Investing
Tom Shrader continues his Financial Foundations series by examining how Christians should approach investing. He teaches that every purchase beyond basic needs (food, clothing, shelter, transportation, communication) represents an investment in one of four areas: profit, pleasure, people, or prestige. Shrader emphasizes choosing honest low yields over questionable high yields, seeking godly financial counsel, and ensuring investments align with moral convictions.
“Where I get into trouble is when I try to fill that crucial longing with a person, place, or thing, with a bagel or a poached egg or a caregiver.”
— Tom Shrader
Series: Financial Foundations
Recorded: February 16, 2006
Duration: 37 min
Themes: stewardship, investing, money, wisdom, integrity, counsel, priorities, faithfulness, making investment decisions, seeking financial advice, new investor, young professional, planning for future, struggling with money choices, parent teaching children, building wealth responsibly
Scripture: Proverbs 28:20, Proverbs 24:3-4, Proverbs 21:5, 2 Corinthians 9:7, 1 Timothy 5:8, 1 John 3:17, Psalm 1:1-2
Theological Themes: stewardship, biblical stewardship, financial discipleship, godly wisdom, moral convictions, biblical worldview, faithful stewardship, christian ethics
Full Transcript
Today is session 4 of our 8-session series entitled Financial Foundations. Sandy was asking last night if she should come to the noon study tomorrow. I said it depends, but you probably understand this better than anyone. It's good for me, though I don't know whether you're going to particularly enjoy the lesson or not.
I've been in this mode lately, and I don't know if it's where I am in life or who I hang around with. But I have spent more time in the last two or three months having these incredible conversations, oftentimes just out of nowhere. I had a guy stop me yesterday—just an FYI, don't do this—and he said, "Are you ready to die?" I said, "Well, I don't think so. I know I'm going to, but I'm not sure what you mean." I was up for a conversation about the Cubs, but I didn't want to go there.
Last week, the question was, "Are your best days behind you? And did you realize it when you were in your sweet spot?" These were reflective questions. But yesterday a guy asked me, "How long have you been teaching?" I said 28, 29 years. He said, "What do you like best about it?" Now we're into it.
What I Love About Teaching
I love it, and you would expect to hear this. When somebody hears the gospel and responds for the first time, that's the best. But when life begins to change—for me personally, it's when I'm studying and I get one of those moments where I go, "Wow." It's either a wow into God and the nature of God or theology, or it's one of those where I go, "Wow, this is a big, big, big deal to me personally and to life."
And then to bring it into here and have you go, "Wow, that's a big thing too." When I say "go," I don't mean say something—I mean it connects for you. It's also the equal frustration. I'll have these moments where I'll go, "Wow, this is a big deal," and then I present it, and you look exactly like you do right now. You look at me and go, "Oh, that's a big deal."
Well, this series, Financial Foundations, has three or four of those moments in there. So it's basic—it's 101. There's not a week goes by that somebody doesn't say, "I don't know why people didn't tell me this a long time ago." It's common sense, and it really is. But we've learned, right? Common sense is not very common.
Three Key Moments from Previous Sessions
There are three of these moments when we get to session four. So let me take you through them again—repetitive for some of you, but that's okay. It needs to be.
A life changer, game changer: session one is "I'm a steward, not an owner." That changes the whole ball of wax. All of a sudden, all of the resources that are in my possession are mine to steward, but not mine as an owner. Even though it's financial foundations, these principles absolutely overflow into all these other areas of our life.
So the money that I have—and I understand the breakdown of language here—in my account or my authority or under my sphere of influence is not my money. It's God's money. He transfers possession to me, but not ownership. So He holds me responsible for my stewarding of that. He wants me to have an investment strategy of my time, energy, effort, and money that aligns with His. And there is a day—and this is the scary part of it—there's a day of judgment on that.
The second part talked about savings, and we say you should. The second part was last week on borrowing. Borrowing, again, is so fundamental for us. If you borrow it, you have to pay it back. If you borrow it, the borrower is enslaved to the lender.
The Car Replacement Exercise
So we did a simple exercise last week. I asked you this and asked you not to raise your hand—I'm not distracted here, I'm trying to pull up a text. We asked this question: Given this statement that transportation is a necessity, light rail's not to Paradise Valley yet and I don't see it on the horizon, then a car is a necessity.
