Due to a recessionary economy or bear market that usually occur once every ten or fifteen years but only last an average of eighteen months it seems many people suffer great personal financial and business loss and many are forced into foreclosure and bankruptcy. These economic situations bring high unemployment and loss of income where all of a sudden they have more in monthly debt payments than their monthly income can handle. Many people, if they have investments, have a heavy concentration of assets in one company or one sector of the market and usually in a faddish one whose value has long ago risen to astronomical levels before they purchased the stock or business. Then, the value fell precipitously when the bad market reared its head. All of sudden the assets they thought would protect them are not enough to cover the debt payments they owe.
Poor stewardship practices that result in people experiencing a downward financial spiral are failure to:
• Refuse to use debt.
• Establish a budget to intimately know income and appropriately manage expenses.
• Eliminate debt during past rising economies and bull markets when they had increased revenue and income.
• Quickly reduce unnecessary expenses when they see signs of economic trouble.
• Build an emergency fund in high yield savings accounts at banks or credit unions in order to take care of their expenses in emergency situations.
• Put at least 10% of gross monthly income in investments they understand and know the long-term history of.
• Diversify assets by putting portions in different classes of investment with seven or eight brokerage houses (Vanguard, Fidelity, TIAA-CREF, TD Ameritrade, etc.).
• Understand that getting more debt will not help them alleviate financial problems.
Increasing financial education will help you understand that more debt does not lead to debt elimination rather it leads to debt accumulation. It also helps you find equity investments that have a history of solid long-term growth so you can choose them for your diversified portfolio and control emotions to maintain your investments when there are short term market gyrations. Most people do not reap huge long-term growth because they constantly buy investments at high prices and sell them at low prices. Your long-term conservative yet moderately risky plan will cause you to buy investments at low prices and sell them at higher prices. It will help you avoid speculative investments and business deals that would become worthless before you could sell them or get your money back.
Short-term losses in the equity market will occur for even the most astute investors. However, they quickly subside and the market roars back to a point much higher than it was before it went down. In addition, recessionary economies and bear markets do not negatively affect every business and type of investment. There are always some that thrive when others experiences losses. Thus, you have the ability to overcome losses and experience tremendous growth when you engage the biblically based discipline of good stewardship.
Please pray for this ministry and email any questions. May God bless you richly as you follow His plan!
Deuteronomy 28:12, Ecclesiastes 11:1-2, Acts 6:3, Romans 13:8
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