Thoughts + Attitude = Outcome
Your thoughts and attitude reveal the answer to this question. Many people are willing to take risks when they are fairly confident they will win, but if they lose, then high risk wasn’t what they wanted. Many place too much value in risk tolerance questionnaires. They place too much weight on answering questions about risk then choosing investments based on a questionnaire.
This is a dangerous way to invest. This doesn’t mean considering you shouldn’t consider your risk tolerance. However, too many people rely on their tolerance when choosing their investments and do not know or understand what they are investing in. This is form of investing is gambling.
The key to avoid gambling is to fully understand any investment you make. If you have important financial decisions to make, it is prudent to seek sound financial advice from someone who can provide independent counsel and look at your interests first. Finding such persons is not always easy given the self-interests of many financial institutions.
Gambling in disguise
A lot of people think they are investing when in reality they are gambling. Many hand their money over to an advisor, money manager, or mutual fund company and have no idea where they are investing, yet hope for the best. Then if they lose a large portion of their investment they are surprised or disappointed. If you went to a casino and expect “luck” at the roulette table, you would also have to expect to lose money. When many invest, they turn to mutual funds and stocks hoping that the same type of “luck” will make them a fortune. Yet they are surprised when they lose. Though I agree the odds are more in your favor in the stock market than at the casino, but this mentality is similar to that of gambling.
Become an investor!
Do you realize when you invest, you are investing in people? Even you think you are investing in a service, a particular stock, or mutual fund, you are actually investing in a company‘s integrity, its ability to create value, and the ability to bring their services/products successfully to the marketplace.
The product or service may be fabulous, but its success relies on its people. How many times have you seen companies lose money even though they have a fabulous product or service? This often happens because of poor management decisions, greed, or other inefficiencies. Though it is easier to make money with a great product or service, do not underestimate the importance behind the people managing as this will ultimately determine how successful your investment will be. Are they upholding your values? Do they understand your unique goals as a Christian?
How will you know what types of investments are right for you? Do you have passion, skills, and knowledge in regard to any particular type of investing? When you have knowledge and attitude for certain types of investments, the more you know the less it becomes gambling.
The line between investing and gambling is often blurred, but a surefire away to minimize it is to fully understand what you‘re investing in and why you are investing in it! Many blindly follow the advice of another professional‖ without researching what all of their financial options are. If you are going to invest, it is critical to take enough time to completely understand what you are investing in and why. That is why we started Faith-Based Investor, to take the time to research and find companies you can be “proud to own”! By knowing our subscribers – devout Christians, we focus on finding companies that line up with their values and have great profit potential. This, we believe, is a match made in heaven!