So we did the exercise—don't do it now. How many of you have a car? Well, hands are up. How many of you think that car will wear out? Hands are up. How many of you have a regular savings or allocation fund for the replacement of that car? Hands start to drop.
So we said, look at what we're programming in here. I'm programming in a necessary asset that depreciates, that's going to wear out. I don't have a plan, so unless you're cash rich—and some of you probably are—but unless you're cash rich, you're putting yourself on a trajectory where you have to be a slave to the lender to borrow to replace that. That's one of those big moments.
A Real-Life Success Story
Here's a text I got last week. I think this is interesting: "I paid cash for the last car I purchased. I bought a car last August, 2013 Nissan with 36,000 miles on it. I was able to pay cash for it because I've been attending your priority living studies for the last 25 years, and I actually put into plan what you taught yesterday. I set aside money for an expense I knew I would incur in the future that would be a depreciating asset."
"I meticulously saved between $100 and $200 every month for seven years. That doesn't sound very flashy, but I put $100—it's like the guy that says buy term, not whole life, invest the difference. Not many people invest the difference, but I put aside $100 or $200 every month for seven years. I now have a pretty nice car that's paid for. I don't have to worry about payments. I did that because I've been listening to your teaching on financial foundations for the last 25 years."
I almost stood up. This guy was here last week and said something Thursday, but I figured it would freak you out. I don't read that so you go, "Oh, wow, Tom, you're a great guy." Now, if that's your conclusion, that's a good thing, okay? I'm just saying, this is not hard to figure out. It's basic.
Spring Training Fundamentals
Spring training time. I'm watching a spring training game the other day, and a guy lays down a bunt. The pitcher and the third baseman—so you're playing Major League Baseball—the pitcher and the third baseman looked at each other like they'd never seen a bunt in their
Understanding Our Three Longings
In our previous discussion, we explored three fundamental longings that drive human behavior. Let me recap these if you're taking notes. We have casual, critical, and crucial longings.
A casual longing is something that can be met with a person, place, or thing. For example, I'm really hungry right now. It's Friday, and given my routine, I'm always hungry at this time. I have an 8:30 breakfast planned - a bagel and two poached eggs. I always think about it ahead of time. I'm saying no to the bacon or sausage, but I weaken when other options are presented. But a couple of poached eggs and a bagel will satisfy that casual longing by 9 o'clock for a while. These casual longings are recurring.
The critical longing is for a person, place, or thing that really needs to be met with a relationship. When God created us, He said it's not good for man to be alone. I talk honestly about this, though it's hard to discuss, but when I was alone and met Sandy, I fell in love with her and asked her to marry me. When she married me, I filled this critical longing. That sounds clinical, but I don't mean it that way. I tell her all the time that she's way more than an admin and a caregiver. Having said that, do we have a doctor's appointment tomorrow, and can you drive me there?
I have a test this Monday - a bladder test that's an invasive procedure requiring medication to relax me during the process. I told her about the test, and she said okay. Then I said I think you're going to need to drive me or get me a Goldberg and Osborne because I'm going to be medicated. She said all right. I want her to know I love her and I need her, which doesn't negate the love, but it fills a critical longing.
The Crucial Longing and Our Financial Mistakes
The third longing is the big one - the crucial longing that cannot be met with a person, place, or thing, but only with a relationship with Christ. Here's the connection and the big point: where I get into trouble is when I try to fill that crucial longing with a person, place, or thing - with a bagel or a poached egg or a caregiver.
When I think I want to be happy and have this need or desire to be fulfilled, I might look to Sandy to do it. Sandy can do it, but she's going to do it imperfectly by definition because only God can do that perfectly.
Here's how this relates to borrowing: I'm borrowing money for a person, an experience, or a possession, thinking that's going to make me happy. You've all lived long enough to experience this. "If I just get blank" - and you fill it in - "if I just get to a single digit handicap, if I just get that house, if I just get that job, if I just get that scholarship, if I just get my kids raised, then I'll be happy." Or "if I lost blank, my life wouldn't be worth living."
Whatever's in that blank is an idol because only God is the one who can fulfill that crucial longing. That's a huge point - a gigantic point.
