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Economics - Home Finances

On investing, with Wade Van Bostelen

Thoughts from an experienced financial advisor

*****

Reformed Perspective interviewed Wade Van Bostelen, a Christian certified financial planner operating out of Burlington, Ontario. Wade and his wife Leanne have two sons, and are frequent visitors to the west coast.

Marty VanDriel: Are there Scriptural principles or texts that you use as guidance for how you advise clients to invest or in your own investing?

Wade Van Bostelen: My guiding principle comes from Psalm 24:1: “The earth is the Lord’s, and everything in it, the world, and all who live in it.”

When it comes to investing personally and with clients, I also return to a passage that speaks to it in Matthew 25:14-30. It speaks of the gifts of the Father and using those gifts, but it comes from an example that people would have understood even in Roman times. Christ uses the example of three servants who understood that their master had given them talents, had set them to work, and they’d invested these talents, with varying outcomes.

While the parable has a much deeper meaning than simply investing, the fact that our Lord uses this as an example indicates that this is a valid way to work in His kingdom – maybe even an expectation that this is a way to work in the kingdom.

MV: What kind of things can Christians be on the lookout for as they look to be good stewards of what God has entrusted to them?

WVB: I will sum it up with a few words – Prudence – Understanding – Self-control.

PRUDENCE: Several principles come into investing that help define prudence, but mainly, I am talking about diversifying what you are investing in to have some degree of protection or safety in what you are doing. You also want to ensure that you have the assets to invest without hindering your ability to take care of your responsibilities and personal needs. Christians can be caught up in the world’s obsession with generating wealth or freedom and forget that their obligation is first to serve the Lord. So Christian investors have first to ensure that they have given of their first fruits, then they need to provide for their household, and then they can invest. What I find difficult to understand are the extremes: Christians that have wealth but do not give and Christians that make a fine living but spend all they have and save virtually nothing. Both are not acting as effective stewards.

UNDERSTANDING: Christians can get caught up in the hype as quickly as others and invest in things they do not understand. Some may even make money doing this, but it does not make it a good practice. If you cannot explain what you are investing in, the types of companies, the kind of asset, the way a business works, how you will make a return on a real estate rental property, how you will be taxed on assets that you have, then you likely should not be investing in them…

SELF-CONTROL: It is known that most investors are driven by two basic emotions: fear and greed. Fear drives people out of their investments because of a lack of prudence and understanding. It also drives them into investing because they are missing out, or they have a fear of missing out (FOMO), also known as greed. Christians have to do better than that. Emotional investing is not stewardship.

MV: What is your opinion on investing in the stock market? How does a Christian do so in an ethical manner, in alignment with God’s Word?

WVB: I sense a bias in the question, so I will frame it differently before I answer it. Let’s ask the same question and substitute a different market - What is your opinion on investing in the real estate market? Rental income market? Commodity market? Livestock market? or any other market. There is a sense that I have in this question that the other markets may be more ethical, or more in alignment with God’s Word than the stock market. All of these markets are financial markets, and all of them come with risks and ethical questions.

Is it prudent for a young couple to stretch themselves to the limit of what they can afford payments for to purchase a house? What drives them to do so? Have they considered the ethical aspects of their decision – for example, will it keep them from contributing to kingdom work because they have stretched themselves so far? Have they considered the ramifications of their leverage? Have they been driven into the market by fear of missing out? What happens if their dual income becomes a single income? Will they still be able to make ends meet?

As a farmer, are you effectively using the commodity markets to sell your crops or make decisions on the amount of livestock to purchase? Are there ethical questions that arise working in a quota system that does not allow competition? How do you justify these questions?

As a rental real estate investor, have you considered the ramifications of what would happen if your renter fails to pay and you need that rent to cover your debt payments? What if you fail to rent the 70% of your building you need to rent to make ends meet? How did you figure out your math? Were you driven by principal or emotion when you invested?

