Giving Wisely in a Confusing World

The 2019 alleged scam on GoFundMe by a homeless man in Philadelphia and a New Jersey couple has highlighted one problem with generosity; there are a lot of liars and cheaters out there. That is nothing new, just an additional example of a well-established fact.

Avoiding that type of scam is relatively easy – avoid impulse giving. Scammers like that prey upon compassionate people, a lot of them, and hope that enough people respond with a little money to make it worth their effort. In the case of the Go Fund Me scam, over $400,000 was donated, mostly by small gifts. It isn’t hard to imagine a weak justification based on the small amount of most donations; “Hey, no one lost enough to hurt themselves financially.”

So, avoid impulse giving. Is the problem solved so we can just give when we want? No, because there are many other ways cheaters work and there is another underlying issue about generosity that needs to be addressed. The underlying issue that makes careful attention important is that generous people want their donations to make a difference. Actually, even most small donors want their donations to make a difference.

No one wants to give money, a lot or only a little, to a scam or to benefit undeserving people. On the other hand, many people want to give and help people in need. After all, that is what we are directed to do as Christians. See Deuteronomy 15:11, 1 Samuel 2:8, Psalm 82:4, Proverbs 14:31, James 2:14-17, among many other verses and passages.

So how can we avoid scams and also do good with what we give? Here are a few ideas that may help.

Define your giving interests

Defining your personal values and setting your priorities based upon those values helps you give with the impact you want. If you have a few defined and identified charities where you feel donations are secure (or you have researched them and are comfortable), you are far less likely to be tempted by an unknown charity or scammed by a fraud.

What charity or ministry or cause has touched your heartstrings? Is it lost people in general or is it a missions destination with many lost souls to be reached? It is a ministry involving music, recreation, men, women, children, adoption, foster parenting, mentoring, human trafficking or any of literally hundreds of ministry opportunities at a large church like Idlewild? For everyone there is a wrong that is cared about, a social injustice to address, or some need to be met. If you are in doubt about yours, give us a call at (813) 264-8713 at the Foundation and we can make recommendations. Alternatively, we will sit with you and help you find the ministry where your passion lights up.

For most of us the goal isn’t a building with our name on it but rather a certain knowledge that we have given and helped those in need and we have walked hand-in-hand with the Lord in His mission. Let’s see how to do that effectively.

Know Your Charity or Non-Profit

Research matters. It isn’t fun, but it allows you to make a difference. There are a few relatively simple tools that can allow you to give with an impact and avoid the scams.

First, let’s learn the language of wisdom and research on the topic of charities and non-profits.
501(c)(3) is the tax code section number referring to the tax-exempt status of a nonprofit organization as qualified under IRS rules. 501(c)(3) organizations are allowed to receive tax-deductible donations from donors. A gift, no matter how charitable in nature, to a non-qualified person or organization is not deductible as a charitable donation. If an organization has that 501(c)(3) status, it has a determination letter from the Internal Revenue Service and can show that letter to you.

It may be helpful to know that there are different kinds of 501(c)(3) organizations, public charities and private foundations. They are each governed by different rules and laws.

There are a few websites you can check on to begin the process of investigating a charity with which you are not familiar. But there may be an easier way even than checking a few websites. If you give using a giving fund of the National Christian Foundation, they have already reviewed the authenticity of the charity and the 501(c)(3) tax code status of thousands of charities. All you have to do is attempt to make a grant and look up the charity on NCF’s grant website. If they are listed, they are legitimate. If they are not listed, you can check with NCF because they might be a good charity, but they just have not been reviewed yet.

Do not assume a charity unknown to you is legitimate; take the time to verify it. A donation to a fake charity is not only a waste of your good money, it is not deductible if it does not have its 501(c)(3) determination letter. Don’t just take the charity’s word for it.

You can check on the charity’s 501(c)(3) status by going to the IRS website for that purpose. Under Select Database enter Search All. Under Search by, enter Organization name, then under “Search Term” enter the organization’s name, city and state. Sometimes persistence and multiple efforts are required. For example, The Idlewild Foundation comes up only under Idlewild Foundation and not The Idlewild Foundation.

