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Investment TRUTHS
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A Christian Perspective into Modern Portfolio Theory
Phyllis J. Wordhouse and Maria J. Kuitula, Wealth Coaches
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Do you know what your “real investment costs” are?
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Are you measuring your portfolio’s risk?
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Are you receiving market returns with lower fees and risk?
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Do you avoid buying the same stock in different mutual funds?
Christian investors need the simple TRUTH of how the market works, and how to protect their wealth. Romans 13.12 “…let us put aside the deeds of darkness and put on the armor of light”
Many investors are on information overload, worried about investment scandals, and concerned about their future. They want and need security, but are speculating and gambling by allowing their brokers to market time and pick mutual funds, based on past historical returns.
Here are 7 key investment TRUTHS to becoming a smart investor and a good steward of your investments:
- Wall Street and the media are NOT your friends. The financial media and big broker dealers prey on investors and benefit from investors’ vulnerability, confusion, and lack of a lifetime game plan. Their goal is to make money. Ps. 1:1-3 God teaches us, “Blessed is the man who does not walk in the counsel of the wicked or stand in the way of sinners or sit in the seat of mockers… He is like a tree planted by streams of water, which yields its fruit in season and whose leaf does notwither. Whatever he does prospers.”
- Stock picking is gambling and speculating. No one, including your broker knows the future. Only God does. Focusing on building wealth fast does not please God. Ps. 1:1-3 Christians prosper when they please God.
- Market timing does not work. Getting out of the market is easy, but knowing when to get back in is the hard part. The market does much better without your interference. Once your portfolio is truly diversified, stay put. Prov. 28:20 “A faithful man will abound with blessing, but he who makes haste to be rich will not go unpunished.”
- Track record investing does not work. Counting on historical returns is like driving forward while looking in your rear view mirror. No mutual fund or asset class consistently repeats its returns.
- True diversification comes when your portfolio is invested in at least 16 asset class mutual funds, which also lowers your portfolio’s risk . If you don’t measure your risk, how can you control it? This is also the best way to protect your portfolio from money managers who chase returns so they can get a bonus at the end of the year.
- Know the turnover rate of your mutual funds. Turnover rates greater than 35% have excessive hidden fees, due to the manager’s frequently buying and selling.
- To eliminate duplicity of investments, each of your mutual funds needs to purchase only one level of risk. When you pay more than one manager to trade Pepsi, you could be buying and selling Pepsi the same day, in different mutual funds.
It’s time to choose: either stay frustrated in a poorly diversified expensive portfolio, or move to a truly diversified portfolio and save at least 30%-50% with tax-deductible fees. Smart Christians learn from their past, but cannot allow it to remain their focus. Philippians 3:13 “…forgetting what is behind and straining toward what is ahead…” You have a choice, do it the same way you always have and get the same results, or turn over a new leaf and go with a strategy that in 1990 won the Nobel prize in Economics. You choose!
Wealth Coaches, Phyllis J. Veltman Wordhouse and Maria J. Kuitula teach classes on Investment TRUTHS: Separating Myths from TRUTH! Contact them at 800-615-0435 or WWW.WordhouseWealthCoaching.com for the class schedule or if you would a speaker for your group.
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