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Having What It Takes to Be an Effective Investor
If you're brimming with confidence about your investment strategy and your financial future, that's great! You're experiencing what I want for all members of the Sound Mind Investing family of readers — peace of mind. But you may not be there yet. You may be new to SMI, and still in the process of understanding our philosophy. Or, you may well understand it, but find you are hesitating to put it into action. It can be more than a bit scary to rearrange your financial life. If this describes where you are, then these words are for you.
If we could spend a few minutes together, I would try to bolster your confidence that you can be successful as an investor. That doesn't mean you won't make a few mistakes along the way (everyone does) or that you'll consistently beat the market (very, very few do). But it does mean you can make steady progress toward your financial goals. Here's why I believe that, with a little help and encouragement from SMI along the way, you can do it:
• You're building on the right foundation. You know "there's nothing new under the sun," and that the instructions God has given us in His Word have proven to be practical and effective. There's safety in following the priorities and guidelines He has provided for your protection. This includes an emphasis on using your monthly surplus to get debt-free and building a savings reserve before taking on the risks of the investing markets.
• You have the right motivation. You see yourself as a steward, a caretaker, of God-given wealth, and you want to please Him. You're not just in this for yourself, but to increase your assets so you can give more generously. You understand that only in Christ are man's most basic needs met — cleansing from sin, purpose for life, and hope in death — and you want to do more to help the world know Him.
• You have a specific, personalized plan. Your investing decisions are based on "inside-out" thinking that reflects your personal goals and tolerance for risk. Your buying and selling is thoughtful and purposeful because it's dictated by your investing plan. You know how all the parts of your portfolio fit together and the role that each part plays. You don't let yourself get distracted by listening to stock tips or news reports on what the "smart money" is doing. You're an initiator, not a responder.
• You have the correct perspective on time. You're not short-term oriented. Taking your cue from the Parable of the Talents where the master was away for "a long time," your strategy is a long-term one. This allows you to take up-and-down market cycles in stride. Time is the enemy of the speculator, but the friend of the investor. You have time on your side.
• You have a realistic goal. You know that a preoccupation with profits can be dangerous (1 Timothy 6:9-10). Surely, more poor financial decisions are made and more money is lost due to greed than any other single factor. You have learned that annual gains of 8%-10% over time can be made with relatively little effort or risk, and you are content to be reasonable in your financial ambitions.
• You are sufficiently diversified. You have divided "your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth" (Ecc. 11:2). Great profits can be made by concentrating all of your money in one opportunity, but also staggering losses can be incurred. By avoiding this temptation, you know that no loss will devastate you.
The first two of these six characteristics assure that you are honoring the Lord and His priorities. The final four reflect a wise balance between the risks and rewards of the marketplace. If they already describe you, then I believe you're well on your way to financial security. But if you could use a little help putting these principles into action, I invite you to click the link below to request a free information packet, and join the Sound Mind Investing family of readers.
So, while occasional bear markets, recessions, and storms may threaten, be of good cheer, for the Lord has said: "I will instruct you and teach you in the way you should go; I will counsel you and watch over you ... the Lord's unfailing love surrounds the man who trusts in Him" (Psalm 32:8,10).
Published since 1990, Sound Mind Investing is America's best-selling financial newsletter written from a biblical perspective.
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