Are You Assuming or Presuming?

Assumptions can be very dangerous.

I help novice or beginning investors. I don’t charge for the work I do, because I like to share my experience and expertise and help others. No one needs to give me compensation for what I do because God has blessed us with resources that make compensation unnecessary.

Sometimes I assume that the people who come to me for help understand some basics like, what an ETF is, the different types of investments, the differences between volatility and risk, the usefulness of a CD ladder, what a dividend is, and what the “Rule of 72” helps an investor understand.

Assuming is a dangerous approach to life and life choices.

Assume or Presume?

According to Merriam Webster, “’Presume‘ is the word to use if you’re making an informed guess based on reasonable evidence. If you’re making a guess based on little or no evidence, the word to use is ‘assume’.” Most of the time people receive very little information about their investments and don’t understand them. They assume their advisor, or the team that created their workplace 401(k), provides good investment advice and choices.

An example of a wrong use of “assume” comes from a funny comedian. He really should say that he presumes others are shaving.

Some Basic Investment Advice

Here is a free, easy way to quickly weed out some bad investment choices. If you see a year in a mutual fund name, do not assume it is a good investment. In fact, you should presume that it is probably not the best investment for you, especially if you are younger than sixty. Furthermore, if the fund name in includes one of the following words, avoid it: “Freedom”, “Life Path”, or “Target Date.”

Some Basic Life Advice

Do not assume a prophet is telling the truth. Certainly don’t presume they are telling the truth.

Test the spirits. 1 John 4:1

“Beloved, do not believe every spirit, but test the spirits to see whether they are from God, for many false prophets have gone out into the world.” 1 John 4:1

How to Identify a Follower of Jesus

Followers of Jesus walk and think and live by faith. They don’t suppose God’s favor based on their own works or credit-worthiness.

“If any of you lacks wisdom, let him ask God, who gives generously to all without reproach, and it will be given him. But let him ask in faith, with no doubting, for the one who doubts is like a wave of the sea that is driven and tossed by the wind. For that person must not suppose that he will receive anything from the Lord;…” James 1:5-7

Five Minute Friday

This post is part of the weekly Five-Minute Friday link-up.

All scripture passages are from the English Standard Version except as otherwise noted.