Definitions Matter
There are probably as many ways to define investing success as there are types of fruit. There are, however, two primary ways to think about investing. One has to do with tangible wealth. This has to do with what we can accumulate during this lifetime. The second is related to the way we use our time, talents, and energy during those same days. These are interrelated, but many don’t see the connection.
Some Faulty Definitions or Perspectives
Far too many have the “I want to get rich quick” mentality, so their definition of investing success is immediate, astounding investment returns. This can appear in many forms, including gambling, the various lotteries, and questionable investments that are being chased by those who have a get-rich-quick mentality. For example, I avoid all forms of cryptocurrency and other speculative investments.
Others have a life perspective that is very selfish. The goal is to accumulate wealth for personal pleasure, luxury, and long-term relaxation. They invest with only 60 or 80 years of perspective. They define investing success as living a comfortable and pleasurable life until their heart stops beating.
Still others insist that they are successful if they beat the S&P 500 index, or at least have their wealth grow at a similar rate. If that is the case, then your ten-year return on your investments must be 12.70% per year on average. There are many problems with this perspective, but they become more pronounced when you enter your retirement years. For example, VOO, the Vanguard S&P 500 ETF, has a yield of only 1.33%. Most people cannot live on that type of income in retirement. Anything less than 3-4% is probably going to require that you sell some assets to cover your retirement expenses. Sadly, you might have to sell during a bear market. That can spell disaster.
My Four Perspectives
First and foremost, I want to have a long-term perspective. That means I won’t have a “get rich quick” approach to investing. This requires patience, planning, and persistence. This has both a financial and spiritual component. I want my investments to last longer than my life for the benefit of my family. But I also want my investments to be stored for me in a safe place when I go Home.
Secondly, I want to remember that what I “own” is not my own. I am to be a careful steward of the things placed in my life, including our financial wealth. This means I want to view every dollar as an opportunity to make a difference in the lives of others in a way that brings glory to God. Jesus told his disciples that others would know if they were his disciples if they loved each other. He also said we are to love our enemies. I’m still working on that.
Thirdly, I don’t feel compelled to beat or equal the S&P 500 index on any given day or in any given year. That does not mean I don’t care about investment returns. Rather, it means that other things like income growth are more of a priority. For example, the total cumulative 10-year return of our investments is 8.84%. That means our wealth doubles every eight years.
However, the S&P 500 has a ten-year track record of 12.70% as of February 29.2024. One could argue that I am not doing well based on that comparison. However, bear in mind that dividends of $13,300 on $1M is insufficient for most people living in a high inflation environment. I am willing to give up some growth for present income. My current average yield across all of our accounts is 4.7%, which means $1M can earn $47,000 per year. This is due to not being a slave to the S&P 500 as a definition of success.
Fourth is that wealth given to others is not wealth lost. It is wealth gained. In fact, it makes life more fun, more joyful, and more meaningful. During my life I don’t want to be known for how much I accumulated, but rather by how much I gave away to benefit the souls and lives of other people.
Recalibration is Required
I want to close by telling you something you may know down deep in your soul, but that we all tend to forget. Let me remind you to recognize some important things that a great Teacher told his disciples. He is the one who died on Good Friday and who rose again on Easter Sunday morning. I know what he said was true, but I need to remember to live like what he said is true.
Recognize Your Natural Shortsightedness
Everyone tends to be shortsighted. Instant or immediate gratification seems like the best approach. “You deserve a break today” is the common theme. In so many areas of life this is a huge lie. We forget about the rust, moths, and thieves. Our heart is focused on the wrong goal.
Jesus said, “Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.” – Matthew 6:19-21
Recognize Real and Lasting Value
We tend to settle for short-term trinkets that wind up in closets, stored in the basement, in the attic, in the garage, or in an offsite self-storage facility. Oftentimes we regret, later in life, the wasted time, and resources. There are things that last a very long, long time.
Jesus said, “The kingdom of heaven is like treasure hidden in a field, which a man found and covered up. Then in his joy he goes and sells all that he has and buys that field.” – Matthew 13:44
Recognize Our Sinful Soul Chooses the Wrong Treasure
It is quite easy to do a comparison game in life when it comes to wealth and to character. I know I have more wealth than most citizens of this world. It is also easy for me to succumb to the false notion that I am “better than” most people. That is a greater fallacy.
“Jesus said to him, ‘If you would be perfect, go, sell what you possess and give to the poor, and you will have treasure in heaven; and come, follow me.’” – Matthew 19:21 The problem is that we are all imperfect, and God calls that sin or “falling short of the glory of God.” This is a big deal. The reason is that the “wages of sin is death” but the good news is that the gift of God is eternal life through Jesus Christ. See Romans 6:23
Jesus is the best treasure. Stuff won’t matter in eternity. Think about it – the streets are paved with gold, so the metal we think is valuable is just pavement in heaven.
Also remember that disciples follow. Following means living differently.
All scripture passages are from the English Standard Version except as otherwise noted.
Know Your Flocks & Herds 