Our Lord gives us this teaching about the reckless acquisition of wealth in Matthew 6:19–21.

Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also. (ESV)

Indeed, a hard look at where we spend our money is a fine way of taking our spiritual temperature. So when—for some reason—I polled my Twitter followers to ask whether I should write about how I invest (and I meant that in a non-metaphorical, financial sense), I signed up for a bit of a public balancing act. Few of us would take a passage like Matthew 6:19–21, conclude that any acquisition of wealth is wrong, and hastily join the Bruderhof. We moreover would not tell believers that they shouldn’t buy life insurance because “trust God.” At the same time, the scriptural warning against trusting in riches is difficult for any one of us in the “first world” to hear and heed well.

Experts often warn individual investors about bad behavior that negatively affects our investment returns. Many will say that we should “stay the course” in the good and bad despite the gut feelings of despair we may sometimes feel when we see market downturns. Too much giving in to a perceived need to sell in bad times and buy in good times will wreak havoc upon an investor’s overall return. As believers, we should also understand that what the secular world calls “investor psychology” or “behavioral economics” should be examined in light of what the Bible teaches about sin nature.

Is All of This Just Gambling?

Based on a John MacArthur sermon, Grace to You lists these five reasons why gambling is sinful:

1. Because it denies the reality of God’s sovereignty (by affirming the existence of luck or chance)
2. Because it is built on irresponsible stewardship (tempting people to throw away their money)
3. Because it erodes a biblical work ethic (by demeaning and displacing hard work as the proper means for one’s livelihood)
4. Because it is driven by the sin of covetousness (tempting people to give in to their greed)
5. Because it is built on the exploitation of others (often taking advantage of poor people who think they can gain instant wealth)

Financial investment, considered apart from the hearts of the people who participate in it, largely is not gambling. However, our personal decisions to invest may indeed be based on affirming the existence of luck, denying God’s sovereignty, our dissatisfaction with the level of provision God has provided us, and/or our false belief that being financially rich later in life will make us happy and fulfilled.

Many of you may glance at financial news sources—such as CNBC or Bloomberg—and justifiably have a gut feeling that much of it looks like a legitimized gambling casino. Especially in the case of “day trading,” there is much truth to this perception in the hearts of its participants. Many of us believers, therefore, run from the prospect of opening a brokerage account and betting (cough!) on individual stock picks. For believers, we may even perceive that individual stock picking is not only practically similar to casino gambling but may even involve the very same personal sins.

Rightly seeking to run from the financial and spiritual risks of individual stock picking, we may go running to mutual funds. Even in mutual funds, however, some of the same risks remain. For example, how do you go about deciding in which mutual funds to invest? We then may end up “performance chasing” based on a fund’s recent high performance, the popularity of a high-flying fund manager, or the recommendation of a sit-down financial advisor who is being paid a commission to sell you particular products that may or may not meet your needs well.

When is Financial Investment “Gambling”?

I believe we can argue soundly that financial investment is not gambling when at least these conditions are met.

1. Most importantly, our hearts are clean. We are satisfied with God’s provision in our lives. We are seeking to invest not because we want to hoard and “get rich” but because we wish to be good stewards of what God has provided, not to become a burden upon others, and to help relieve others’ burdens.
2. We have a reasonable expectation that our investments will return a profit. In other words, our investment choices reflect our desire to soundly steward what God has provided us. For example, if we reasonably believe that the U.S. Government will be around in ten years when it’s time for them to pay up on a 2.70% 10-year Treasury bond, then it’s extraordinarily difficult to call this “gambling.” If we invest in the broad stock market with a reasonable expectation that we will receive a return when we expect to sell the investment decades in the future — even when the market will experience many significant dips over time — this also is difficult to characterize as gambling.

