to say that will yield any specific steps or strategies to guide us.

There is one verse however, that gives some financial wisdom on the topic of investing, and it’s found in Ecclesiastes 11:2.

In this verse, Solomon tells us to divide our “gifts” among many in order to hedge against risk.

What’s he talking about?

I like the way the NIV states this verse. It says it this way:

²Give portions to seven, yes to eight, for you do not know what disaster may come upon the land. (Ecclesiastes 11:2, NIV)

In this verse, Solomon is encouraging the reader to divide his investments into 7 or 8 different portions. Essentially, he’s encouraging the reader to diversify their assets in order to hedge against a potential disaster.

I found a blog post by Alice A. Anacioco to be especially helpful. She explains this passage this way:

You may be surprised to read King Solomon offering financial counsel as he nears the end of Ecclesiastes. But accordingly, Solomon was deeply involved in international trades with merchants. And just like today, one of the main trade commodities was grain.

The merchants of Solomon’s day would load their grains on ships and send them off. But instead of loading all of their grains in just one ship, he tells his merchants to put them in several ships and send them out in a diversified way so that if one of the ships should sink, he would not lose everything.

The main advice the Bible gives when it comes to investing is to diversify your investments. The idea is to spread your money out among different types of assets so that if one type of asset is negatively impacted by an economic event, the other assets may be unaffected and as a result, the entire portfolio will not be completely devastated.

Be careful though. Many people assume they are following this advice because they have placed their investment money into mutual funds. Many financial advisors will advise their clients to diversify their stock portfolio among many different stocks so that if one company performs badly, the positive performances of the other stocks may shield the portfolio from being completely torpedoed.

Mutual funds provide some level of inherent diversity because a mutual fund is already a portfolio of many stocks. Hence, if one company within the fund goes down, other companies may go up and thus the value of the fund may go up as well despite the poor performance of one or a few companies.

But being invested in a number of stocks or even mutual funds does not mean you are diversified. To truly be diversified and hedged against disastrous economic events, one needs to have their funds invested in different asset classes altogether.

Think about it. Stocks and mutual funds are part of the same asset class. When the market crashed in 2000 due to the dotcom bubble bursting, many people who had all their money in the stock market had their entire portfolio decimated. Again, in 2008 when the market crashed as a result of the real estate bubble bursting, many who were “diversified” because they owned many different stocks or mutual funds took major hits to their bottom line.

I have heard and seen too many stories of people who had their entire nest egg cut in half or worse by one of these two market events. And for those who were in retirement when it happened, the results have been disastrous. There simply is no time to rebound from these market crashes when you’re already taking disbursements during retirement.

Solomon’s advice is basically “don’t put all your eggs in one basket”. So if you really want to diversify, don’t have all your money in stocks and mutual funds. Invest in other assets as well (such as real estate, precious metals, commodities, etc.) That way, if the stock market crashes, as it inevitably will do, only a portion of your entire portfolio will be affected. And who knows, even while the market is crashing, perhaps the other assets will be unaffected or even increase. You may find that you are gaining overall instead of losing it all.

Reflection

What is or has been your investing strategy?

What steps have you taken or are you taking to diversify your financial portfolio?

Besides stocks and mutual funds, what are some other asset classes you could invest in to begin to create a truly diversified portfolio?

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Matthew 19

¹⁶Someone came to Jesus with this question: “Teacher, what good things must I do to have eternal life?”

¹⁷“Why ask me about what is good?” Jesus replied. “Only God is good. But to answer your question, you can receive eternal life if you keep the commandments.”

¹⁸“Which ones?” the man asked.

And Jesus replied: “‘Do not murder. Do not commit adultery. Do not steal. Do not testify falsely. ¹⁹Honor your father and mother. Love your neighbor as yourself.’ ”

²⁰“I’ve obeyed all these commandments,” the young man replied. “What else must I do?”

²¹Jesus told him, “If you want to be perfect, go and sell all you have and give the money to the poor, and you will have treasure in heaven. Then come, follow me.” ²²But when the young man heard this, he went sadly away because he had many possessions.

²³Then Jesus said to his disciples, “I tell you the truth, it is very hard for a rich person to get into the Kingdom of Heaven. ²⁴I say it again—it is easier for a camel to go through the eye of a needle than for a rich person to enter the Kingdom of God!”

