Starting Prayer
God,
We come before you asking for your discernment and wisdom over the matters of our heart. There will be many times where we need correction and guidance as we learn about how You want us to handle our finances, and we ask for that help because we are so limited and easily led astray by our emotions and the culture around us. God, I pray that we would submit to you every aspect of our lives and not chase after what is fleeting but chase after You. Let Your light shine through this blog post, and I pray that You would guide every person in the right way and surround them with people who would build them up for good in Your name.
In Jesus name I pray,
Amen
Is Investing Biblical?
Before I get into anything, I think we should always hold up our thoughts and actions against the Bible. While the stock market was not in Jesus’ time, money did exist and the Bible has a lot to say about wealth and poverty, wisdom and foolishness, and true gain in this world.
Read: Should a Christian invest money in the stock market?
God cares about the heart. If you are looking to invest to make quick and easy money, it says in Proverbs 28:20, “A faithful man will be richly blessed, but one eager to get rich will not go unpunished.” This speaks against the “get-rich-quick” mentality. Looking at investment as a long-term plan for the future is good planning, but trying to make a fortune overnight is not (gotquestions.org).
If it takes no wisdom for you to get it, then you are basing your investment on pure whim and luck. You are betting. You are therefore, gambling, and you will get exactly what you paid for: chaos and loss at worst and once and a while winning at best. God is not found in luck, God is found in wisdom and patience not in greed or foolishness.
You should first question your motives and then continue to question them in community. For me, I want to understand the stock market to create sustainable wealth, manage my income actively, become more aware of the financial world, pass that information onto others, and overcome my anxiety around my poor financial literacy. However, I should not be blinded by my own thinking and invite the counsel and advice of godly Christians to help me examine my heart and intentions.
Listen, it is not wrong or sinful to want to make money. You should care about your finances and money is how the world works when it comes to living. It is wrong to ignore God’s Will and intention for how we handle money. It is wrong to spend money however we want to with no regards to who owns it.
Ignorance is no excuse for believers, God wants every part of our lives and this is a big part of it. Of course we will fail and make mistakes, our hearts can turn greedy and fearful, but the point is that we would ask for forgiveness and pursue repentance daily as God makes us aware of our shortcomings. When I realized that money was a sore spot for me, it took me some time to come around submission under God’s sovereignty. I continue that submission everyday when I end up making impulse purchases and forget to tithe my weekly paycheck sometimes.
I’m a huge work in progress, we all are, and that’s not to put us down and leave us there in the ditch - but it’s to empower us to know God is with us. God is by our side. God is our friend and for us, not against us, and we can trust Him to take care of what we can’t control.
Fear-Based Finances
Read: Should Christians Invest In Stocks?
Many Christian think that stocks are gambling because they don’t know or understand the stock market. Fear is what drives them away from learning about the stock market from reputable and knowledgeable financial advisors or individuals, and it limits their opportunities.
You don’t need to know about the stock market to be a successful or wealthy person, but if you don’t know about it, you miss out on the opportunity that you may personally want to take part in through the stock market.
Investing in stocks should never take away from our dependence on God, even the stocks are subjected to random surges and dips, the chaos of human emotions like fear and greed, and even a Reddit post can affect which stocks are doing well or doing poorly. We cannot trust in the stock market to be our full source of safety and provision.
In the Parable of the Talents, it goes:
14″For it is just like a man about to go on a journey, who called his own slaves and entrusted his possessions to them. 15″To one he gave five talents, to another, two, and to another, one, each according to his own ability; and he went on his journey. 16″Immediately the one who had received the five talents went and traded with them, and gained five more talents. 17″In the same manner the one who had received the two talents gained two more.
18″But he who received the one talent went away, and dug a hole in the ground and hid his master’s money. 19″Now after a long time the master of those slaves came and settled accounts with them. 20″The one who had received the five talents came up and brought five more talents, saying, ‘Master, you entrusted five talents to me. See, I have gained five more talents.’ 21″His master said to him, ‘Well done, good and faithful slave You were faithful with a few things, I will put you in charge of many things; enter into the joy of your master.’
22″Also the one who had received the two talents came up and said, ‘Master, you entrusted two talents to me. See, I have gained two more talents.’ 23″His master said to him, ‘Well done, good and faithful slave. You were faithful with a few things, I will put you in charge of many things; enter into the joy of your master.’ 24″And the one also who had received the one talent came up and said, ‘Master, I knew you to be a hard man, reaping where you did not sow and gathering where you scattered no seed. 25’And I was afraid, and went away and hid your talent in the ground. See, you have what is yours.’
26″But his master answered and said to him, ‘You wicked, lazy slave, you knew that I reap where I did not sow and gather where I scattered no seed. 27’Then you ought to have put my money in the bank, and on my arrival I would have received my money back with interest. 28 Therefore take away the talent from him, and give it to the one who has the ten talents.’
