Those are wise words, especially when it comes to investing. These days, we have several ways to invest our money, but each requires a certain amount of oversight. We’ll talk through your options today on Faith and Finance.
Those are wise words, especially when it comes to investing. These days, we have several ways to invest our money, but each requires a certain amount of oversight. We’ll talk through your options today on Faith and Finance.
“Know well the condition of your flocks … and pay attention to your herds. For riches are not forever … nor does a crown endure to all generations.” (Proverbs 27:23-24)
Today our flocks and herds are likely to be stocks and bonds. And you certainly do need to pay attention to them no matter which method of investing you choose, and we’ll go over three of them.
THREE METHODS FOR WATCHING YOUR INVESTMENTS
1.Do it yourself: This approach is sometimes called “self-directed” investing. Why would you choose this method? Most likely because you don’t like the idea of paying fees to someone else to manage your investments.
And of course, if you choose to go it alone, you really have to stay on top of things. That doesn’t mean you watch the market every day and decide to buy or sell at the drop of a hat. No matter which style of investing you choose— it must be for the long run.
So, here’s the key to a successful D-I-Y approach: You have to keep your emotions in check no matter what the market is doing. These days, technology allows you to make a trade with the push of a button, but you still have to stay disciplined and stick to a long-range investment plan.
And even though you’re taking active control of your investments, you can still put your money into mutual, index, or target date funds that lower your risk and reduce or eliminate the need for frequent trading.
The greatest danger in self-directing your investments is that you’ll fall victim to market swings, selling out of fear when the market takes a tumble, or buying out of greed when the market is hot. You have to keep your emotions in check and stay the course.
Let’s move on to investing method number two.
2. Robo-advisors: A robo-advisor is sophisticated software, and they’re now offered by most of the big online brokerage houses, like Fidelity and Vanguard.
So, how do robo-advisors work? You input some basic information, such as your age and retirement goals. The robo-advisor then recommends a diversified portfolio tailored to your needs — with an emphasis on low-cost exchange-traded funds and bonds.
The benefit is that you get pre-packaged investing advice tailored to your needs but at a much lower cost than from a human. For an annual fee of around 0.25%, the robo-advisor will automatically rebalance and diversify your portfolio as needed.
We’ve talked about managing your investments yourself or getting a robo-advisor. Here’s your third option:
3. Hire a financial advisor: This would be for folks who want more than just investing advice. As the name implies, a financial advisor can assist you in all areas of your finances, from investing to tax strategies and estate planning.
Financial advisors come with various specialties, but for the widest range of assistance, you probably want to go with a Certified Financial Planner. They have a fiduciary responsibility to give you advice that’s best for you, even if it doesn’t make them the most money.
And of course, no matter what type of financial advisor you need, you can find one that shares your Christian worldview and values by choosing a Certified Kingdom Advisor.
Now, going with a financial advisor will cost more than the other methods we’ve talked about, but there are two major benefits with this approach.
First, it might actually be the most cost-effective method. How can that be if it’s more expensive? Because the advice you receive will likely more than pay for itself in increased gains and reduced taxes. So it’s not really accurate to say hiring a financial advisor will “cost you more,” because it probably won’t.
Second, going it alone or hiring a robo-advisor won’t get you the personalized service you receive from a financial advisor, especially from one with the Certified Kingdom Advisor designation.
That person will take your specific circumstances and needs into account, and very often become a trusted friend to help you through all of your financial decision-making. We think that’s “worth its weight in gold” … pun intended.
On this program, Rob also answers listener questions:
Is there a way to reduce the interest rates on your student loans to pay them off faster?
When does it make sense to buy an investment property?
When is it a good time to start a business financially?
Remember, you can call in to ask your questions most days at (800) 525-7000. Also, visit our website at FaithFi.com where you can join the FaithFi Community, and give as we expand our outreach.