That’s only a start, though.

Perhaps the best help is Guidestar. The Guidestar site allows a search and provides information on the charity or non-profit, including the organization’s EIN, address, principle officer, and even the mission statement, if the organization has one.

The Better Business Bureau has a search site that may help you spot a problem charity. Go to that site and type in the charity’s name and see if there is a report. This is a limited site, but still a good neutral source that may help you spot a problem charity.

The American Institute of Philanthropy maintains a charity watch site with the purpose of helping donors make informed giving decisions. The Institute rates charities pursuant to a number of criteria, as well as publishes helpful articles about the charitable sector. Unfortunately, the site is only accessible to the general public on top-rated charities, meaning that many fine but smaller charitable organizations cannot be checked.

Charity Navigator has a site that allows the public to search by charity name. You can also narrow the search by keyword. However, they do not rate many fine organizations because they limit ratings to organizations with annual revenue above $1 million.

Florida has laws aimed at protecting potential donors from scams, but enforcement is hard due to Constitutional protections for charitable organizations. All charitable organizations and sponsors must register with the Florida Department of Agriculture and Consumer Services (FDACS) before engaging in any solicitation activities in or from the State of Florida. Those registrations must be renewed annually with the state. If an organization is not registered, that is a concern. You can receive a copy of the registration and financial information of any particular organization soliciting in or from Florida by calling 1-800-HELP-FLA (435-7352) or 1-800-FL-AYUDA (352-9832) en Español. Many other states have similar laws to protect against fraud and abuse.

There are a few general rules you can follow to protect yourself against charities that do not comply with the law. Start with these:

  • Avoid any charity or fundraiser that won’t show you its letter of determination of its 501(c)(3) status;
  • Be cautious about a charity with a copycat name, a name similar to or mimicking a well-known charity;
  • Check on a charity that calls you about or sends you a thank you for a donation or pledge you did not make;
  • Do not donate when high-pressure tactics are used such as the need is urgent and immediate;
  • Never send cash, a pre-paid card or wire funds and never give money to a “charity” that sends a courier or pick-up service;
  • Do not fall for the “chance to win” some special or outrageous prize in exchange for your generous donation; and
  • Stay away from any charity or non-profit that won’t give you information about its costs including its percentage of donations going to actual charitable use, fund-raising expenses, public education, administrative expenses, and overhead expenses and won’t tell you how the donation will be used.

You worked hard for your money; don’t give it away to a charity that pays a large percentage of all donated dollars to overhead, management, and fundraising. Some charities reach 97% overhead and only 3% of donated funds goes to help the cause supposedly supported. In checking, on an organization’s expenses, be aware that education can be an important part of an organization’s mission, but that some charities use that expense as their excuse for more donated funds not going to the cause.
Give with a goal

To give well and effectively, you should give with a passion and a goal. You have already found your passion because you have defined your interests as written above, but now you need to know what you hope to accomplish with your donation. The goal you have ties in closely with your passion. Look for some of the following:

•  The specific needs of the charity or ministry you want to support are important. Are those needs immediate? Is the need a program that is important to you?
•  Have a realistic and objective goal. Have a goal that is S.M.A.R.T., especially a goal that is specific and measurable to give your generosity a kingdom impact. Look for an organization with similar objective goals. For example, if your goal is salvation for nonbelievers, look for an organization with results and stories that show it is making an eternal difference for the lost.
•  Is the need for a new program or to continue or expand an existing program? Is the program well-thought out and planned? Will it accomplish what you want?
•  Look at the long-range plans of the charity or organization you want to support. i.e., is it a viable organization that will be around to continue to serve your passion into the future?
•  What is the mission of the charity and is it fully aligned with your faith and passion?
•  Know the management of the charity. Is it well-staffed with caring people whose passion aligns with yours?

