Where are you on the investment risk scale?

Back in my corporate days, if you were to ask me what my risk level was on a scale from 1 to 10, I would have said a “2″.  I was really conservative with my investments.

If you would have asked me that same question just a couple of years ago, I would have answered with a resounding “10″ and would have been quite proud of that.

But where should we be?  Knowing that God is balanced in all things, maybe we should follow His lead and be in the middle – maybe a “5″.  But what does that mean?

Being on the low end of the risk scale would be like the “wicked servant” in Luke 19, who buried his talent because he was so afraid to take any risks. 

So, needless to say, I didn’t want to be there, so, hallelujah, let’s move to a “10″!

This is exactly what I did.  I would sign my life away on the dotted line on just about anything that came across my desk that looked like it might make money, believing I was quite unlike that wicked servant. 

Let me make this clear.  It’s not the asset itself that’s too risky; it’s HOW you invest in that asset that makes it more or less risky.

Let me give you an example.  One of my biggest mistakes is the purchase of two luxury homes right before the real estate market had its biggest downturn.  Because I signed for these personally and I couldn’t sell them, they became huge financial burdens on us (they were $1 million plus each). 

Was it the luxury homes themselves that was risky?  No, it was the way I bought them.  I could have put these two homes under option with no risk at all!  Why didn’t I do that?  Well, I trusted the people who brought the deal to me, and as I’ve said before, I didn’t seek the Lord for wisdom in these deals, or even inquire if I was supposed to be involved with them in the first place.  So any particular investment can be a “5″ just by being wise at finding ways to minimize the risks involved.

After going through certain financial struggles (some due to these two homes and some due to other mistakes made, but perhaps that’s another post), it would be tempting to run back to the safety of the “1″ or the “2″ on the risk scale.  But are you getting anywhere?  Not even according to Jesus himself, as evidenced in Luke 19.

Ecclesiastes 11 talks about taking risks with your investments, all the while knowing that some of them will have a return and others won’t.  But you do it anyway!

Yes, we need to take risks, but as a recurring theme you’re hearing from me over and over in this series, there must be a balance to it.

Stay tuned…

Blessings!

Mark

P.S.  Please leave your comments below!