29″For to everyone who has, more shall be given, and he will have an abundance; but from the one who does not have, even what he does have shall be taken away. 30″Throw out the worthless slave into the outer darkness; in that place there will be weeping and gnashing of teeth. ~ Matthew 25:14-30
We can see here that Jesus uses the analogy of money to what God gives us in our life: our talents, our friends, our family, our intelligence, our personality, and our career to not only be used but to multiple and grow. God doesn’t want us to waste away what He has given to us, but He does not want us to use it simply for our own pleasures and gain too. There are definitely times and moments to enjoy our life, but we should know that there is much more God is expecting out of us when it comes to what we do with what we have been given.
Don’t be afraid of learning about what scares you, know that God is with you and strengthening you to overcome fear and the unknown.
Basics:
Watch: Stock Market For Beginners 2021 | The Ultimate Guide To Investing [3 hr] or read my overview below
Information taken from Stock Market For Beginners 2021 | The Ultimate Guide To Investing:
What is a stock?
When you own a stock, you hold a “share” of a company based on how many stocks you have compared to how many stocks total that company offers.
You take a part as a shareholder or owner of a business. Along with that you own their assets aka what makes them money and their liabilities aka what loses them money.
You may also have voting power based on how many stocks you hold when it comes to making company decisions.
Why do stocks exist?
In my first Faithful Finances blog post: Let’s Learn about Credit Cards Together, we learn that credit cards are money that the bank or financial institution loans us on credit because we do not have that money currently. In the same way, companies may need more money than they hold at hand for business expenditures. That’s where stocks come in. You invest the money they need in exchange for ownership of that company.
What is the difference between a bondholder and a shareholder?
Banks also give companies the money they need to borrow in the form of loans.
Banks or people who loan money to a company are bondholders and instead of loaning their money for ownership, they make money off interest (like with your credit card loans for example). They are also paid first if a company hits bankruptcy while a shareholder is paid last.
Taken from Stock Market For Beginners 2021 | The Ultimate Guide To Investing (14:15)
Which one should I be?
If you are under 30, go for a stockholder. The profits from being a bondholder are really negligible, and under 30 you are looking to grow your wealth the most during this time.
If you are over 30, consider being a bondholder to maintain your wealth along with your shareholdings.
What is a portfolio?
It’s just all your investments like a file of them! Some of them can be in stocks and some of them can be in bonds.
A common adage is that you use this formula:
120 - your age = the amount you should be putting into stocks and the rest is in bonds
For me, 120 - 22 = 98% in stocks and 2% in bonds but again, consider waiting until you are 30 to place your money into bonds and go for stocks instead if you’re like me.
Additional Info/Not Necessary to Know:
How does a company sell its stocks off to you?
Understanding Initial Public Offering (IPO):
A company wants to raise their capital (wealth or money from assets), so they decide to sell their shares/stocks and an underwriter will help them to decide on pricing for them.
The institutional investors, or foundational investors who were there at the start with the company, get to sell off their shares and newer investors can buy those shares now. These institutional investors get to but they also get to buy at the IPO price.
IPO could be $30 but you may be able to buy at $40 because that price is set for the institutional investors (kind of like a special pricing deal if you were an earlier investor).
If you don’t have a lot of money to invest, you may not be able to get invited to an IPO.
It is also riskier, there’s not much information on them, and the prices fluctuate drastically.
It’s better to wait a few months after the initial public offering before investing so the price can settle down. It’s better for more experienced investors to look into.
Understanding Stock/Ticker Symbols:
The Stock Market has its own symbols, terminology, and language that you must know in order to be part of the stock market.
Basically, a stock/ticker symbol is a series of letters that identify a stock. So, if you look up stocks for McDonald’s for example you wouldn’t see it as McDonald’s but it would be identified as “MCD”.
You’ll need to know it in order to execute trading orders, but most brokerage places will let you look up the company’s stock by their full name.
Stock Exchange
A stock exchange is basically a marketplace: where sellers can meet buyers.
A listed stock is traded on major exchanges (NYSE or NASDAQ) which is the only ones you should stick to otherwise it’s riskier.
Terms:
Bull Market:
Highlighted in yellow/rising market:
Bear Market:
Highlighted in green/falling market:
Man Feelings Run Stocks:
If anyone uses the idea that women should not be in leadership roles or positions of power because they are emotional, they should really look at the aftermath of any sports events, the rate of domestic abuse reports of men against women, and the stock market!
This is just my mini-conversation on how the stock market, which is predominantly male dominated, is extremely emotional and illogical.
Read: Men too ‘hormonal’ when trading as women produce better returns
Talk for the Girls:
Why are you bringing gender into this conversation, Grace?