There are a few final thoughts before you make a sizeable donation to a charity. These final thoughts include:

•  Will the donation you are considering will have a negative or harmful impact on your personal finances, your financial future, or your estate plan and your desires to give to your family?
•  Have you considered using life insurance to make a final gift to a charity or ministry that matters to you? Life insurance may allow you to make a far-larger charitable gift than may otherwise be possible. You can re-name the beneficiary of an existing life insurance policy. By making a charity the beneficiary of the life insurance policy, the charity may receive a larger donation than if you had just donated the cash value of a policy or donated the annual premiums.
•  If income on the money you want to donate is important, have you considered such giving methods as a charitable gift annuity or a charitable remainder trust. These legal means of giving generate life income to the donor as well as a tax benefit. For more details on this complex but often used means of giving, give us a call at The Idlewild Foundation, see Planned Giving – A Blessing for All or discuss it with your financial adviser.
•  It is often tax-wise to give other appreciated assets such as retirement accounts, real estate, stock, a business interest to a charity rather than cash. See Tax-Wise Charitable Giving for more information.
•  Have you sought advice from your family and your financial adviser?

One of the best ways to give and impact a charity or ministry is so simple it is often overlooked, and that is regular committed giving. Many charities and ministries receive small one-time donations. Those matter a lot and are often the life-blood of a charity. But the donation that allows a charity to build a sustainable program of help or relief and meet the long-term goals and purpose of the charity is the donor who commits to a monthly donation that the charity can rely upon.

You can automate your donations through either a regular automatic check from an online checking account or from a Donor Advised Fund (DAF). If you make your donations a part of your monthly and annual budget, you allow the charity to make that income a part of its budget. That makes planning and growth a lot easier and more effective.

Celebrate success

No, you probably won’t “save the world.” But you can and should celebrate when you reach a giving goal and do your part in God’s kingdom work. The way to celebrate success is to define success so that it can be objectively measured. Aim for it and stay committed.

About the Author

John Campbell has retired from a 40-year legal practice as a trial attorney in Tampa. He has served in multiple volunteer roles at Idlewild Baptist Church in Lutz, Florida, where he met Jesus. He began serving as the Executive Director of the Idlewild Foundation in 2016. He has been married to the love of his life, Mona Puckett Campbell, since 1972.

Save $ in 2022

Saving money is a challenge. The money seems to (and does) build up slowly and the temptations to cheat and spend rather than save are like dieting temptations, easy to find and hard to resist. Here are a few practical ideas to keep your savings increasing and to help you hold the line on spending. When you save on one of the ideas here, save the money toward an emergency savings account, your retirement or a special trip and vacation.

Try these ideas and save:

1. Your car insurance rises every year even though your car is older and is worth less. You would think at least the collision coverage would decrease since your car is a year older and worth less. No! But it will, if you decide to shop around at least every three years. You may not want to decide based upon premium cost alone, because there is a lot to be said about receiving good service; but if money is tight, shop around. 

2. If you have emergency savings, go with high deductible collision coverage. You can save a lot that way. I will admit it may cost you if you have an at fault accident, but if you go several years without an accident, your savings will far exceed the amount of your deductible. If you don’t have an emergency savings fund, start one now.

3. Shop your homeowners coverage as well. Those premiums tend to rise more than the value of your home. Home insurers, like car insurers, count on your not wanting the hassle of changing carriers.

4. Drop your magazine subscriptions. Check and you may find the very same magazine is available at your nearest public library. Or, alternatively, spend a quiet evening at a local bookstore, reading your favorite magazines for free.

5. Hold a garage sale. Go through your closet and find clothes you have not worn in a year. The chances are you will never wear it if you haven’t worn it in a year. Pull the junk out of your closets you never use and out of the attic that you stuffed up there and see if there is someone else who wants your junk. You won’t make a lot, but you will make more than doing nothing will make for you. Alternatively, try eBay or sell online. A second alternative is for you to donate what you have to a Christian thrift store and take the deduction on your tax return if you are able.

6. Check your Internet, cable and phone plans. You can almost always improve your plan and save money if you check once a year. Ask yourself if you really need that landline. We dropped ours over a year ago and discovered we received fewer junk calls during dinner.