If we broaden our thinking in light of these two points, we may realize that we make these kinds of decisions quite regularly. We might weigh which job offer to take based on salary, working hours, and the financial strength of the company. A car buying decision includes price, affordability, resale value (obviously a loss but still considering the degree thereof), and how well it protects our children in a mishap. Moreover, our discretionary investments may not only be stocks and bonds but also such things as local businesses and rental properties, each of which involves levels of risk and expected return.

Passive vs. Active Investing

To make a long disclaimer short, using a particular investment strategy to fight the sins of greed and anxiety is perhaps akin to fighting Internet-based adultery with filter software. Neither a web filter nor an investment strategy will refine the sinner’s heart. What I offer in the following is not a method of biblical sanctification but rather what I personally find has been helpful in terms of sound stewardship and avoidance of financial anxiety.

Virtually all of us do have a passing awareness of major market indices such as the Dow Jones Industrial Average and the S&P 500. These indices aren’t lists of “hot stocks” but rather are mathematically designed to reflect the overall condition of the stock market. So if you do feel like stock market investing is the right thing for you, you might consider a stock market index fund. You can’t approach Standard & Poor’s (“S&P”) and just ask to invest in the S&P 500, but you can approach a mutual fund company and ask to invest in an S&P 500 index fund. By definition, an index fund is not trying to make bets on performance but simply buys the stocks in an index to track the index’s performance. And by virtue of owning every stock in an index, it’s already diversified against the risk of individual companies falling off the cliff.

While index funds certainly don’t take risk out — obviously because the market as a whole can still go down — they do remove the aspect of picking individual winners and losers. Additionally, they also generally charge much lower fees and most often do outperform actively managed mutual funds. The importance of low fees is easy to miss. If you understand why Albert Einstein called compound interest the eighth wonder of the world, consider how a seemingly small difference in a percentage fee over time could have compounded. For example, a $10,000 investment making 10% interest over 40 years becomes $452,592.56. If you subtract a 1% fee annually from that (therefore 9% interest), the final value is $314,094.20. In this scenario, a fund that performing equally to the market but charges “only” a one-percent fee results in an opportunity cost of about $138,500. One percent over the course of time does not equal one percent in the end.

Taking Away (Some) Fear

If you’re a “common” American, and you’re actually selling securities in fear of today’s market losses, you need to learn (1) not to invest by emotion, and (2) to have an asset allocation that’s appropriate to your risk tolerance. #bogleheads

— Garrett O’Hara (@mokaThought) February 5, 2018

At a minimum, risk tolerance has at least a couple of aspects to it. The first is arguably more objective: when do you actually expect to use this money? As such a time approaches, it is necessary to move investments into safer vehicles than stocks, which can go up and down in value very quickly. Take my college situation, for example. I was to enter college in August of 2003. My parents obviously knew this date well, and my financial advisor (whom I later fired) at least should have known. Instead of transitioning my college savings from a high-risk, actively managed stock fund to safer investments as my entry into college approached, he kept my account 100% invested in stocks.  From its high just over four years before I was to enter college, my mutual fund lost 45% of its value. Oops. In the same period of time, the S&P 500 lost 25.5%, which was probably too much as well.

The second aspect has much more to do with one’s personality. When you see financial downturns in the news, how likely are you to log into your account and fearfully pull the investment out? Selling investments in fear of a downturn is generally deleterious to its long-term benefit. In short, we need to be invested in such a way that a downturn isn’t going to cause us to act upon fear, whether that fear is merely one’s head math or something darker from our sin natures.

