It may be of help to you to know the pathway the LORD directed me up years ago after I asked Him to help me become a good steward of the money He entrusts to me. I planned to become debt-free using the help of a monthly budget. It helped me see where I was to control spending to ensure I quickly set aside about $1,000 as an emergency fund. After all non-mortgage debt was paid off several years later, I upped the emergency fund to about $10,000, so I would not be in jeopardy of having to withdraw or borrow investment money and thus pay taxes, penalties, or other high fees when an emergency occurs. For simplicity sake early on and to the greatest extent possible, I invested via 401k, 403b, and Roth accounts. I focused on quickly getting my debt paid off so I could invest 10% of gross income after my emergency fund was in place and increased the percentage every year so in peak earning years my household was investing around 25% percent of gross income.
I asked trustworthy friends who used good money management skill about their experiences with particular advisors who help teach biblically correct principles that prospered others. I called state and federal securities agencies to ensure the advisors and investment companies were in good standing with no unsatisfied complaints against them. I made sure advisors were willing to teach me how to properly manage income and assets and not just sell investments. I quickly got the heck off the phone or out of the office if one immediately started touting and trying to get me to put money into high commission, high expense, so-called high growth guaranteed or virtually guaranteed investments.
I refused to write checks payable in the name of the individual advisor. I thoroughly analyzed the investments recommended and made checks out to the investment company / brokerage I found reputable whose investment I decided to buy. I required a copy of the clear written instructions concerning the investment transaction the advisor was to submit for me.
I invested solely in no load low expense stock index mutual funds, until I learned more about good stewardship, personal finance, and was able to identify advisors who truly help people over the long haul obtain consistently better investment growth than their peers. Such funds are diversified and I did not pay sales charges up front nor would I upon cashing out of the investments. Over time I spread the money out to seven or eight investment vehicles across various arenas (large cap, mid cap, small cap, international, REITS, etc.).
I selected those with low annual expense ratios and no 12b-1 fees. I considered low expenses to be an annual amount less than half of 1% of the investment amount. I was able to find funds that charged far less via Vanguard, Fidelity, Charles Schwab, and a few other investment companies. I understood upfront commissions would start my investment account with less money than I would write the check for. For example, a 5% load (sales charge) would turn a $1000 investment into $950 right off the bat. I thus would not get investment growth off my entire $1,000.
High expenses would eat into investment returns so I would pay more in annual expenses and over many years the compound effect of such fees would be staggering in terms of investment growth I would not receive – in the hundreds of thousands of dollars. Also, the vast majority of mutual funds that charge commissions and high expenses were not earning more than no load low expense stock index mutual funds on a regular basis. This does not mean that a few won’t, however a novice investor is usually not able to tell which actively managed loaded high expense funds might beat no load low expense funds most years without undue risk of great loss.
In the midst of this lifelong investment process, I still continually ask the LORD to help me appropriately manage income and assets and take action to tithe and give abundantly to my local Church and other ministries that truly honor His will. Thus, my life and financial priority always unquestionably remain Him and the spreading of the gospel so many others can know about the pathway through Jesus Christ to be saved and inherit eternal life while maintaining a position to prosper on earth.
Please pray for this ministry and email me with any questions. May the LORD bless you richly as you follow His plan!
Proverbs 21:20, Ecclesiastes 11:1-2, Matthew 25:14-30, Luke 19:11-27
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