7. Get a free energy audit from your power company and see where your electric use can be trimmed. Consider adding attic insulation if your house is old, many types of older insulation settle and lose R-value, costing you money every month. Alternatively, you could do something really radical and turn off the lights when you leave a room.

8. Drop your gym membership and take up walking. It is easier on the knees and hips than jogging, can be done well into your 70’s, and is free!

9. Keep your tires properly inflated, put the right gas in your car and maintain it based upon the manufacturer’s recommendations.

10. If you use AAA for emergency roadside service, go to an AAA location and check out their available gift cards. You get a 3 to 5% credit in AAA dollars towards your next year AAA bill. If it is a card for a restaurant you are going to eat at anyway, a store you will shop at anyway (or even Amazon Smile), or a gift card you would give as a gift anyway, you will save an annual AAA fee in a fairly short time, certainly less than a year.

11. While I am on the topic of gift cards, buy them at a discount from a discounter like giftcardgranny.com. You can at times find meaningful discounts on hundreds of gift cards including Walmart, Target, and many large retailers.

12. Buy used, not new. A used car, if checked out carefully, is a great savings over a new car. New cars lose thousands of dollars almost the same moment you drive the car off the lot. If the car isn’t too old, you may still have some warranty left – always check. If buying a used car, always check the obvious things such as the tires. Many dealers will put new tires on a car if you spot a worn or repaired tire.

13. Used books are readily available at thrift stores, or, even better free books, magazines and videos are available at the public library.

14. Buy an Entertainment Book and eat out for 50% at many restaurants. Try Entertainment Books and see what restaurants and services are covered in your area. In the Tampa Bay area there are over 150 restaurants and services offering substantial discounts. You quickly save the cost of the book, try new places and then save a lot more.

15. Save without the hassle of coupons. There is a rather remarkable website worth checking – Savingstar. You can go to their free website, check the products you want to buy from a store and get cash back after you shop. You can link your store loyalty card or upload the receipt and save. The stores available can be seen from the site and include Publix, WalMart, Target, CVS, Walgreens and literally hundreds of other retailers.

Saving just requires that you try. The problem is that we tend to get so busy, that time is a commodity that is hard to find. But if you can find the time to try a few of these ideas here, you can save a lot. If you have additional ideas, call or email us and we will pass them on.

About the Author

John Campbell has retired from a 40-year legal practice as a trial attorney in Tampa. He has served in multiple volunteer roles at Idlewild Baptist Church in Lutz, Florida, where he met Jesus. He began serving as the Executive Director of the Idlewild Foundation in 2016. He has been married to the love of his life, Mona Puckett Campbell, since 1972.

A Great Start to 2022

New Year’s Resolutions to Kick-Off the Year

What are your New Year Resolutions for 2022?  Lose weight – check, exercise more – check, and get in better shape – long overdue! Those three resolutions are there for me almost every year. But then life happens! Sometimes I keep such a resolution for a few weeks or maybe even a few months with strong encouragement. After that, the busy days of spring begin to take over.

Instead, join me and make one of your resolutions for 2022 to review your family financial and estate plans. Significant life changes (and even significant market or legal changes such as increasing income tax rates) are something that should trigger in our minds the question, “Do I need to change my will or trust?” or “Should I change any of my beneficiary designations?” If you need an easy way to keep track of your bequests and beneficiary designations on bank accounts, IRAs and financial or investment accounts, make a list. It is best done on a computer file so you do not have to re-do the entire document each time there is a significant change, but then print it and keep it with your estate and financial documents just in case your computer files are somehow lost. For a few additional thoughts on this topic, see A Few Estate Planning Pitfalls (especially #3) and A Few More Estate Planning Pitfalls.

Also, think about adding a few fresh ideas in which your entire family can become involved! Here are some things we are trying that I can offer as suggestions to prayerfully consider.

