Mutual Funds Explained
Solomon’s investment advice was to diversify. He said: Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.
Mutual funds provide diversification. With a small amount of money, investors can own shares of hundreds of stocks or bonds because mutual funds pool money from lots of small investors. Professional advisors invest the money in large portfolios with many securities.
Like stocks, there are risky funds with high yields and safer funds with lower yields. But your money is not protected in a mutual fund! So, before you invest you need to fund an emergency savings account with a minimum of $1,000 and preferably 3 to 6 months of living expenses.
Although some people invest short-term for specific reasons, like accumulating funds for the down payment on a home, others find success in patient, long-term growth.
Before you invest:
- Determine your short and long-term goals.
- Do your homework. Never invest in anything you do not understand. Investing is for the wise, not the foolish speculator.
- Seek no-load funds with consistent management. These are funds without sale or commission fees.
- Avoid those supporting anti-Christian work.
My friend, Rusty Leonard, at Stewardship Partners calls that ‘Biblically Responsible Investing’. He believes that as the Lord’s servants, we’re called to steward what God’s provided and reflect a Biblical worldview in all of our daily life.
We’re to walk and invest in a manner worthy of the Lord. It’s our responsibility to know the “moral fabric” of the companies in which we invest.
May we be wise investors with an eternal perspective – seeking first His kingdom and His righteousness!
Crown’s staff is here to offer you encouragement and prayer as you face your financial challenges. Call the Crown Help Line at 800 722-1976 or for free resources visit Crown.org