So each market has its questions - the stock market is not at all different than other markets, and you need to exercise prudence, understanding and self-control. You need to be able to justify why you invest in the companies that you do, and be willing to walk away from others. You can engage in positive activism as a shareholder to change the way that companies do business. You need to be willing to exit positions in companies when their activities are unethical. If you are doing these things investing in the stock market is no different than investing in any other market, but more so, you need to think like an investor. In every market I have listed, you need to think long-term to invest successfully. In all markets, your greatest risk occurs right after you have invested – before you have made a return. The one thing that is different about the stock market compared to the other markets is that stocks are priced daily, so you can become obsessed with your short-term returns and not longer-term returns. Real estate investors, for instance, tend to think in 10-year periods or longer. Stock market participants should also think along those lines, and not look daily at their prices.

Could you imagine valuing your home every day? What is the price someone will pay today for my house? It seems ludicrous, but people will do that with their well-diversified portfolio and lose sleep or become euphoric based on the price change in a day, month or year. If you are investing for your retirement income – why are you worried about today?

MV: What are your thoughts on "investing" in cryptocurrencies?  Or companies that are in the crypto industry?

WVB: As indicated before, you have to have prudence, understanding and self-control when investing. If anyone claims to understand cryptocurrency, I would like them to explain why it has value. There have been manias before in investment history. Our Dutch heritage has an exciting period referred to as "Tulipmania" in the 1630s – people were gripped by a speculative desire to own tulip bulbs. Fortunes were made and lost on tulip bulbs.

The crypto space is unregulated. That is why people like it, because it falls outside government control. They have ascribed a value to things that previously had no value, and the value has increased because of limited supply.

This is not a realm of investment as I would define it because you have no expected future value based on anything that you can quantify. You have no definable present value because it produces nothing – there is no inventory, there is nothing that society needs that it offers, no product.

That being said, many crypto-related things may cause some change and are investible. The technology that runs it is called blockchain. It does facilitate immediate transactions. It allows you to move assets from one country to another instantaneously. It requires servers, microchips, technology development, internet service providers, electrical generation, etc. So, there are ways to legitimately invest in these things by investing around the hype, rather than speculating in the hype.

If you go into the crypto space now, you are speculating. I find it hard to define speculation as an investment; it is more akin to a gamble. You can make money on speculation as you can with gambling, but don't call it an investment.

Unfortunately, because of a lack of regulation, the tax rules are not yet written…but they can be backwardly enforced. There are also opportunities for charlatans like Sam Bankman-Fried (SBF) to fraudulently gather assets for personal use because even astute investors, like Kevin O'Leary, can be taken in by fraudsters when they don’t understand what they are buying.

MV: What is your own favorite investment and why?

WVB: My favorite investment is my own company. I had the advantage of working with another advisor who allowed me to start my own business while working with him. Eventually, I also bought his business from him when he was ready to retire and then consolidated two other companies into my own. I have been blessed to work with partners who have worked alongside me to help build my enterprise while I helped them in their enterprises. But more than anything, my business has allowed me to work with clients from all walks of life to help them develop their financial plans. This has been as enriching for me as for them – so that has to be my favorite investment!