Understanding Needs Versus Investment
Here's the third point for our series, which is new material and an important concept I hope I can do justice to: we have needs. Today's topic is investing. When I think investing, you probably think of buying stocks, buying property, looking for a startup, whatever it might be. But we have needs.
I've made a list of five basic needs, though you could dispute them: food, clothing, shelter, transportation, and communication. I'm not sure a phone is a necessity, but you're almost in real trouble now if you don't have one. I also put taxes, though some of you might consider that optional. But food, clothing, shelter, and transportation are definitely needs I have to meet.
The Food Investment Illustration
Let me give you four illustrations, starting with food. I'm hungry. I can go to Jack in the Box and for 99 cents get two tacos. It may not be a great dining experience - it's an upgrade from Filiberto's, but not much of one.
Or I can say I want something more than that. I want a burger, so I'll go to Zen Burger and spend 15 bucks.
Or I can say no, I want a little more. We're out in the area, so we're going to Houston's, and I'll have the equivalent meal there for 40 bucks.
Or I can say no, I want something more than that. We're going to pick a spot like Donovan's, and I'm going to spend 200 bucks.
Here's the big revelation: the need was met for 99 cents, but I spent $200. I've now invested $199, and I invest in one of four areas - profit, pleasure, people, or prestige.
I doubt that the $199 is going to have a return on investment. This just popped into my mind, so it could be a little gross, but I'm more likely to get a return from my 99 cent tacos than I am from Houston's.
It could be pleasure - going to Houston's provides a dining experience I enjoy, sitting outside on the patio where I'm comfortable. Could be prestige - when somebody asks where I ate last night, it doesn't sound cool to say Jack in the Box, but I might say Houston's. It's unlikely to be for people in this scenario.
The Clothing Investment Example
Let me illustrate this with clothing. I need slacks - I'm really into comfort, but I need a pair of slacks. I can go to Dillard's Outlet, which none of you are ever going to visit, at Fiesta Mall. It feels a little grimy, but it's actually the best place to buy clothes in the city. If you need shirts, guys, you can go into Dillard's and find thousands of shirts.
The Investment of Our Daily Choices
I can buy a shirt like this, which is a nice shirt, for 15 bucks. Or I can go on Land's End and find one for 35 bucks. I can go to Joseph A. Banks and buy this shirt and get the rest of the store for free—however they do it. Whatever deals on TV are never in the store when I get there. Or I can go to John's and get a nice shirt, get a Bobby Jones shirt for 250 bucks.
I met the need for 15, I bought the shirt for 100. I've made an investment of whatever that gap is—85 bucks—in profit, that's unlikely. Pleasure—I mean I'm really into this, it's a really comfortable shirt, I love it. Prestige—I can go to Dillard's Outlet and get a Greg Norman shirt for 15 bucks. If you put a little logo on here that says Hotel Del Coronado on the same Greg Norman shirt, it's 95. So I could be buying it for prestige, or it could be for people.
Same thing with a house. You can get a studio for 500, I can drive out to East Mesa, homes starting at 125. I can come in here—do you get that? Same thing with a car—get a reliable used car for five grand, but I'm going to spend 25.
Understanding Our Investment Categories
Here's what I want you to see when we talk about investment: We are constantly making investments in either profit, pleasure, prestige, or people. Now here's what I'm not doing—I'm not trying to make you feel guilty, and I'm not trying to squeeze every dime out of your budget.
There used to be a popular fitness guy, Colbert Bailey, and he said you'll never get rid of 100% of fat in your body because the brain is 100% fat. He wrote this 25 years ago, and without it, you're only fit to run for public office. We seem to bear that out. You get the drift of this?
How This Changes Our Perspective
When you get that, it causes you to reflect. Sandy and I were out the other day, and it was time to get something to eat. I said, "What are you hungry for?" "Well, I don't know what I'm hungry for, it doesn't matter." I said, "Well, let's get a cheeseburger." "Well, I don't want a cheeseburger." "Okay, stop, what are you hungry for?" "Not hungry"—and I know her answer, it's a salad this big.
"Well, let's go where we can get a salad." I just said, "Sandy, I can't do this. I could go in and look at this and spend another 50 bucks for cheeseburgers. I can't do it." And it's me, it's not you, it's me. It's not a judgment. Everywhere we go, if I have an apple and a bottle of water, or I have Eggs Benedict, it's $20 for breakfast.
