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Ask Chuck: What to Know Before Investing

by Chuck Bentley August 21, 2020

Dear Chuck,

I’m trying to teach my children/grandchildren some basic financial principles. Any tips I could pass on in regards to investing?

Motivated Grandmother 


Dear Motivated Grandmother, 

What a blessing for your family that you want to help them get better with their finances. It will not only help them for the here and now, but also prepare them for that day when their stewardship will be evaluated by the Lord. 

Before investing, it is essential that young people understand that God owns everything and that He is their provider. This is the motivation to responsibly manage all that He entrusts to them, whether a lot or a little. This also sets their heart right to avoid investing to get rich but rather to be faithful and generous towards others.

When young people follow a few basic principles, margin is created for money to be invested. These go contrary to the way in which many Americans live today. Here is my simple list that if followed, will set them on the right path. 

  • Spend less than you earn – this happens when you live on a budget. 
  • Give first, save second – maintain these life long priorities. 
  • Don’t buy too much house – this creates a huge advantage.  
  • Be content driving used cars – always pay cash for what you drive. 

Establishing self-discipline early in life will enable them to live out Proverbs 21:20 which states, “The wise man saves for the future, but the foolish man spends whatever he gets.” (TLB)

It is not uncommon to find that a young person has already found themselves buried in credit card debt and is stuck in cycles of overspending. If you find that this is the case with any of your children/grandchildren, I recommend our trusted partners, Christian Credit Counselors. They have helped hundreds of thousands of people eliminate their credit card debt and rebuild their financial foundation.

Investing Basics 

Money saved is not at risk. However, money invested is at risk of loss. That’s why you should advise them to only invest money after becoming a giver and a saver. No one should invest without a purpose. So here are some questions to help establish a proper reason for investing. 

Answer the following:

  • How much will you need to accomplish your goals? 
  • How long are you willing to wait in order to accomplish them? 
  • How much are you willing to risk? Can you afford to lose your initial investment if the market or your particular investment choice reverses itself and begins to drop in value? 
  • How long can you afford to wait if your investment drops in value? 

All of these should be considered and evaluated before any money is allocated to investment.

After setting goals, beginning investors must understand some basic investment rules. Investing is not intended to be an overnight get-rich-quick success. It is a long-term undertaking, so early investors have the advantage of giving their money time to grow.

It should not affect the daily family routine and must not cause the family stress or discord. In fact, I recommend that couples take time to discuss and pray through their goals to maintain unity. A wise spouse can offer unique insight and proper balance in decision making.

This is Big 

Start small and do something on a regular basis each month. It is surprising at how significant small decisions will become as the decades pass. Make sure you thoroughly understand each investment, that liquidity is important in the event of an emergency, and that diversification is key. 

Think of investing like planting a tree. It could die. But if you nurture it, over time it will begin to grow and grow. The longer you allow it to remain planted in one spot, the more likely it will produce good growth yields. This is the philosophy of value investors as opposed to traders or gamblers. 

Investing Early

Twenty-somethings have certain advantages over those who wait to begin investing, including time, the ability to weather increased risk and opportunities to increase future wages.Jean Folger,

Investing early helps you think about how you use money. When you develop Biblical financial habits early in life you are able to invest sooner. This gives you a head start and the benefit of time. Plus, you gain years of practice to help you recover from any mistakes and avoid emotional roller-coasting.  

Research, Don’t Guess

Proverbs 24:3-6 (ESV) is a great verse to apply to your investing philosophy: “By wisdom a house is built, and by understanding it is established; by knowledge the rooms are filled with all precious and pleasant riches.” This means that we are to make investment choices by using our mind, not simply throwing darts and hoping to pop a balloon with a prize inside. Wisdom and knowledge are the keys to success. Diversification is Solomon’s advice in Ecclesiastes 11:2. 

Types of Investments

Most people think of the stock market when they think of investing. This would include a variety of choices for publicly traded securities such as: 

  • Stocks
  • Bonds
  • Mutual Funds
  • Index Funds
  • Exchange-Traded Funds
  • Options

But don’t forget other choices like real estate, starting a small business, or investing in a privately held company. 

Finally, especially when it comes to your grandchildren, teach them to invest in themselves early in life to gain the education, skills, and wisdom to reach their income earning potential. One of the highest returns on any investment relative to temporal returns is to make ourselves more valuable whether as an employee or entrepreneur. God is honored when we become excellent at whatever we are called to do.  

I encourage you to follow through with your desire to pass along God’s principles to your children and grandchildren. What a blessing it will be to see what incredible returns will happen in their lives as you make these deposits of love and wisdom. Go, Grandmother, Go! 


This article was originally posted on The Christian Post August 21, 2020.

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