Economics - Home Finances

When your finances have you scared

Inflation, rising interest rates, business failure, job losses – there’s no shortage of financial trouble these days. And these all contribute to anxiety and depression and even physical illness. This financial uncertainty has us looking for solutions to our many questions, questions like: Am I being responsible with what God has given me? What will the future bring? Where can I turn for help and advice? What should I do? Others aren’t looking for solutions – some will simply shut down in hopelessness and fear, as a kind of paralysis takes hold, procrastination sets in, and the feeling of financial doom settles over them. TRUST THAT GOD DOES REIGN How, then, do we move from fear to faith? The Bible contains many commands to God’s people not to be afraid. There are more than one hundred imperatives to “Fear not; be strong; be courageous,” and the like. Some commentators suggest that these commands rank second in number only to the commands to love. Why such repetition? The Lord knows we are weak, so He requires that we take hold of Him in faith. Our finances can be a major stumbling block in doing so. We confess that He is our provident God, and that all things come from His Fatherly hand, including prosperity and poverty. But when the prospect of poverty or financial difficulty looms over us, we panic and become fearful, and so we fail the test to trust Him. Likewise in prosperity, one can easily forget that the Lord is the provider of it all. USE WHAT GOD HAS GIVEN YOU Trust does not mean sitting back and doing nothing. The Lord gives us knowledge, wisdom, and the ability to plan. We must do so under His guidance and with much prayer.  Proverbs 16:3 tells us to “Commit your work to the Lord, and your plans will be established.” We have been given the tools for the job. First of all, we have God’s Word which has over 2000 verses that speak to possessions and finances. The Bible provides us with the principles by which we can think and act in a godly and faithful way, and it gives us direction and solutions. Another tool we have is our basic elementary school education which taught us the essentials of addition, subtraction, division, and multiplication. Basic math can give us many answers. Armed with these tools, we can walk the path the Lord is leading us on. DON’T GO IT ALONE We should not try to do this alone. It should go without saying that we must seek the Lord’s guidance and direction in our finances, except this may not always be the case. Prayerful contemplation needs to be part of our financial exercise. We must commit all our finances to the Lord, rather than trying to sort things out for ourselves, and we do well when we consult His word in all situations. We are told in Proverbs 3:5  to: “Trust in the LORD with all your heart, and do not lean on your own understanding.” The Lord has also given us many advisers and He tells us to use them. Proverbs 15:22 says: “Without counsel plans fail, but with many advisers they succeed.” There are many qualified and experienced brothers and sisters in the extended church who are able and willing to help. This may include the Deacons whom God has appointed for circumstances of need, and the ministry of mercy. For many other financial issues there are accountants, lawyers, and experts in investments, insurance, banking, mortgages, etc., and these people are all not much more than a phone call away. Qualified advisors can help us stand back from ourselves and our situation. This is a very important step in the quest for answers and solutions. Many who experience financial difficulty are too absorbed in their own problem to see a clear way out. Objective assessment is an important  aspect of decision making. Standing back from your circumstances and understanding the problem in a detailed way, while looking at all the options, and asking lots of questions, will help to settle anxiety and to give comfort in decision making. CONCLUSION In all circumstances, including those relating to our finances, God tells us to turn from fear and anxiety and to look to him for our comfort and help. He provides tools and support in both His Word and his people. Finding solutions in the midst of difficult circumstances may require us to expend a lot of effort as well. Knowing the character of our God, it should provide great comfort when we read in Proverbs 19:21 “Many are the plans in the mind of a man, but it is the purpose of the LORD that will stand.” This has been a father-daughter collaboration: Rev. Hank Van der Woerd (MDiv) is emeritus minister (URCNA) and past president of the Mortgage Brokers Association of BC; Maria Dawes CIM CFP is a Portfolio Manager for Capstone Asset Management (www.capstoneassets.ca)....

Economics - Home Finances

Is gambling wrong? And if so, what about buying stocks?

Some Christians won’t invest in the stock market because they believe that investing in stocks is really no different than buying a lottery ticket. Both, they argue, are examples of gambling, which God forbids. But are they really so alike? Consider these two ways in which investing in stocks differs completely from gambling. 1. You can gain without causing pain While it could be argued that the Bible doesn't specifically forbid gambling, it does condemn the roots of it including covetousness (Ex. 20:17), love of money (1 Tim. 6:10, Heb. 13:5, Matt. 6:24), and the lack of productivity (Matt. 25:14-30). Another significant problem with gambling is that a person can only win if others lose – there is no way for all the players to benefit. It is a zero-sum game, so for a gambler to walk away with more than he came with, he has to get it from the other players. God calls us to love our neighbor as ourselves (Mark 12:31), but the gambler wants to benefit at his neighbor's expense – he wants to get something while giving nothing. With stocks, it is very different. While the stock market has its ups and downs, over time the trajectory is ever upward, as the economy expands, and as we continue to learn how, through automation and other efficiencies, to become ever more productive. That means it is possible for all investors – or at least all of the patient, cautious sort – to win. An investor’s gains need not come by making others lose; instead their increase can come from helping a good company grow. An investor’s return can come from supporting companies that are creating good products, or offering wanted services, or who are in some other way being productive in a way that paying customers appreciate. And then the return he gets will be in exchange for the help he provided: it will be something for something. Of course, someone could buy stock in all sorts of evil companies too, so we’re not trying to say here that buying stocks is always good. The point is more limited: whereas a gambler can only gain by others’ pain, it’s possible for an investor to gain by helping others. 2. You are likely to gain Another problem with gambling is that it is a waste of the resources God has entrusted to us (Matt. 25:14-30) because in gambling the odds are always stacked against the gambler. Slot machines, provincial and state lotteries, 50/50 raffles, casinos: all of them are a source of revenue for governments because they are designed to pay out less than they take in. Sure, a fellow might make some short-term gains, but any gambler that keeps at it is sure to lose…and quite possibly everything he has. But in the stock market, the very opposite is true. If the economy is growing (as it is, at least over the long term) then the stock market will grow too, and see more gains than losses. If you have no other ideas as to what to do with your money, then placing it in a diversified portfolio is one of the safest ways to invest it. With minimal risk you can increase the resources God has entrusted to your care. Conclusion To sum up, whereas a gambler is always trying to win at others’ expense, stock market investors can gain by helping others do better too. And while the odds are stacked such that over time a gambler will lose all he has, stock market investments overall continue to grow over time. In these two significant ways, buying stocks is the very opposite of gambling....