I'm making an investment there. That changes my strategy. That's not anti-stuff, it's not anti-thing. It's to go, when I start to look at this, it revolutionizes my whole way of thinking. I don't mean to over-spiritualize—I hate it when people do that—but what would Jesus eat? What kind of driver would Jesus hit? I don't know, but it'd be an expensive good one. I know that. You get what I'm saying there? All of a sudden, it changes my whole strategy.
The Value of Obedience Over Appreciation
You need to determine the value of obedience over appreciation. Proverbs 28:20: "A faithful man will abound in His blessings, but he who makes haste to be rich will not go unpunished." He's a faithful man.
This is hard stuff. I think the scripture teaches that for the Christian in business, the bottom line is not the bottom line. That produces all sorts of tension for the Christian in business. The bottom line is not the bottom line. What's important beyond the bottom line is how you got there. It is important, and we want to be conscious of this, but there may be things that contribute this way beyond just the bottom line.
A Lesson from the Ping Factory
Years ago I was going through some putting problems, so I was at the Ping factory more than Karsten was there. Somebody I know walks through and said, "Tom, have you been in and looked around? You want to go through?" I said, "Yeah, I'd love it. Got time?"
So we go in and I hear this thing—it was like being in an MRI machine. They were taking the clubheads and putting them in with big rocks and tumbling them. I mean, it was intense. Whenever I see these guys who put their plastic covers on their irons, I think, "Buddy, they've been in there with rocks."
We come around and there's a little room—maybe 20 by 20, maybe a little bigger—and there's about 15 stations. Iron sets are stacked up, and there are ladies who are painting the dots on the irons. If you're a Ping guy, you had black dots. I was an orange dot guy, blue dot. These ladies would take a set of irons and paint the dots on them.
The Cost of Character in Business
I said, "This seems pretty inefficient." He said, "Well, this is not going away. These ladies have been with Karsten since Karsten started, and he knows and I know and anybody else knows there's a faster, more efficient, easier, less expensive way to do it. He's committed to these gals."
It was the most amazing thing. There's a business side of you that goes, "But the bottom line is the bottom line." But it was something where Karsten said, "How much more do I need? I'm going to honor these guys in the process."
So it matters. If you're in sports, it matters how you recruit, it matters how you cheat, it matters what you do. I remember I did a chapel for the Iowa football team four years ago, and I was making a point that how you do what you do is more important than what you do. I said, "I'd rather be seven and five with Coach Ferentz than 12 and 0 with some other guys." Now what I learned this year is I'd rather be 12 and 0 with Coach Ferentz. I like that too.
But it doesn't matter. At the end of the day, it's a matter of integrity and honesty.
Look for Godly Financial Advice
Here's the second thing: look for a godly source for investment advice. If my car breaks down, I'm looking for an honest mechanic. If my toilet breaks, I'm looking for a guy that can come in a timely fashion and fix it at what I think is a reasonable rate. I'm not looking for the Christian way of fixing the toilet. There's not a Christian way to fix the toilet. There's not a Christian way to change the carburetor. You're in areas that are pretty mechanical.
When I had my open-heart surgery, somebody asked me the same questions—the same stupid questions: "Do you have a good doctor?" And I always go, "No, I got the guy who graduated last in his class from Rocky Point Medical School online. That's who I got." I said, "Yes, I have a good doctor." "Is he a Christian?" I don't know. "Does that matter to you?" And I said, "I was more looking at survival rate and Yelp reviews. I'll get the Christian guy to pray for the atheist guy who's cutting on me." Now you may disagree with that, and that's okay. I'm fine with that.
When it comes to finance, you're in a different place. There's an ethical, moral, biblical way to handle these things. I was a coal banker, and there were two or three guys at tax time. I'm talking to one of the guys—these guys on the pecking order are way up here, and I'm way down here. So I was talking to one of them over coffee or something, and I said, "I got to get taxes done. Who does your taxes?" He gave me a name. Then a couple days later, I'm talking to another one of these guys. I said, "Who does your taxes? You know, I've heard that a colleague said he does the taxes for a lot of the guys in here." I thought, "Okay, I want to be here. That'll be good. If nothing else, I can say our incomes aren't in common, but our tax guy is."
