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What Does the Bible Say About Diversifying Your Investments?

Excerpt from The WorryFree Retirement® Episode 195

“Now, what the financial world has always said, oh, yeah, you diversify that within your 401(k) plan. Well, that’s not really a diversification, folks. That’s just putting it in several different funds.
But in most cases, let’s say you’re in maybe a 20-30 fund, a target fund or something, in a 401(k). Well, pretty much most of that money is in the market. So if the market goes down, you’re not really diversified. You’re going to lose money. That’s not what we mean.

Diversification, in my view, means you are putting your assets, your time, your money, your talents into totally different things that are kind of unrelated to one another. If something happens over here, it doesn’t negatively affect something over there. That’s what true diversification is.
And the Bible speaks to this very clearly. One of my favorite books on money in the Bible is Ecclesiastes. So let’s turn there. Let’s go to 11:01, Ecclesiastes 11:01. First of all, it says, “Cast your bread–” Of course, bread, that’s what you’re going to eat, right? “Cast your bread upon the waters, for you will find it after many days.”

Now let’s stop there for a minute. This is a true symbolism of faith. I mean, when you think about it, why would you take bread– that’s your sustenance, right? You have to have bread to live on– and throw it out in the water. Obviously, water would soak it up and draw it away. You’d lose it, you would think. And now what it’s saying is, no, you won’t. The bread will come back.

So by faith, we work hard. And in this case, what I’m translating this to mean is we invest it. We put it somewhere. We have faith that what we’re doing makes sense.
This is why it’s so critical that you’d need to know yourself. Are you a saver, investor, or a speculator? If you don’t know yourself, and you’re blindly throwing money all over the place, you could be having the best intentions and so could your advisor, but that’s probably why you’re all stressed and worried. You’ve got it invested maybe in too risky a place. Or maybe it’s not diversified. But you don’t know how to gauge that, so there you are.

Now let’s go to the important part. The second part of this says, “Give a serving to seven, and also to eight. For you do not know what evil will be on the earth.” Same concept.

You’re not putting your serving, you’re not putting your money, or in this case your assets, into one investment or into one area because something could happen to that one area. It would be like, can you imagine you had all of the money in the world invested in just one stock? Now granted, it might do really well. But you remember Enron? Can you imagine? And you lost all your money? It’s like, well, who would have ever known, right?

So this means that it is very, very crucial, and there is much wisdom involved in this, in intentionally spreading this money out or diversifying it. Well, how about you? Maybe you’re sitting there feeling like, Tony, I don’t really understand diversification. I didn’t realize you all offer this many services and this many different products, and that you could help me in the retirement income world.”