Economics - Home Finances

The case for biblically-responsible investing

God calls his people to be good stewards of what He has entrusted to us, whether that’s our talents and time or the possessions we’ve been given. It all belongs to God (Ps. 24:1), so just as a steward manages and cares for what belongs to another – and does so as the owner desires – so too we are to manage what belongs to God as He desires. We are also to do everything to the glory of God (1 Corinthians 10:31). Eating and drinking are two activities we often do without thinking, yet specific mention is made of how even these activities are to be done to the glory of God. How much more then ought we to manage God’s money in a way that glorifies Him! How shall we then invest? So, when it comes to investing, we need to understand that buying shares in a company means becoming a part-owner. And an owner, whether a minority or majority owner, bears responsibility for the actions of a company. In Ephesians 5:11 we are instructed to, “Take no part in the unfruitful works of darkness, but instead expose them.” So here is a key issue for consideration: if a company is doing “works of darkness” being an owner of a company is taking part in those activities. Even if it is a small part, it is still a part. Another consideration is the aspect of making money or profiting from sinful activities. Proverbs 16:8 instructs us in this (as does Prov. 15:6): “Better is a little with righteousness than great revenues with injustice.” As a shareholder, it is not possible to refuse the portion of a dividend or share growth which results from activities which directly contradict Scripture. Receiving that profit, no matter how it is then used, is bringing the “wages of a dog into the house of the LORD your God” (Deut. 23:18). So, what is the problem? The problem is Christians often unknowingly invest in companies which directly contradict Biblical values. An examination of the companies which make up the S&P 500 is alarming. Found there are companies which, among other things, profit from or support abortion, pornography, and gambling. So, what is the solution? What this might look like The solution is what I call “biblically responsible investing.” The goal with this type of investing is to be a faithful steward who glorifies God with the management of His money. In striving for this, a disciplined process is followed which can be summed up in three steps: AVOID THE BAD: Via in-depth research and analysis, we want to actively avoid companies that are at cross-purposes to Biblical values. SEEK OUT THE GOOD: We want to actively seek out companies which value ethical business practices, the sanctity of life, care for the poor, and other biblical values. BE AN ACTIVE OWNER: An investor has a voice in the boardroom and a vote to cast in proxy votes. Rather than remaining silent or letting ungodly money managers cast votes, Christian investors and investment managers can raise their collective voice when needed in the boardroom. Will this always be perfect? Will a company ever find its way through the process? Unfortunately, perfection will not be attained on this side of the grave. A business may hide an unethical practice or donation. However, that is not an excuse not to strive for perfection. This is the way of the Christian life here on this earth. It is a continual striving to walk in the way of godliness, being “holy in all manner of conversation.” We strive to put off and flee from sin. We strive to fight the good fight of faith as God has called us to do. Then, after fighting the good fight, when we are called to give account of our stewardship we, being washed by the blood of the Lamb through no merit of our own, will hear these blessed words: “Well done, good and faithful servant. You have been faithful over a little; I will set you over much. Enter into the joy of your master” (Matt. 25:21). Brian Hilt is an Associate Portfolio Manager with Virtuous Investing of Huxton Black Ltd (InvestVirtuously.ca) and passionate about stewardship and biblically-based financial planning and investment advice....