So I call the guy and set an appointment and take in my packet. He calls and said, "I got a bunch of questions here." I said, "Well, I'm not good at receipts and stuff." But he said, "No, no, no. It says here you drove 8,000 miles last year." Well, I don't drive. I hate to drive. I always get somebody else to drive. I get somebody to pick me up. I never go to the thing. If I can get them to come to me, I get them to come to me. I said, "Yeah, that's right." He goes, "Well, we got to change that." I said, "I don't know what you mean." He said, "Listen, the industry you're in, we can put 18,000 in there. Nobody will ever question it."
Now, I'm not Saint Tom here, but I said, "But I didn't drive 18,000. I drove 8,000." He said, "But we can put in 18,000." "That's not right. I drove 8,000." He said, "You know what he's going to say—what everybody does: 'Everybody does it.'" I said, "You know what? Put it all back in the envelope, because if you're going to screw them, you're going to screw me too, and I don't want to be part of that."
That's moral. When you get into finance, it's someone—"How blessed is the man who doesn't walk in the counsel of the wicked, nor stand in the path of the sinners, nor sit in the seats of the scoffer, but his delight is in the law of the Lord, and he meditates on it day and night." When you're talking about marriage, when you're talking about family, when you're talking about friendships, it's not just competency—it's a biblical perspective.
Adopt a Prudent Process That Honors God
Here's the third thing: you need to adopt a prudent process that honors God. Proverbs 24:3-4 is listed for you: "By wisdom a house is built, by understanding it's established, by knowledge the rooms are filled." In other words, by wisdom I launch this enterprise. Understanding is common sense, and knowledge is keeping abreast of what's going on.
So saying that I'm a follower of Christ and I'm going to follow these principles doesn't mean I abandon good, solid business procedure. Years ago, the stat was that of every hundred businesses that failed—this stunned me—80% had no plan. No business plan. Not a bad one—they didn't have any.
Some friends came over to your house, and you had meatloaf, and they said, "This is the best meatloaf I've ever had! I know it's an old family recipe." A week later, people come over: "Meatloaf! This is the best meatloaf I've ever had!" You open up a restaurant. "I'm starting—you know, God must want me to—God wants me to open a meatloaf restaurant." And then you serve pie. They said, "No one serves pie like that." So out you go, and you open this restaurant. There hasn't been any planning. There's no marketing.
What the Scripture says is it's a real simple process. I doubt you need to write it down, but I get a vision, and I have a mission, and I have goals. I have a strategy, and I have a plan, and I monitor those along the way. I keep abreast of what's going on. It's not enough for you to say, "Who handles your finances?" "Bob handles my finances." "How are they doing?" "Well, I don't know." Well, that's not your prerogative to not know.
Stay Engaged in Your Financial Management
I'm prone to this. I'm preaching to myself on this. I've never handled the finances in our house. We talk about it—we have budget and goals and concepts and buckets—but I just never done it. So when Susan got sick, she got really, really sick. As she got sicker, the only thing she was doing was the money. I said, "Susan, listen, let me do it." She said, "You don't know how." I said, "I can figure it out." "No." She was a math girl and all that stuff. She said, "I want to do it."
I stepped back, and I realized it was the last thing she was doing, and she was hanging on to it. So she's really sick. She's got an hour or two, maybe every other day, and she said, "I'm just going to spend it on the finances." I'm at work one day. Phone rings. She said, "Can you come home?" I said, "Sure. What's the problem?" She said, "Well, just come home. Can you?" I said, "Sure."
So I go home, and she's bawling. I said, "Are you okay?" She said, "No." I said, "What's wrong?" She said, "They turned
Choose Honest Returns Over Questionable High Yields
Here's a personal example of this principle. My wife called me one day and said they'd turned off our water. We don't have any water to the house. How can that be? She said, "I forgot to pay the bill. I got plenty of money." I said, "Well, I can go down there and fix this." And she said, "No, I'll go down." I said, "Susan, you can't drive." She said, "I let you down. I let this down." I'm saying, "Buddy, it's my fault, not your fault." You don't have the right to just stay back and go, "Okay, you're going to take care of that." You need to be careful there.
