Becoming a Financial Steward 7: Setting the Table

Welcome back!  In our last Becoming a Financial Steward post, we introduced the concept of saving - that big discovery to stopping the cycle of debt and turning your financial ship in the right direction. Hopefully you are working right now on your emergency savings, or you are on the next step and working toward saving 1-3 and up to 6 months of your income.

Now it’s time to set your table. If you’re going to meet someone new, you want to prepare your financial house and make your table as lovely as possible. So Let’s go one step further and talk about investing. Don’t run away, it’s not as scary as you may think, and we’re going to give you a few steps to start that you can easily do on your own!

So what is investing anyway? Why is it important? Think of it this way, investing is simply putting money to work in the present so that it will make you money in the future.

Consider just a few of the things these scriptures have to say about investing:

• Isaiah 48:17 - The Lord is the one who teaches us to profit
• Matthew 25:18-27 - God honors diligent investing & rewards it
• Proverbs 31:16 - The wise woman makes an investment
• Ecclesiastes 11:2 - Dividing/diversifying is having foresight

These are just a few, but you can see our Father’s heart for wisdom and diligence. The rewards are both earthly and eternal.

Investing does not always mean the stock market. It simply means spending money now on something that will allow you to make money in the future. This can mean buying a sewing machine for your sewing business, lemons for your lemonade stand, or a rental property. In fact, the biggest investment most people make is paying for a higher education. These are different types of simple investments that help you generate more income because there are two primary reasons to invest:

1. Saving for Retirement
2. Growing your income

Today our focus will be on investing in stocks since it is what most people think of when they hear the word invest. Anyone can invest in the stock market no matter your education, wealth, etc. - making it one of the most accessible ways to invest. Investing in stocks means that you are purchasing a small portion of a business, with the hope that the business will become more productive in the future. If the business makes more money then the value of the business goes up. If the value of the business increases, so does the small share of the company your future self will own.

Now, no investment is without risk. If you are paying attention to the news about the ups and downs in the stock market right now, you will know that it fluctuates.  However, over time, even with fluctuations, the gains most often outweigh the losses and having diversification in your investments is a key factor to managing the risk.  

See the links below with important articles about easy ways to make sure your investments are diversified. (If you use a Robo-Advisor, or a Dated Fund in your 401K, this is often handled for you.)

Interestingly, it is best to continue investing even when the market is not doing well because you are buying the economy at a lower price and in the long run you should see good gains as a result. The best thing most people can do is just ignore the market completely, and simply invest the same amount every month, no matter what is happening. Timing market tops or bottoms is almost impossible. Consistently investing over time nearly always wins out in the end.

Here are 5 easy steps to help you begin investing:

1. If your company offers a 401K, Roth, or 403B plan with a match, take it! It’s FREE money! Max out your contribution to the limit of the company’s match.
2. Purchase company stock in a public company you work for if it is offered at a discount
3. Open a personal IRA or Individual Retirement Account, (Roth or Pre-Tax) through a well known company with very low fees - see list on link  below.
4. You can talk to a financial planner who can help you, but be sure to understand how they get paid, and if they are a fiduciary so you know they are working for you - OR-
5. You can look into robo-advisors. Betterment and Wealthfront are 2 of the best in the business. Both charge low fees, help step you through the amount of risk that you're willing to take, and automatically diversify your investment into numerous low fee ETFs. Set up an account with one or both and set up your bank account to invest a small amount with them each month. You can see a comparison of the two in the additional link below.  

The concept of compounding is how something builds upon itself & this happens most when you invest early. We could amaze you with a bunch of math and charts, but all we’ll say is this, the earlier you start investing, the better off you'll be. The person who starts investing very small amounts of money in their 20s will almost always be much better off at retirement than the person who invests large amounts, but starts much later. Time is your friend. Invest for retirement as early as possible.

So, take a leap and choose one step to start! Then another :). If you have any questions, shoot us an email at finance@readingcitychurch.com

Next time we are going to introduce you to someone new...and it might just change your whole life :). Stay tuned and see you on the next post!

Would you like to talk with someone who can walk alongside you confidentially with your personal finances?  Please know that there is FREE coaching available for you to take advantage of from our Financial Ministry!  Just email: sarah@readingcitychurch.com, I look forward to hearing from you.