048: Biblical Investing—The Benefits of Diversification

King Solomon is known for being the wisest person who ever lived. The fame of his wisdom spread across the known world. That's no small feat considering how slow information travelled without the internet!

In 1 Kings 9 and 10 we read that King Solomon had a navy and "shipmen that knew the sea." What comes to your mind when you read, “a navy of ships?” For me, I start hearing “Anchors Aweigh” in my head, along with images of battleships of all sizes. Go Navy!

 

In This Episode, We Look At:

Solomon taught reducing risk through diversification

This background helps us understand the practical application of Ecclesiastes 11:1-2 

"Cast thy bread upon the waters: for thou shalt find it after many days. Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth."

Increase expected growth

There are investment categories that have a higher expected rate of return than individual stocks.

Diversification in the stock market today

Owning investment categories with dissimilar price movements.

Hypothetically, when Investment A moves down, Investment B is likely to go up or stay level.

Global diversification

There are many countries, in addition to the good old United States (about 44 of them), that have free markets and publicly traded companies which produce goods or services. A country is said to have a Free Market when there is: Rule of Law, Property Rights, and Patent Protection.

Fixed income provides a "cushion" from the volatility of the markets

For example: Short-term Bond Funds and Intermediate Bond Funds

 

Today's Resources and Links:

Morningstar

A Random Walk Down Wall Street by Burton Malkiel

 

One Thing You Can Do Today to Improve Your Faith and Finances:

Look closely at your investment plan's list of investment choices to identify funds that are not closely related to each other. Diversify your portfolio by contrasting Large and Small, U.S. and International, and Bond Funds.

 

What Are Your Thoughts?

If you have a question or comment about today's topic, we invite you to share your thoughts.

King Solomon is known for being the wisest person who ever lived. The fame of his wisdom spread across the known world. That's no small feat considering how slow information travelled without the internet!

In 1 Kings 9 and 10 we read that King Solomon had a navy and "shipmen that knew the sea." What comes to your mind when you read, “a navy of ships?” For me, I start hearing “Anchors Aweigh” in my head, along with images of battleships of all sizes. Go Navy!

 

In This Episode, We Look At:

Solomon taught reducing risk through diversification

This background helps us understand the practical application of Ecclesiastes 11:1-2 

"Cast thy bread upon the waters: for thou shalt find it after many days. Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth."

Increase expected growth

There are investment categories that have a higher expected rate of return than individual stocks.

Diversification in the stock market today

Owning investment categories with dissimilar price movements.

Hypothetically, when Investment A moves down, Investment B is likely to go up or stay level.

Global diversification

There are many countries, in addition to the good old United States (about 44 of them), that have free markets and publicly traded companies which produce goods or services. A country is said to have a Free Market when there is: Rule of Law, Property Rights, and Patent Protection.

Fixed income provides a "cushion" from the volatility of the markets

For example: Short-term Bond Funds and Intermediate Bond Funds

 

Today's Resources and Links:

Morningstar

A Random Walk Down Wall Street by Burton Malkiel

 

One Thing You Can Do Today to Improve Your Faith and Finances:

Look closely at your investment plan's list of investment choices to identify funds that are not closely related to each other. Diversify your portfolio by contrasting Large and Small, U.S. and International, and Bond Funds.

 

What Are Your Thoughts?

If you have a question or comment about today's topic, we invite you to share your thoughts.