There are several ways to do this, but I’ll tell you my own personal strategy: “age in bonds.” Better explained, I’m 33 years old—despite looking like I’m 24—so my investment target is 67% stocks and 33% bonds. Bond investments (think those savings bonds your grandma used to purchase for every new grandbaby if you must) can be purchased most easily through a bond market index fund just like you would a stock market index fund. They’re much more stable in value than stocks, and in the long run, they will make more than just shifting things into a bank savings account. When I turn 34, I’ll log into my investment accounts and rebalance everything to 66/34. When I turn 35, I’ll rebalance it to 65/35. When I retire — suppose that’s age 70 — it should be 30% stocks, 70% bonds. A sudden market downturn in old age won’t kill the plan or cause us to deviate and make poor decisions. John C. Bogle, the founder of Vanguard Group and inventor of the index fund, has gone so far as to say not to bother looking at one’s investments more than once a year. I happen to do it twice in most cases: on my birth month and six months later. The most recent downturn in the market led me to peek and see if my allocations were still on target, and they actually didn’t require any adjusting.

Financially, many would consider this strategy “too safe” and advise more aggression, e.g. “age minus ten in bonds.” They might be right mathematically, but I’ll give you a couple reasons why we do it this way. Practically, it makes both my spouse and me feel safe in market downturns. If a market crash cuts stocks in half, we will have lost a smaller portion of what we’ve saved. Secondly, accounting for our sin natures,  we’re not chasing the absolute maximum performance we could otherwise get out of what we currently have invested. If we see between what we have invested, what we expect to add, and how we expect the investment to perform that we will have enough to live comfortably and not be a burden on others, why add more risk? The point isn’t to become “filthy rich.” We can’t take it with us.

Be Rich Towards God!

Someone in the crowd said to him, “Teacher, tell my brother to divide the inheritance with me.” But he said to him, “Man, who made me a judge or arbitrator over you?” And he said to them, “Take care, and be on your guard against all covetousness, for one’s life does not consist in the abundance of his possessions.”

And he told them a parable, saying, “The land of a rich man produced plentifully, and he thought to himself, ‘What shall I do, for I have nowhere to store my crops?’ And he said, ‘I will do this: I will tear down my barns and build larger ones, and there I will store all my grain and my goods. And I will say to my soul, “Soul, you have ample goods laid up for many years; relax, eat, drink, be merry.”’ But God said to him, ‘Fool! This night your soul is required of you, and the things you have prepared, whose will they be?’ So is the one who lays up treasure for himself and is not rich toward God.”

And he said to his disciples, “Therefore I tell you, do not be anxious about your life, what you will eat, nor about your body, what you will put on. For life is more than food, and the body more than clothing. Consider the ravens: they neither sow nor reap, they have neither storehouse nor barn, and yet God feeds them. Of how much more value are you than the birds! And which of you by being anxious can add a single hour to his span of life? If then you are not able to do as small a thing as that, why are you anxious about the rest? Consider the lilies, how they grow: they neither toil nor spin, yet I tell you, even Solomon in all his glory was not arrayed like one of these. But if God so clothes the grass, which is alive in the field today, and tomorrow is thrown into the oven, how much more will he clothe you, O you of little faith! And do not seek what you are to eat and what you are to drink, nor be worried. For all the nations of the world seek after these things, and your Father knows that you need them. Instead, seek his kingdom, and these things will be added to you.

“Fear not, little flock, for it is your Father’s good pleasure to give you the kingdom. Sell your possessions, and give to the needy. Provide yourselves with moneybags that do not grow old, with a treasure in the heavens that does not fail, where no thief approaches and no moth destroys. For where your treasure is, there will your heart be also. (ESV)

Our Lord’s instruction from Matthew 12 is clear that we must not place our spiritual trust even in a mathematically sound investment strategy. Truly, our investment into heaven is the best investment, and neither a market downturn nor sound investment strategy can change that. Please don’t read this post as an encouragement to hoard riches to the detriment of your charity or of your soul.

Moreover, you should not take this as advice for any particular situation such as your own, as every situation is different. I am not your professional personal financial advisor; you definitely should not sue me, anyone at Things Above Us, and—in most cases—anyone in general for your own poor investment decisions.

In Memoriam

Between this article’s writing and initial publication, index fund creator John C. Bogle passed away aged 89. Thank you, Jack, for all you’ve done.

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