It's wise to save some of your money for the future, but the only way to make it grow significantly is to invest it. Investing multiplies your money, so you'll have more to meet your future needs and give to others God wants you to help.
Here are some principles to remember when you invest:
- Start investing as soon as you can. The more time your money spends working for you, the greater financial returns you can receive. For example, if you start investing for retirement in your 20s, you'll earn far greater interest on your investment principle than you would if you waited until your 40s to start investing.
- Invest as much as you can. The more money from your budget that you allocate to investing, the more it will compound over time.
- Think and pray about which types of investments will potentially give you the maximum return and the minimum risk. First, determine your investment goals (what you plan to use the extra money for and when you'd like to access that money) and the level of risk with which you're comfortable. Then study the various types of investments available - everything from low-risk certificates of deposit and U.S. federal government savings bonds to higher risk stocks, mutual funds, corporate and municipal bonds, and real estate. Keep in mind that you will probably have to accept a greater level of risk to earn a greater level of interest on your principle, especially over a short time period.
- Don't get involved in any investment strategy you don't fully understand.
- Don't make any investment decisions in a hurry. If someone pressures you into investing quickly, beware - it might be a "get rich quick" scheme that's fraudulent.
- Don't risk any money that you can't afford to lose. Remember to maintain enough money in your regular budget for all your expenses, and don't go into debt to invest.
- Diversify your investments. Spread your investment dollars over several different types of investments to minimize your risk. You could do this by investing in different types of assets (such as some stocks and some bonds), different areas of the economy (such as health care and technology) or different regions of the world (such as Asia and Europe).
- Seek investment advice from people you trust rather than trying to react to the plethora of information in financial media reports. The economy is constantly changing, and without a background in investing, you'll likely be ineffective trying to digest all the details and use them to make sound investment decisions. Check references of professional financial counselors who have strong relationships with Christ, then seek their counsel. If you're investing for the first time, you may want to choose a mutual fund that's professionally managed.
Adapted from The World's Easiest Pocket Guide to Planning Your First Investment by Larry Burkett with Todd Martin, copyright 2001 by Burkett and Kids, LLC. Published by Moody Press, Chicago, Ill., www.moody.edu, 1-800-678-6928.
Larry Burkett, chairman of the board for Crown Financial Ministries, hosts two daily radio programs. He has also written more than 40 books.
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