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When it comes to investing, there are 6 rules that will help guide you as you plan for the future. Here are 6 rules for investing:


1. Invest conservatively within different asset classes

Investing is not gambling. Those who approach the stock market as a way of “playing the odds” or Las Vegas style gaming are not investing (see episode on WallStreetBets). It’s not a get rich quick scheme. Yes, you can make incredible gains over short periods of time if you take very high levels of risk. Is the return worth the risk of loss?

Investing done properly, is a get rich slow kind of program. All investing has risk. It is the risk that makes growth possible. The question is not avoiding risk but how to take on the right amount of risk to reach your goals while not jeopardizing your nest egg. 

Here are a few things that prudent investors do to manage risk.

  • Diversify – they don’t put all their eggs into one basket, company, or fund. Diversification does not eliminate risk but it does help to reduce the amount of risk to which one is exposed. 

Side Note: Diversification can be overdone. If you only have a small amount of money to invest (i.e. under $25,000) using 25 different funds may be overkill.

Some like to diversify their advisors. On one level, this is understandable. However, if you are working with someone who provides comprehensive wealth management, diversifying between advisors may reduce the potential benefit that comprehensive planning can provide. 

  • Asset Allocate – This is another way of adding diversification. Rather than just owning one type of assets (i.e. large US stocks), asset allocation would seek to hold large, mid, small cap stocks. They will look to add growth companies and value companies. They would seek to invest in both the USA and internationally. They may use both stocks and bonds…
  • Check your timeframe – If you have a year or two before you need the money, you should not be investing it in the market. The sooner you need the money, the less risk you should be taking. 

Ecclesiastes 11:2 says, “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.” (ESV)


2. Look for a 10 year track record of the fund manager, not just the fund. 

Avoid investing in the “latest and greatest” investing gizmo or strategy. Just because it’s new doesn’t mean that it is safe, prudent, or wise to invest. When a new fund comes out, we tend to hold off on investing until it has some track record of success under its belt.  

Another factor is to consider the experience and track record of the fund manager, not just the fund. You could have a fund with a great and long track record but with a completely new manager calling the shots. We also like to see that the fund manager has experience and success. Admittedly, this is harder to determine than other metrics. We often look at independent, third-party research to gauge this point. (see point 6)

1 Timothy 3:6 (ESV) says, “He must not be a recent convert, or he may become puffed up with conceit and fall into the condemnation of the devil.” There is wisdom with age/experience.


3. Reduce or avoid investing in “sin stocks.”

As we discussed in episodes 35 & 36, it is possible to invest in such a way as to minimize and avoid investing in companies which profit from an anti-Christian worldview. These companies produce or profit from tobacco, alcohol, gaming, pornography, and abortion.  

  • Proverbs 16:8 (ESV) – “Better is a little with righteousness than great revenues with injustice.”
  • Prov. 3:7 (ESV) – Be not wise in your own eyes; fear the Lord, and turn away from evil.”
  • Ephesians 5:11 (ESV) – “Take no part in the unfruitful works of darkness, but instead expose them”


4. Keep it simple!

Remember the KISS principle. “Keep It Simple Stupid.” Any investment strategy or technique that is overly complicated and not understood by the investor should be avoided. Complexity does not mean gains or profits. Don’t be intimidated into making investment moves. Take your time and understand the process. If your advisor doesn’t have the heart of a teacher… run!

Think of your spouse. Don’t invest in something that they would not be comfortable handling once you’re gone. For this reason, working with an advisor who can teach and explain is essential. 


5. Minimize or avoid surrender and redemption fees

Did you know that, generally speaking, the longer your money is tied up in an investment, the higher the commission for the salesman… the higher the redemption fee, the higher the commission.  

At what point does the recommendation go from being in your best interest to being the best financial move for the sales rep? Annuities are notorious for having high redemption penalties and surrender fees. Commissions can be 5% to 10% or more and surrender periods can last from 7 to 20 years.

Keep your money liquid so that you can change your mind if you want to. Working with a fee-based advisor can help because they have to keep you happy or you will move. Compensation is tied to your success. 


6. Use independent, third-party research.

Don’t believe the pitch just because you’ve seen slick marketing pieces. Use sites like and others to get unbiased analysis of a given investment.

 Proverbs 11:14 (ESV) – Where there is no guidance, a people falls, but in an abundance of counselors there is safety.”

“If it sounds too good to be true, it probably is. If it sounds too horrible to be true, it probably is.” 



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The topics discussed in this podcast are for general information only and are not intended to provide specific investment advice or recommendations.  Investing and investment strategies involve risk including the potential loss of principal. Past performance is not a guarantee of future results.

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