A look at some ancient biblical principles of investment

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The word “investment” is as old as creation itself. It pre-existed the very origin of man and civilization as detailed in the book of Genesis. The story of Creation as described by the scriptures is nothing more than an investment by the creator.
He had an investment objective, a sound investment plan, an implementation timetable and an investment manager, which is man. He put man in charge of all created things and man in turn reported to God. These stories are not mere bed side and “Sunday school” stories but presents secrets to life and intelligent investing. The principles imbedded in these stories are timeless, civilizations rise and fall but these principles remain valid and un-dated. This this piece will take you through a step by step approach to discovering these principles, some of which you have already been practicing unconsciously.
A seven ancient pillars and principles of investment
Historians argue that for us to forge ahead in life we must appreciate what has taken place already because there is nothing truly new under the sun. It is therefore not surprising that some of the major investment principles are deeply rooted in ancient wisdom, which when discovered and applied can yield a great reward. The bible, which theologians call “The Book” is arguably the oldest book in the world. It is the most read and widely translated book in the world. It is the most accurate and forward looking literally work in the history of man. The word Bible is from the Greek word “Biblio”, which means a collection of books.
#1 Principle of Semper Fidelis
Luke 16:10
He that is faithfully in that which is least is faithfully also in much and he that is unjust in the least is unjust also in much.
Semper Fidelis principle is the first principle that can be extracted from the bible. This principle enjoins investors and all potential investors to be faithful with the little money that they have. It is a cardinal principle because it forms the basis of an investor’s attitude towards money. How do we manage the little pay we earn, what about the little gifts we receive? For us to be successful in investment we should learn to value little money and be able to manage it very well. If we cannot invest part of the little money we receive, there is no guarantee that we will be able to invest when we earn or receive a huge sum of money. For example, you earn GH¢100 and you cannot save part of it, it will be difficult to save even when you earn GH¢1,000. The reason why we should invest even if our income is little is that the little money that we receive offers us the opportunity to learn and sharpen our innate investment skills.
#2 Principle of Cold and Heat
This principle means that investment is cyclical. It takes its root from Genesis 8:22 “While the earth remaineth, seedtime and harvest, and cold and heat, and summer and winter, and day and night shall not cease”. This principle reinforces the idea that it is almost impossible to expect all your investment to be moving up always all the time. Thus there is a waiting period between the time of investment and reaping of returns. It reminds us that we should be realistic in our expectation of return.
There is period of summer and winter for our investment. Our investment can be so hot as to bring us the necessary returns but there are times that our investment will grow cold and we might even make some losses but it is important we keep to the strategy of investing intelligently. Investing intelligently means looking for companies with solid fundamentals that will generate the necessary cash flow over a long period of time. For example the Ghana Stock Exchange like many other stock exchanges have their times good performance and period of time. Research shows that investment on the stock market has yielded the highest return over a long period of time than other classes of assets such as bonds and treasury bills.
#3 Principle of Diversification
Investment Analysts, Fund Managers and Market Watchers all over the world subscribe to the principle of diversification as a strategy of reducing exposure to investment risk. It represents one of the major decisions that confront investors when deciding on how to spread funds between major classes of assets such as cash, bonds, foreign currency, shares, mutual funds and treasury bills. This principle has it foundation in the biblical maim as recorded in Ecclesiastes 11:2 “Divide your portion to seven or even to eight for you do not know what misfortune may occur on earth”.
In every day parlance, this translates into “do not put all your eggs in one basket”. The rationale behind this investment principle is that we live and operate in dynamic environment where it is impossible to accurately predict the outcome of all your investments in the years ahead. Investment has more to do with the future than with the past. For example, a single event can have adverse impact on a particular industry or asset class.
Based on this principle an investor can reduce his risk exposure by investing in at least 7 or 8 different types of investment vehicles according to Ecclesiastes 11:2. Such investment vehicle may include stocks, real estate, bonds, mutual funds and treasury bills.
#4 Principle of Consistency
Investment supposed to be a life time activity. This principle encourages us to invest in the morning and evening. It is captured in the biblical saying.
“In the morning sow your seed, and at evening withhold not your hands; for you do not know which will prosper, this or that, or whether both alike will be good” Ecclesiastes 11:6.
This fourth principle encourages us to be consistent in our investments. For example, we can make it policy to invest 10% or 15% any income that we receive no matter how small the amount. Just imagine how much we will have accumulated in 10 years if we had invested 10% of every income we had received. The saying “little drops of water make a mighty ocean” also holds true in the field of investment. The advantage of this principle is that it affords investors an opportunity to achieve their life time goals without much struggle.
#5 The Principle of Multiplication
This principle provides the motivation for investment. We invest because at the back of our minds we are looking for returns on our investment. It is a joy to see your investment grow by the day. The good old book admonishes us to put our money to work so that we can multiply it. After analyzing out risk profile, it is necessary that we look for alternative investments that offer some level of returns.
Like the parable of the talents in Luke 19:12-26, the least that is expected of every investor is to place their money in an investment that yields an interest comparable to the rate on savings. The expectation of every investor should be at least to double his or her investment over a period of 7 years.
#6 Principle of Watching over your Investments
Proverbs 27:23 “Be thou diligent to know the state of thy flocks, and look well to thy herds”.
There is the need for an investor to monitor his investment so as to determine the state of this investment to see whether the goals set are being achieved.
If we take a long-time view and realize that a particular class of assets will not help us to achieve our life time goals, we can dispose of it and purchase those that will assist us to achieve our dreams. It means that we should be researching, listening to the latest news and discovery in that particular industry so as to be able to take the appropriate action. This does not necessarily mean that any time a particular investment is not appreciating we should sell it. If that particular investment vehicle is part of our strategy to achieve a long term goal we can maintain it in our portfolio. This is because sometimes in Ghana it is difficult to enter the stock market once you exit.
#7 The Principle of Tithing
This is an age old strategy that has been practiced for centuries. This principle holds that whatever income that you earn or receive you give 10% of it as tithe. The significance of this principle is that you honor your creator. Those who practice this principle will most invariably be at the cutting edge of investment. Like the law of gravity any organization that upholds the principle of tithing is on its way to achieving immortality of ideas. Indeed, it is suggested that one of the ways for an organization to achieve corporate immortality is through corporate tithing. What do you think will be the impact of the contribution of corporate America to the tsunamis victims in Asia?
It has been a long journey and I hope you did enjoy it. the 7 ancient pillars of investment works and we can bet you on that.