Read an Excerpt
The Eternity Portfolio
By Alan Gotthardt
Tyndale House Publishers, Inc.Copyright © 2003 The Strategic Life Initiative, Inc.
All right reserved.
Chapter OneFaithful Managers: Investing with Their Values
In This Chapter:
* The truth about investing
* How the faithful manager invests
* God's two purposes for money
* The investing equation
THE TRUTH ABOUT INVESTING
People often miss the point of investing money. After years of working with some of the wealthiest people in the world as a financial advisor, I have found that there are several common misconceptions. Some think of investing as a game to be won. Others see it as a goal in and of itself-to "be a successful investor." Most think of investing as a way to accumulate as much money as possible during their lifetime. Then there are a few who understand the real but hidden truth about investing-it is a means to an end.
Investing money is the process of committing resources in a strategic way to accomplish a specific objective. If done properly, investing will take you from where you are to where you want to go. In the financial-planning business we think of investing in terms of a person's overall financial strategy (see chart on page 2). For optimal results, each part of your financial situation should be considered in light of the whole. Investing is simply a component of the financial strategy that you must integrate with your entire plan to be effective.
Several years ago I was designing a portfolio for a newly widowed
client who was in a unique situation. Most of Mrs. Brown's assets were in a trust that paid her the income generated each year. Since her husband's pension covered all of her modest living expenses, Mrs. Brown wanted to give away all of the income generated from the trust assets. Not only that, she wanted to maximize the income generated each year to be able to give away as much as possible during her lifetime. Most people in a similar situation would want to minimize the current income and maximize the long-term growth of the trust for the benefit of children or grandchildren many years down the road. Needless to say, the portfolio we developed for Mrs. Brown was very different from what we would typically use. Success for her was measured in a radically different way. Her life plan guided the strategy and made an impact on how she would invest her finances.
INVESTING BEGINS WITH VALUES
Money has no intrinsic value, only relative value. Its worth is measured by the ability to exchange it for something of value to the owner. In this light, the man who has no money and no wants is in the same position as one who has all the money in the world but cannot buy what he wants. In both cases, money is irrelevant because it cannot accomplish its purpose.
The point? Investing is important only as a means of accumulating money to be exchanged for something of value to you.
Personal core values influence everything you do, and they should be the starting point for any investment plan. Your values represent who you are and what you consider important. Many influences shape and mold your core values, including family, friends, faith, and life experiences. These values define your life and should also be the basis for managing your finances. Your investment strategy will be truly effective only to the extent that it furthers your core values.
INVESTING IS ONLY MEANINGFUL IN TERMS OF YOUR VISION
Successful investing requires vision. You must be able to see at least a glimmer of the future rewards to understand that delayed gratification is worthwhile-that what is not spent on yourself today will be even more valuable in the years to come. When it comes to investing, vision is what turns a big spender into a big saver as retirement approaches. Vision is what enables a young couple to buy less and "eat in" more while putting aside funds for their child's college education. Vision motivates a person to give up now for the future. In a society that constantly tells us to spend and consume at a frantic pace, vision enables us to ignore the siren song of instant gratification and instead focus on the future.
But a vision of what? Rewards. What type of rewards? Those that are attractive based on your values. Values are transformed to vision as you begin to see the potential reward. Your vision encompasses the goals and objectives you have for living your core values, and it understands the payoff-the reward for achieving your objectives.
For example, love for family is one of my core values. I want to be around my children, be a positive influence on them, and do everything possible to ensure their well-being. Each day I grow in my understanding of what it takes to live out that core value. I have a clearer vision of the objectives that must be met to accomplish that. From a relational standpoint these might include eating dinner with my family each night of the week or reading Bible stories after dinner. From a financial standpoint these include such things as providing housing, food, and clothing. Saving for college educations and for retirement also become parts of the long-term vision. And I picture the rewards, such as a happy and successful family and the personal benefits of good relationships. Expectation of rewards brings vision for achieving them.
INVESTING IS A STRATEGIC PROCESS
As you become passionate about your vision, you develop the discipline for achieving it. As a person pursues the reward, he will make hard choices and sacrifices. Discipline is the vehicle that drives a vision to fulfillment. For example, when you're saving for retirement, discipline forces you to consider your spending patterns and invest a certain amount each month. Discipline requires a wise investment strategy that's focused on your long-term goals. It pushes you to monitor your plan and to make adjustments where needed. Discipline creates and sustains a good investment strategy. Shown as an equation, investing might look something like this:
Continuing our example from before, let's start with the core value of loving my family. Over the years my vision increases and I understand more about what it means to love them-in this example, by providing financially. As the rewards become clear, my desire to achieve the goal expands my vision. That vision brings with it the discipline to create, implement, and monitor a wise financial strategy for making it all happen.
Whether the objective is retirement, a new car, or a college education, this equation holds true. When it comes to investing, the clarity of your vision and the quality of your strategy determine the degree of your success. We'll come back to this equation throughout the book to help us remember the factors that add up to investment results.
HOW THE FAITHFUL MANAGER INVESTS
What does this mean for the Christian who desires to be a faithful manager of the resources God provides? The details will vary from person to person, but there are some common principles that form the foundation of an investment plan. The faithful manager wants to invest money with a clear vision and a quality strategy based on personal values. Equally important is the desire for the rewards of faithful management. Let's look at values, the first building block.