  1. Serve: Serve together as a family, a small group or just as a group of friends.  Find a ministry that touches your heart and about which you can be passionate. Schedule yourself to serve regularly in this ministry with your family, a group of friends, or involve your small group. On a simpler note, you can visit a friend you haven’t seen in a while, perhaps someone out with an illness or injury. Always remember that stewardship is a L.I.F.E activity that is not limited to dollars and cents. It involves your Labor, your Influence, your Financial resources, and your Expertise, your entire L.I.F.E. Stop by the Movement booth in the Gatheria at Idlewild. Learn how you can discover God’s gifting to you and put your gift(s) into joyful service. You can give an hour a week – yes, you really can.

2. Broaden your view: Look for new opportunities to broaden your stewardship. Never neglect giving your tithe to your home church. Check out Does the New Testament Teach Tithing?, More on the Tithe – Tithes and Offerings 1, and More on the Tithe – Tithes and Offerings 2. Know that God has also called us to give over and above the tithe. Read and reflect upon Deuteronomy 15, Matthew 23:23, and Luke 12:33-34.

3. Give generously and wisely: When you find a ministry that touches your heart, consider giving as well as serving. You can give in different ways. Instead of just monetary giving, consider giving an appreciated asset, stock, or a piece of property. This type of giving may be better for both you and the charity than if you sold and donated the net proceeds. This strategy may reduce your tax burden if done correctly (and wisely) and increases the amount the charity receives – and what that charity can do. Not sure how to do this? The Idlewild Foundation can show you how. Just give us a call at (813) 264-8713. And never forget God in your giving.

4. Learn about Giving Funds: Explore the possibilities of a Donor Advised Fund that will allow you a deduction now, but choose who you want to support and how much you will give at a future date. This kind of fund can be an efficient means of setting up recurring donations and makes record keeping for taxes easy. Learn more at Ways to Give, or just give us a call. Now, with the new administration in Washington and with there being a great likelihood of either direct or indirect tax increases, more than ever you need to examine tax-wise giving. We can help!

5. Share your experience with others: If you have a life example of how God has blessed you and how you have given back to Him, share your story. Tell your small group, your friends, and your family about how you’ve been blessed and how you’ve been able to bless others.

6. Accelerate your giving: In 2021 Idlewild completed its debt elimination program that was called Accelerate. That means you have some additional money! Rather than increase your standard of living, instead increase your standard of giving (a quote from Randy Alcorn). Increase your giving to Idlewild’s kingdom investments, join Pastor Ken in that goal, or increase your giving to Christian ministries. Please consider The Idlewild Foundation and its Fund 1:27 where 100% or any donation goes to ministry. Nothing goes to salaries, overhead or administrative costs. Give over and above the tithe and enjoy the joy of generosity. For a bit of help encouraging that, read More on the Tithe – Tithes and Offerings 1, More on the Tithe – Tithes and Offerings 2, and Science Proves That It Is More Blessed to Give Than Receive.

Here’s another idea! Why not spend some time reviewing your spending for last year? By looking at your bank and charge card statements you’ll get a pretty good picture of where your money was spent and what your priorities have been. Did you find ways to glorify God through any of your spending? Did your spending in 2021 give more glory to yourself than to God? Could you do better? Give God the credit He is due. He made your income and your abilities possible.


Deuteronomy 8:18
18     But remember the Lord your God, for it is he who gives you the ability to produce wealth …


Give God the credit He is due. He made your income and your abilities possible.

Take some time to sit down with your family and discuss ways to manage your money more effectively. Consider speaking with someone from the Stewardship Ministry of Idlewild Baptist Church or with us at The Idlewild Foundation. We can give you tips and ideas in managing your money. And don’t worry. You won’t be bludgeoned until you agree to give money to the Foundation! On the other hand, you will learn ways that you can further God’s kingdom by sharing His blessings with others – with open hands!

You can contact us at The Idlewild Foundation, (813) 264-8713 or email me at jcampbell@idlewild.org. Make 2022 a year to celebrate!

 

About the Author

John Campbell has retired from a 40 year legal practice as a trial attorney in Tampa. He has served in multiple volunteer roles at Idlewild Baptist Church in Lutz, Florida, where he met Jesus.  He began serving as the Executive Director of the Idlewild Foundation in 2016.  He has been married to the love of his life, Mona Puckett Campbell, since 1972.