Economics - Home Finances

Can you cut your grocery bill in half?

A summary review of Steve and Annette Economides' Cut your grocery bill in half with America’s cheapest family ***** Is it possible? The title of Steve and Annette Ecomides' book Cut your grocery bill in half really caught my attention. Who doesn’t like to save a dime? Or actually cut half off your entire grocery bill? Wow. While I have 3 young kids I still feel new to the role of stay-at-home mom, homemaker, wife, and all the adventures that brings! One thing I realized early on in my role was how much of my life now revolved around food: preparing meals, cooking, serving, eating and cleaning them up 3 times/day, plus baking, some gardening, and canning/freezing produce in the fall, plus other miscellaneous activities such as blending and freezing baby food and making meals or baking for other families or events, and, yes, grocery shopping.  MAMA KNOWS BEST I think I am like a lot of RP-readers. I was raised by thrifty parents: we grew up in hand-me-downs and ate a lot of potatoes.  We rarely ate out at restaurants (unless it was McDonald’s, with coupons). We baked cookies every week for school lunches and squares for after-church coffee. With groceries, Mom always had a list that she stuck to, she used coupons, she bought in bulk, and she knew her prices well. As a mom now myself, and “head-grocery-shopper” in my own little family, I’ve tried to follow my mom’s lead. My parents seemed to have good spending skills and I wondered if this book could truly challenge my skills (and even my mom’s) to really be able to cut our grocery bills in half.  It turns out though, it was worth a read! I have attempted to summarize some of my findings below, while adding my own thoughts. I am certainly no expert in this. Perhaps my mom should have been recruited to write this, or some of our grandmothers who have all sorts of cost-saving tricks up their sleeves! Don’t many of our grandmas reuse tin foil, wash and reuse ziplock bags, and use yogurt containers as Tupperware? Do I? Does this generation? Should we? Is it wrong if we don’t? The topic is endless! I feel as though grocery bills are scraping the surface of the larger issue at hand: being a Christian steward.  A COUPLE WITH A PASSION FOR SAVING MONEY The authors, Steve and Annette Economides are a husband and wife team with 5 children. They are really passionate about saving money, eating well, and spending time together as a family. In their opening chapter they write “We are on a crusade to convince the world that frugality produces freedom (and fun) while a debt-riddled lifestyle only produces distress (and destruction).” While they are Christian, the book is not explicitly so (the only extended mention made of God's call for us to be stewards comes in the last chapter, which seems slightly tacked on). I respect their mission and appreciate the experiences they have been through (e.g. living on a limited income as newlyweds), and I believe that much of America (and of course Canada!) can learn from them, “America’s cheapest family.” I heard recently that 50% of Canadians spend more than they earn. It is easy to see that if we spend more than we make there will be significant consequences! Are we being blinded by the materialistic, keep-up-with-the-Jones, buy-now-pay-later mentality that society bombards us with daily? SO WHAT CAN WE DO? Bringing this back to our grocery bills, what do the Economides advise? Skimming the book’s table of contents quickly shows some of the key areas of focus. Planning ahead, being shopper-savvy (e.g. buy in bulk, no impulse buying etc.), coupon use, cooking to save money, stocking up on items, and useful tools (e.g. consider buying a meat grinder to grind your own meat). They also dedicate a chapter to promoting families eating together, as well as a chapter to feeding kids for less (e.g. how to make your own baby food, filling up hungry teens on inexpensive snacks such as air-popped popcorn). Finally, they discuss how to eat out at restaurants wisely and in moderation, and the benefits of gardening. Bonus material also includes how single people or couples without kids can save on money (e.g. buy in bulk and share savings with other singles or couples). Several tried and true family recipes finish off the book. 1. PARTICULAR PLANNING The Economides recommend planning a monthly menu for all meals, and they offer steps on how to do this effectively by considering what is already in your pantry at home, what’s on sale in the grocery store, and what’s practical for your schedule. They compare prices and sales from different supermarkets and carefully plan what is best to buy where and when. Learn to be organized. List meals for breakfast, lunch, and dinner, and brainstorm on how to use leftovers best. Waste nothing. Don’t let food spoil. Aim to go grocery shopping only once a month (store fresh produce correctly so it lasts, and freeze your milk and thaw when needed). Eat what is in season; if you crave asparagus wait until it is on sale! And no picky eaters allowed! 