The Seven Pillars of Financial Success, Pillar 5: Invest to Make Your Money Grow

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

The Bible discusses the keys to personal finance success quite plainly. If you read the book of Proverbs in particular, you'll see that the path to financial success isn't that difficult or extensive. In fact, the wisdom to be prosperous can be found in a few simple steps.

Over the next few weeks, I'll be sharing what I consider to be the seven pillars of financial success from the Bible.  I picked up on the number seven from Proverbs 9:1 where it says:

Wisdom has built her house; she has hewn out its seven pillars.

Today we'll be discussing Pillar #5: Invest to Make Your Money Grow.

The Bible says a lot about making your money grow over time, being diligent in managing your money/finances, and applying wisdom to money management. But the verse I like best about investing is from Proverbs 13:11 where the Bible says:

Dishonest money dwindles away, but he who gathers money little by little makes it grow.

I love the idea of making money grow "little by little." For me, it's a perfect picture of what it takes to be successful: saving money (last week's pillar) from your surplus (the first week's pillar) and then investing it to make it grow bit by bit over time. This strategy is successful because taking advantage of time is the best way to maximize your investments. If you invest early and invest (save) often, your money will accumulate and grow over time -- slowly at first and then more rapidly as it gains momentum -- until you become a wealthy individual.

Saving alone won't get your there -- you need to invest your money to make it grow/compound. I think of it this way: Savings provides the fuel, investing lights the spark! ;-)

Do you agree or disagree?

Come back next week as I discuss Pillar #6!

Comments

[DIY Investor]

I agree. We are very fortunate to live in an economy where it is easy to invest. The hard part, for many people, is to pick a company from all of the great companies out there to invest in. I recommend investing in broad market ETFs and thereby investing in the entire market. By doing this you are getting funds to those companies that produce the goods and services that enhance the quality of living.

[Doug Warshauer]

Investing well is critical. @DIY Investor is right, it is a mistake to try to pick individual companies to invest in. Stick to broad market ETFs or traditional indexed mutual funds for your equity investments.

Also, people often overlook the importance of investing in fixed income securities for their short term goals. If you're going to want to spend the money you're saving soon, don't put that money into equities.

[Squirrelers]

As with the first 4 Pillars, I think it's hard to disagree.

Yes, living within your means is necessary. What you save needs to be put to use. Keeping it stashed under a mattress won't grow your funds; on the contrary, you will lose purchasing power. Investing, and earning an after-tax return that exceeds inflation, is the way to grow your nest egg.

[Dr. Artfredo C. Abella-Philippines/U.S.A]

Let me cite the seven Pillars of financial success:

1. Part of what you earn is yours to keep;

2. Delay your instant gratification;

3. Show integrity in all your financial affairs,

4. Earn more than you spend;

5. Pay yourself first;

6. Diversify your investments; and

7. Show gratitude to the God of the universe.