Aren’t Stocks a Risky Investment?

Life has risks. We weigh comparative risks constantly. Do I have enough gas to skip this crowded station and make it to the next one? Can I make it through the intersection before the light turns red? Is it safe to cross the road? Do I dare drive in Tampa during rush hour?

Similarly, investing involves risk assessment. But here is a thought you may never have had: doing nothing with your money involves risks as well! Putting it under the mattress risks fire and theft.

But putting money in a bank doesn’t involve risk, does it? Yes, it does. In fact, putting money into a savings account involves more than just a risk; it involves a virtual certainty of loss! Money in a bank, a credit union, or money market fund will earn negligible interest income. Typically, you might get, at the very most, 1 to 1 ½ percent. Inflation currently is above 2%, guaranteeing a loss if your money earns only 1% or 1 ½%. If you have $1,000 earning 1% per year, you earn $10.00. But if inflation is 3%, your money lost $30 in value over that same year, making your net loss for the year $20.

Putting your money in a Certificate of Deposit (CD) only reduces the loss a little bit because, except for rare times of deflation, CDs typically earn less than the rate of inflation. At the time of writing this article, the only rate available above 3.0% was for a 5-year CD, which is generally not considered to be a wise investment choice. because interest rates may rise (and they are rising when this article was being written).

So yes, putting your money in a bank has risks. All decisions about money involve risk. The only questions are, (1) “How much risk is there?”, (2) “How much risk should you take?”, and (3) “How much risk is acceptable to me?”

The answer to those questions involves a blend of thought, planning and guidance. The only way to fully answer those questions is to factor in these variables:

  1. Where are you in life, including your age, health, and employment future?
  2. Where do you want to be financially and at what age?
  3. What will be the likely effect of inflation in the time between the answers to #1 and #2?
  4. Are you willing to settle for less?
  5. Are you willing to work more or longer or risk more to have more to reach the goals you have set?

Five “simple” sets of variables? No, there is nothing simple about them! The answers you give to the variables determine what is realistically possible and what may be out of reach. By way of a simple illustration, if you are 60 and have no savings, your options are very limited. If you are 25 with a professional degree and a good job, there are many options. In between those two extremes there is a wide range of unclear options, each and every one of which involves some risk.

You need to have savings for several different reasons; you need an emergency fund, you need savings for your retirement, you need savings for education, for travel, and for your senior years when medical care and assisted living may cost astronomical amounts.

The problem is that to make wise choices takes a level of skill and knowledge that may require professional help. Regardless, here are a few ideas.

Stocks are often a necessary investment option

If you are starting early enough, in your 20’s or 30’s perhaps, some of your end goals, such as retirement, are far off. However, the amounts needed are great, so you should start as early as possible. Even then, if all you do is put money in the bank, you will actually lose some of your savings to inflation. As a practical matter, the best and most reliable way to stay ahead of inflation over the long haul of 30 to 40 years is in the stock market. It has been far more volatile since 2000, but historically it has averaged 10%, by one source and slightly less by others (depending on the time frame used and how costs are factored in). Regardless of the source and data applied, the market has averaged well above inflation and far more than average savings account or CD rates over lengthy time-periods.

Understanding how the market can potentially make early retirement possible is necessary to allow a person to determine if it is personally worth the risk. One way to get some estimates is from a website calculator such as calculatemywealth.com. If you input your information, it will calculate how much you could have at your desired retirement age. For example. If you are 30, want to retire at 66, have saved $25,000, and can save $100 per month, the calculator tells you that you have a range of possibilities (based upon assumptions shown on the website), as follows:

$114,523 if you just put your cash in a bank savings account,

or

$365,496 if you put half your cash into a savings account and half in stocks,

or

$1,290,286 if you put all of your cash into stocks

How you save makes a huge difference in whether you can retire, when you can retire, and the quality of life you can have during your golden years.

There are alternatives

Some advisers do say there are alternatives to the stock market – and they are correct. However, those alternatives all have their own risks and uncertainties. See, for example, Top 5 Alternative Investments for 2018, 3 Ideas to Build Wealth Outside the Stock Market, and 7 Alternatives to Investing in the Stock Market.