2. SUPER SHOPPER Always take a shopping list. They suggest taking a calculator to keep track of the amount you are spending as items enter your cart. Use coupons. No impulse buying allowed – e.g. resist the urge to buy something just because it looks delicious and you are hungry! Know your prices on items and snag sales when you see them. Buy in bulk. Browse the discount/clearance shelf. Be assertive and ask for a rain check if a sale item is out of stock. Always double check your receipt to be sure you paid the correct prices. 3. CUE UP THE COUPONS Coupons save you money. Take the time to collect them, cut them out, and use them. The savings add up. The authors offer tips on how to organize your coupons best. They touch on the idea of coupon stacking - sometimes it is possible to put several coupons towards one item and get it steeply discounted. Sharing or trading coupons with friends can be helpful. Look online for coupons. But, they warn, keep coupons in perspective – don’t get obsessed by them, don’t get caught up in the thrill and “game” of saving money when it starts to take over your life! 4. COOK AND SAVE Annette Economides admits she did not know a lot about cooking when she first married Steve. She offers hope that anyone can learn to cook and should! Home-cooked meals are healthier, often have less calories, and are cheaper. Grind your own meats! Learn the spice rack and use your knowledge to keep simple dishes tasty and interesting. The Economides believe in “once-a-month-cooking” days. Time is saved when you double (or quadruple) a recipe. Meal swap with others. Knowing you have meals frozen in your freezer combats the temptation to eat out or buy convenient foods. 5. STOCK THE SHELVES Know the shelf life of your items – stock up and keep track. Stay organized. The Economides list over 40 items that they find most helpful to keep stocked up. Like in other chapters, many practical tips are dispersed among the information. For example, they suggest having a rule that sweet cereals (e.g. Froot Loops) can only be eaten when mixed with a healthy (and often cheaper) cereal (e.g. Corn Flakes). They also discuss setting up your kitchen cupboards and fridge most efficiently. They advocate reusing containers and bags.  And they love their freezer! It is a 25 cubic foot chest freezer, well-organized. They list tips on how to freeze things best, and offer advice on overall freezer use. They write, “A mainstay of our money-saving philosophy is buying storable food on sale – stockpiling as much as we can safely store – and slowly depleting that supply over several months.” 6. TOOL TIME Everyone needs a spoonula! Maybe they are more commonly called (or miscalled) spatulas – the kitchen spoon-type scraper that allows you to clean out a container or pot nearly spotlessly. The Economides love their KitchenAid Mixer, though they admit it may be a luxury item. Yet, the attachments they bought for it, such as a meat grinder, have made the purchase more than worthwhile. They list various other kitchen tools they find to be essential such as plastic cutting mats (that can then be shaped to pour what you’ve cut up into your recipe without spilling a drop), blender (for making smoothies using up older fruits that may otherwise be unappetizing), Popcorn Air popper (popcorn kernels are very inexpensive and air-popped corn compared to microwave popcorn makes for a healthier snack) etc.  COULD YOU CUT YOUR GROCERY BILL IN HALF? The book is packed with so many tidbits of information on how to save money. It is worth a read. Even adopting just a few ideas will guarantee more money stays in your wallet than before. Even though many ideas seem to show just a small amount of money is saved (e.g. using a coupon to save 50 cents), the savings compound to a significant impact! Saving money on your groceries seems to be about taking on a frugal mindset. It becomes a mentality. Not something to obsess over, but something that we could all probably be more aware of. So could I cut my grocery bill in half? I think it depends on your starting point. When I read the book I felt I was doing several of their strategies already, but that I could certainly expand and improve on a lot of them. If I was someone who was used to eating out a lot, buying pre-made convenient foods, insistent on purchasing only the more expensive brands, and didn’t care about sales, I might have a different story. Which leaves us with the question, RP-readers, what kind of shopper are you? Could you cut your grocery bill in half? This article first appeared in the September 2013 issue....