In talking to Christians over the years, I have found that faithful managers share a set of core beliefs related to their stewardship responsibilities:
1. God owns everything and controls the distribution of wealth.
In Psalm 24:1 we read, "The earth is the Lord's, and all its fullness, the world and those who dwell therein." God created everything and it all belongs to Him. Not only that, but He controls what happens to it. "Both riches and honor come from You, and You reign over all. In Your hand is power and might; in Your hand it is to make great and to give strength to all" (1 Chronicles 29:12).
A logical extension of this understanding is that God is in charge of providing everything we need. "Therefore do not worry, saying, 'What shall we eat?' or 'What shall we drink?' or 'What shall we wear?' ... For your heavenly Father knows that you need all these things. But seek first the kingdom of God and His righteousness, and all these things shall be added to you" (Matthew 6:31-33). In his commentary on these verses, Dr. John MacArthur discusses the contrast between people of faith and those who have no hope:
Those who have no hope in God naturally put their hope and expectations in things they can enjoy now. They have nothing to live for but the present, and their materialism is perfectly consistent with their religion. They have no God to supply their physical or their spiritual needs, their present or their eternal needs, so anything they get they must get for themselves. They are ignorant of God's supply and have no claim on it. No heavenly Father cares for them, so there is reason to worry.
How different should our outlook as Christians be? Although we are to be obedient and work diligently, we know that God is ultimately in control of all the financial resources that come our way.
2. We must all give an account of our stewardship.
We are told in Ecclesiastes 12:14 that "God will bring every work into judgment, including every secret thing, whether good or evil." We know that salvation and eternal life are granted based on our faith in Jesus Christ. However, the works we do in His service will be judged on their merits and will be rewarded accordingly. "For we must all appear before the judgment seat of Christ, that each one may receive the things done in the body, according to what he has done, whether good or bad" (2 Corinthians 5:10).
In this passage, Paul was talking about a "judgment seat" that is similar to a legal bench in a modern-day courtroom. The one major difference will be the judge. Unlike an earthly judge, the One to whom we must give account already knows everything we have or haven't done, and He will judge our motives as well as our actions. Maybe this is why when the reformer Martin Luther thought about the Judgment he said that there were only two days on his calendar: today and that day.
As Americans, most of us have been blessed with far more than the vast majority of all the people who have ever lived. We may find it hard to believe this because we know plenty of people who have more or earn more than we do. The fact remains that when compared to the condition of most people around the world, even lower-income Americans are considered wealthy. And, in the words of Erwin Lutzer, "We will be judged on the basis of our loyalty to Christ with the time, talents, and treasures that were at our disposal" (emphasis added).
Most importantly, our Lord Jesus makes an observation about where we will stand in the judgment: "From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked" (Luke 12:48, NIV).
The coming judgment motivates us to seek God's will for every aspect of our life, including our finances. Page after page in Scripture echoes this theme of accountability.
3. Time is short; eternity is long.
Understanding the brevity of time is a hallmark of the faithful manager. "Do not boast about tomorrow, for you do not know what a day may bring forth" (Proverbs 27:1). If you are not guaranteed tomorrow, the only way to live is for today.
Planning is not wrong; on the contrary, faithfulness requires that we use God-given wisdom to prepare for the future. However, the faithful manager is not fooled into thinking he will work and save and strive for that magical day in the future when he can finally focus on God's purpose in his life. He sees the danger in putting off the responsibility to live for Christ now. The life abandoned to God's purpose, the life of no regrets, can only be lived with the view that each day could be our last on earth. Eternity stretches out before us.
4. The pursuit of material riches is not a valid goal in and of itself.
There is nothing wrong with having money. The Bible is full of godly men and women who were wealthy, including Abraham and Job. The question is one of purpose. Money can be spent in many ways for our personal benefit. It can buy a certain lifestyle, new houses and cars, and vacations. Eventually, however, the question becomes, "Now what?" The richest man who ever lived, Solomon, said it best:
I denied myself nothing my eyes desired; I refused my heart no pleasure. My heart took delight in all my work, and this was the reward for all my labor. Yet when I surveyed all that my hands had done and what I had toiled to achieve, everything was meaningless, a chasing after the wind; nothing was gained under the sun.
Ecclesiastes 2:10-11, NIV
God has gifted some people with the ability to generate money. They have become wealthy by His grace and providence. The question for them becomes, "What should I do now with His resources?" John Galsworthy puts it this way: "Wealth is a means to an end, not the end itself. As a synonym for health and happiness, it has had a fair trial and failed dismally." One of life's greatest ironies is that many people spend their entire lives chasing after wealth only to find that most of the truly rewarding things in life have very little to do with money. The wealthy learn this by experience. Those who are the happiest find purpose in their work, helping others, or some other meaningful activity.
Rich or poor, the faithful manager looks to God as the owner and master, and looks to money as a means to accomplish His eternal purposes.
5. God has two objectives for money.
Scripture is an invaluable reference tool for the faithful manager since he or she wants to know as much as possible about God's plan for money. (A full discussion of all the verses on finance in the Bible is beyond the scope of this book. See Appendix D for information on some of the many good books written on the topic and visit www.GenerousGiving.org/Bible for a more complete listing of Scripture verses.) While there is more in the Bible on money and material possessions than almost any other topic, it can all be boiled down to two priorities: invest in family and invest in others. That's it. Care for your family and help others.
We have now reviewed some of the values shared by faithful managers: All wealth belongs to God, we are accountable for how we use it, time is short, pursuit of riches is not a valid goal, and God wants us to invest in family and others.
Remember, in our investing equation values are translated into vision based on a desire for rewards.
Excerpted from The Eternity Portfolio by Alan Gotthardt Copyright ©2003 by The Strategic Life Initiative, Inc.. Excerpted by permission.
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