Alternatives include the following:

  • Real Estate. This has had its own dramatic ups and downs such as during the recession in 2008. Real estate is not a liquid investment, meaning you can’t be sure of having cash when you need it. Owning real estate includes buying units to rent. That adds significant work as well as risk of loss due to bad or no tenants.
  • Gold and silver bullion and coins. Precious metals have significant market risk.  Most commonly, the stock market increases in times of economic growth and stability while precious metals benefit from times of financial distress.
  • Owning your own business. Needless to say, this approach typically takes money to start, requires a lot of effort, and has high risk,
  • Equity crowdfunding. This is a high-risk new investment scheme with no long-term history of success.
  • Peer to peer lending. This is another relatively new high-risk investment scheme with no long-term history.
  • Antiques. They are difficult due to valuation and liquidity problems. How people value old items has a huge degree of uncertainty.

Perhaps the stock market doesn’t sound so bad now.

Controlling the risk

There really is no eliminating risk, but there are steps you can take and ways to invest that can help reduce the risk. Things you can do to reduce risk include diversification, index funds, and index Exchange Traded Funds (ETFs). On what to do while you are still young, see 6 Ways to Reduce Market Risk, which will give more information on index funds and ETFs as well as additional ways you can reduce risk.

Read 8 Ways to Lower Your Stock Market Risk in Retirement for ideas on reducing your risk further as you reach or are near retirement. Part of what the author is proposing is that your risk should drop as your get closer to retirement because you have less time to make up for losses. That is typically a wise decision.

You need diversification and perhaps more than just stocks

The idea of diversification is often oversimplified to mean just having different stocks. However, real diversification means holding investments in different companies, sectors, markets and types. The idea of diversification is that if one investment drops, the losses may be offset by gains in a different investment. But to be truly diversified, your investments can’t be all in one company, one sector, once market or be of the same type.

  • Sector diversification involves different market sectors such as manufacturing, financial, energy, or technology. The hope is that when one sector, such as energy stocks, have a bad year, those losses may be offset by gains in other sectors.
  • Diversification in markets is another strategy of diversification.  Losses in international stocks hopefully will be offset by gains in American markets.
  • Diversification in investment type means you have some bonds, real estate investment trusts (REITs) along with stocks, perhaps some real estate and other investments.

You need time and patience

The greatest market trick you need is one you can’t control – time. The worst client for a financial adviser is the investor who watches the markets daily and wants rapid adjustments. Studies have shown that this increases the work and cost but not the return, just like guessing at market timing has proven to be an unsuccessful way to beat the market.

The stock market is best with time and patience as you can see in this 90 year chart.

The last 5 years show a steady upward trend. 

Dow Jones Industrial Average 5 Year Historical Chart April 2016 to April 2021

There will be bad days and more. But time has shown the stock market offers the best opportunity to make long-term gains so long as the investor has a diversified portfolio and does periodic adjustments to keep investments balanced.

Over a period of years, stocks have a tendency to out-perform other means of investment and do it with less effort and time. Yes, those dips on the chart can be terrifying, but the market has no losing periods over any 25-year period. It looks volatile day-to-day or week-to-week, but over longer periods, especially over decades, the market smooths out and gives meaningful growth over inflation. In other words, start early and stay steady!

Conclusion

That is only the beginning and it is a lot. I highly recommend a qualified and capable financial adviser to help you with these decisions. Will there be a cost to you? Of course, but a good adviser will often give gains greater than the costs. If you would like help locating a good Christian financial adviser, please feel free to call us at The Idlewild Foundation, (813) 264-8713.

About the Author

John Campbell has retired from a 40-year legal practice as a trial attorney in Tampa. He has served in multiple volunteer roles at Idlewild Baptist Church in Lutz, Florida, where he met Jesus.  He began serving as the Executive Director of the Idlewild Foundation in 2016.  He has been married to the love of his life, Mona Puckett Campbell, since 1972.