²⁵The disciples were astounded. “Then who in the world can be saved?” they asked.

²⁶Jesus looked at them intently and said, “Humanly speaking, it is impossible. But with God everything is possible.”

²⁷Then Peter said to him, “We’ve given up everything to follow you. What will we get out of it?”

²⁸And Jesus replied, “I assure you that when I, the Son of Man, sit upon my glorious throne in the Kingdom, you who have been my followers will also sit on twelve thrones, judging the twelve tribes of Israel. ²⁹And everyone who has given up houses or brothers or sisters or father or mother or children or property, for my sake, will receive a hundred times as much in return and will have eternal life. ³⁰But many who seem to be important now will be the least important then, and those who are considered least here will be the greatest then. (Matthew 19:16-30, NLT)

The Daily DAVEotional

In this famous story, a rich young man comes to Jesus and wants to know what good deeds he has to perform to inherit eternal life. It seems that many Jews of that time period believed that there were certain righteous acts that could guarantee salvation. This man wanted to know what the magic deeds were that would assure heavenly admittance.

Jesus responds by telling him to keep the commandments and when the young man asks which ones, Jesus repeats several of the 10 commandments.

The young man is puzzled because in his mind, he’s kept all of the commandments, so he asks Jesus, “what else must I do?”

Jesus seizes on this opportunity to show the person that he really hasn’t kept all the commandments. If it were possible for anyone to fully keep all the commandments, it would have been unnecessary for Jesus to come and redeem mankind in the first place.

So Jesus tells the young man that if he really wants to be perfect, or complete in his devotion to the law, then go and sell all you have and give the proceeds to the poor.

The text says that the man walked away from Jesus sad because he was a person who owned many possessions.

In debriefing this encounter with his disciples, Jesus says that it’s very hard for a rich person to get into heaven. In fact, Jesus makes the claim that it’s easier for a camel to go through the eye of a needle than for a rich person to enter the Kingdom of God. That sounds impossible!

So who can be saved?

This is exactly the question the disciples asked and it may be the question you’re asking as well.

What exactly is Jesus teaching? Does he really mean to communicate that it’s more difficult for rich people to enter heaven than others?

At first glance, this seems unfair and unjust, as if rich people have a higher standard they must meet in order to gain entrance into an eternity with God.

Jesus is not saying that rich people cannot go to Heaven; instead He’s making a statement about need and priority. Coming to Jesus and following Jesus is a matter of recognizing your need for Jesus and then forsaking everything else and making Him the priority in your life.

People who have a lot of possessions often have a harder time recognizing their need, since their material needs are already satisfied. In addition, if you own a lot of material possessions, you can become very attached to them. Hence, people who own a lot of things often have a harder time forsaking those things and making Jesus the center. For this reason, it’s harder for them to enter the Kingdom of Heaven.

Look at what Peter says in verse 27:

“we’ve given up everything to follow you.”

This is the sentiment of following Jesus – giving up EVERYTHING!

It doesn’t matter how rich or how poor you are materially. What matters is being poor in spirit, which simply means that you recognize that you need a savior. If all of your needs are met and you’re feeling pretty content with life, you may have a harder time realizing that you’re a sinner who is in desperate need of help.

If you recognize your need for a savior then the next criteria is a willingness to make Jesus the priority. Jesus never makes selling all your possessions a prerequisite to being saved. He only made this comment to this person in order to bring about an awareness that didn’t exist before, namely, that this young man thought of himself as a person who was not a sinner, but someone who had always upheld every aspect of the Law.

The requirements and standards for getting into heaven are the same for everyone. But some people, who may see themselves as self-sufficient may have a harder time admitting a need for a savior. For people who are wealthy and self-sufficient, recognizing need and brokenness may prove to be harder than for people who are poor and more desperate.

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Reflection

How are you doing with Jesus in terms of recognizing your need for a savior and your willingness to make Him a priority in your life?

What are the things that you hold most dear….those things that if Jesus were to ask you to forsake them, you might be tempted to walk away just as the rich young man did? What is it about those things that make them so important and elevated in your life?

Peter asks a question in verse 27 – “what will we get out of it?” What do you think most people are expecting to get out of this thing called Christianity?

What do you think you are going to get out of Christianity?

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