Choose honest low yields over questionable high yields. It's that passage, Proverbs 21:5: "The plans of the diligent lead surely to advantage." It's the term that we've talked about before—it's steady plotting. When I'm doing investment, I need to be careful here. If ever there's something that wants to make me swing at the fences, it's this high yield.
I got a call one day sitting at my desk. "Tom, so-and-so," and I knew him. He said, "I got an investment opportunity for you." And I said, "You know, this is probably not a good time." He said, "Okay. Let me tell you who else is in it," so he gave me the names—you would know them. And he said, "I got two units left, and I thought of you." Which means to me he's at S in his Rolodex, which is what he means when he said he thought of me. And I said, "You know, is it something I can do?" And I said, "Well, yeah, I can do it." I said, "All right, I'll take the two of them."
About five months later, I'm thinking about it. I'm thinking, I haven't heard from this guy. So I call him. He said, "I was just getting ready to call you. I got good news and bad news." And I said, "Okay." And I don't know how you handle that, but whenever anybody says I got good news and bad news, I always go, "Give me the bad news first." He said, "Well, the bad news is we've lost all our money." I said, "Okay. What's the good news?" He said, "I think there's still an opportunity here."
I said, "Really?" "Oh, yeah, yeah. I think it's time to double down." And I said, "What's that based on?" He said, "Well, the acquisition of another company that's a public company," and it went blah, blah, blah, blah, blah. At the end of the conversation, I said, "All right, I'll take two more units of this thing."
The Allure of High Returns
And the whole intrigue of that was, "Look who's in it. Look at these returns. Tom, what are you getting now?" Well, I don't know. Six, seven percent? "Tom, seven percent? We're going to be looking at 27, 30 percent." And I wanted to go, "Well, over five months, I'm at zero." But see how that works?
There's nothing flashy when it comes to money. It's like going to the party and saying, "Hey, you look like you've lost weight. You're working out. What are you doing?" "Walking." Nobody wants that. They want to hear hot yoga and P90X and all this other stuff.
Here's what I wrote down here. Life lesson: I learned that the ground floor is right next to ground zero when it comes to investment. That's what I learned.
Make Sure Your Holdings Reflect Your Moral Position
Two more points I'll give you real quickly. Make sure your holdings reflect your moral position, and be careful about investing commingled funds. By that, I mean you can be engaged. You can be one of these people, and I'm not making any judgment here. Let's say you're not a drinker. You have a moral stand that's against alcohol. Yet you're in a mutual fund that's heavily invested in some alcohol manufacturing. You're against gambling, but you're in a mutual fund that's throwing money into Caesar's Palace. There are mutual funds that are available now that are morally neutral mutual funds. So take a look at those.
Be Careful About Commingled Funds
And commingled is saying, "Listen, God said to you," and I'll give you three passages here. 2 Corinthians 9:7: "God loves a cheerful giver." 1 Timothy 5:8: provide for your own. 1 John 3:17: "Whoever has the world's goods and sees His brother in need and closes His heart against Him does not love God."
So I'm in my whole bucket of money here. I have a responsibility to take care of those needs, to be a giver. And this is so hard—to look at the people around me who have sincere needs and to be available for them. I meet people regularly who don't just need a break. They need cash.
I think just giving somebody money is not responsible. But sometimes you've got people that need that hand up. They need to take that edge off. And I need to look and say, am I investing my money in pleasure, people, or profit, prestige? Or am I really helping someone?
Somebody sent me a sign yesterday. I thought it was good. It was one of the guys you'd see on a corner, handwritten sign: "Give me a dollar or a vote for Trump." And I thought that was kind of an interesting sign. But use your head.
Next Week: Giving
Now here's where we're going next week. This could be a way to kill this thing. Next week is giving. And trust me, those who've been here for 25 years, it's not a subtle ploy for me to separate you from your cash. Haven't done it. Not going to do it. Not our deal.
But when we talk about giving and we go, I presume you're here because there's a spiritual component to this. Well, giving is going to reflect that heart that you have for Christ. A lot of stuff in there. But from my view, a lot of good stuff. So the recording will be out next week.
Help us see this truth and live in a way that brings honor and glory to You. We pray that in Christ's name. Amen.