Investing in a chaotic world
The world has literally changed these past 2-3 years, and I think the change hasn’t even peaked. I’m sure many of you feel the same way. Are you invested into the markets? How deep? Should you continue investing? Multiple concerns are compounding in your mind and probably preventing you the restful sleep you need. Is investing in a chaotic world practical? What should you do?
The snowball grows
We’ve had COVID 19, we’ve had natural disasters, we’ve now got very high inflation in many countries around the world, particularly in the western world. And of course, rumors of war and war! It has a lot of potential economical dangers to the world and to the near future if it gets worse and gets out of control.
Investing in a chaotic world
How does one invest in a violent world? As markets are falling, is this a good opportunity to acquire more shares? What issues should be considered to ensure good returns? These questions are will be answered in our March 30 webinar. Please sign up on either schedule options below (a recording will be made available at later dates):
Investing In Chaotic Times
Remember : Uncertainties are normal
People feel vulnerable when they hear of wars and other natural or man-made calamaties. When the normal is disturbed and things inevitably change, we tend to become uncertain of the future. Let me dispel any myths here. The future has always been uncertain. It’s just when we’re in good times and prosperity, we tend not to think about it, we tend to think the future will continue like that. When we’re in tough times, we tend to think that those tough times have made the world uncertain and that we don’t know the future. When in reality, we’ve never known the future, it’s always been uncertain.
In the Western world, it’s becoming darker at a very accelerated pace. In recent years, governments has passed a lot of horrible laws that are totally against biblical principles. The long-term consequences of these sudden anti-God laws will have a massive impact on our society. Brace for it.
Remember : The same financial principles stands
When you are in chaotic environments, where people feel uncertain of their future, take heart… God’s principles remain the same. His word is still trustworthy, His promises are sure and relevant EVEN, or should I say MORESO, in uncertain times. We can, in fact learn a lot of fantastic principles in the Bible about this :
- Isaiah 40:8 – The grass withers, the flower fades, but the word of our God will stand forever.
- Matthew 5:18 – For truly, I say to you, until heaven and earth pass away, not an iota, not a dot, will pass from the Law until all is accomplished.
Can you still make money in this environment? Is it still possible?
- Extremely low interest rates around the world (depending on which country)
- Negative rate returns on cash and bonds
- Overvalued property and shares (expensive and risky)
God will be a wise guide
First, investments are cyclical. At any point in time, there are some investments that will do really well, while some investments will still do poorly. The key is intelligently knowing where to invest, when to go in and when to step out. My favorite investments are small businesses. If you want to make great wealth, it’s usually through small businesses that have grown and become big businesses. Study your environment and find small businesses that are consistently relevant to their customers. Is this a business that’s going to grow to a great business?
So what does the Bible say about investing? There are a couple of principles that I want to touch on. First is my favorite in Ecclesiastes 11:2 which says, “Invest in seven ventures, yes, in eight, because you do not know what disaster may come upon the line.” As you look around the world, you will certainly feel that natural and man-made disasters come too often. My home country of Australia is, as well as obviously around the world, prone to natural disasters.
Second, the Bible tells us to diversify. Don’t put all your eggs in one basket says the first one. In Luke 14:28, these are Jesus’ words. He says, “you got to plan,” he said, when they sit down to build a tower do they first count the cost? When you’re investing, have a plan and think it through. A great passage is found in 1 King 7:10 where he is talking about laying foundations and the foundations of this building were made out of marble and high-quality stone. And the point being is that you got to, third, invest in quality.
The fourth one, get advice. Proverbs says to get wisdom from many counsellors. You can talk to a professional financial advisor, someone like me, or you could talk to those who have had a genuine track record of investing money well. Avoid people that will only tell you the successes, and not they’re their losses.
And the fifth, investing requires patience. If you’re married, I’d encourage you to involve your spouse, even if they have no idea about money or aren’t interested – all the more reason to get them involved. God puts us with a spouse as a sounding board. And as someone who often will have a sixth sense about what’s going on. If they are a mature believer, they’ll be hearing from God.
How to manage your investments
Now, in tough times like this, one of the questions that get asked is, should you alter your existing investments? My initial resoponse is to inquire about your timeframe?
If someone is 65 and they go into retirement, there’s a sequence of risks: First is that you get very poor returns early on in your retirement. And second, it shaves off your saving funds down the track. So someone who’s at that age needs to probably take a little less risk than someone who is on their 25. If the share market crashes tomorrow, it doesn’t affect your life, your savings are there for the long term.
The way we manage money for clients is we put your money in “buckets”, you got a cash bucket, short term, medium-term and long term buckets. We invest the money in these buckets according to when you need the money back. Because at the end of the day, the goal of investing is making sure you get a reasonable rate of return. But it’s also making sure you have the money there when you need it.
Say no to fear
Do not allow fear to rule your financial decisions. Treat investing as a long term activity. Don’t be tossed around by what you see in the media – so much is hyped up, and is often untrue. Do not let fear drive your decision making or you’ll cloud your thinking. The devil wants us to live in fear. As a Christian, we should be focusing on what God is doing, not what the devil is doing. Look forward in faith, and trust God that He’s going to provide for us, irrespective of what goes on around the world.