Well, it’s my blog so I can. I also have to acknowledge that as a woman, most of us are not encouraged to understand finances or invest. Check the statistics. Check the messaging each gender is given about money and behavior. Check how women were not allowed to own their own property until the recent century.
If you’re a girl reading this, I want to encourage you to take the time to re-read this blog, my other blogs, continue to learn, budget, do research, and really take the initiative to control your finances. Money is a currency for power. Opportunity. Ability. We have so many disadvantages in this world because of pay gaps, women who give all the financial power to their husbands, and not knowing our worth (being passed over for promotions, doing overtime but not asking for pay, etc.).
I think that it’s really hard, but that’s why we should build each other up. Teach each other how to be financially literate. Don’t buy the domestic bliss idea people try to sell you about the glamor of being a housewife. Of course, I would hope that you would marry a man that would treat you rightfully as an equal and give you the due compensation of childcare, housework, being a driver, cook, maintenance, designer, school mom, and his wife.
However, in the unfortunate event that happens where maybe he cheats on you, he wastes the money on something he wants, he has the house under his name only, he leaves, etc. suddenly you can be left with no job experience, most of the time the child is in your care, and no means to make ends meet and no idea how health insurance works. So, even if he won’t leave, what if you want to leave in any event? (note: as a Christian, I will not advocate divorce majority of the time saved for in the cases of the 3 A’s (Abuse, Abandonment, and Adultery) but that does not mean it won’t happen and you should be autonomous and prepared in any case).
I don’t want this to be the reality, but I encourage women to keep their own agency and individual sense of self. Also, when you are a housewife, you have a boss. A boss that you are married to 24/7, and it doesn’t always matter if you have a bad day or want to buy something for yourself.
I’m not saying it’s a bad thing to be a housewife, but I’m saying having wisdom and making clear agreements on how much your labor is worth, how big money decisions are made, and honestly, if need be, bring contracts involved. I am for women protecting themselves.
Anyways, man feelings…
Something to understand about the stock market is the numbers are decided by statistical analysis and trend cycles if robots were investors. However, human beings run the stocks and they are often controlled by greed and fear.
When people are afraid, they will sell their stocks (bear market) and the stock price will go down and down and down. They would rather have their money in cash than in stocks, and if a group is selling their stocks out of fear, the stock price goes down, more people sell their stocks, etc.
Monkey see, monkey do.
Basically, people think a market crash will happen and then can cause a market crash to happen because of their fear.
Beginner Mistakes:
Expecting huge returns on stock investments immediately.
In the video I referenced for you to watch, they pull a quote from Warren Buffet: “The stock market is a device to transfer money from the impatient to the patient.”
I like this quote a lot because in the Bible, it says “To the person who pleases him, God gives wisdom, knowledge and happiness, but to the sinner he gives the task of gathering and storing up wealth to hand it over to the one who pleases God. This too is meaningless, a chasing after the wind.” Ecclesiastes 2:26
Obviously, non-Christians do well in the stock market, but to say that they have wisdom in all areas of their life (their marriages, their relationships with their children, their health, their societal impact, their mental health, their emotional maturity, and their life after death), knowledge, and happiness is honestly not always true. You can master one area of your life, and it can more often than not be of no use or even harmful to the other areas.
I believe God sustains and upholds His children, I don’t need to be a millionaire to know that my needs will be cared for in this life and the next. So, stop doing things your own way. Don’t pretend like you can control your life when the fruit of the Holy Spirit, not you, is self-control.
Regardless, biblical truth as always mirrors real life. Those who are patient, even if they don’t believe in God, are rewarded more often than the reckless.
Short-term trades are often going to be the places of loss for the trader and gain for the wait-er.
What’s the market capitalization (market cap)?
Tldr; how much is a company worth?
= (outstanding shares * price per share)
Simply put, how many shares does a company have in total (ex: 100) and how much they price each share (ex: $20) so their market cap would be (100*20) = 2000
Market cap changes everyday because price per share/stocks is determined by man feelings, so if it’s a really spooky day for the investors they’ll sell their shares and let’s say drop the price to $5 and this changes the market cap.
Based on market cap, stocks have 5 main categories:
Simply put, the smaller the market cap, the greater the risk (because even small changes can really impact the stocks). It’s better to invest in mid to large cap stocks.
Closing Statement:
“What?! We’re ending here? What about how I buy the stocks? You didn’t even bring up Robinhood. This is a terrible post!” jk, I don’t think you guys would say that, but if you did that’s totally fine:
Let’s go into next steps:
I want to learn more on my own.
Watch: Stock Market For Beginners 2021 | The Ultimate Guide To Investing
I want to really digest and understand what I just learned.
Re-read the blog. Look up articles on the basics when it comes to the stock market. Take notes on what you read. Pray for wisdom and understanding over finances. Really understand everything we talked about in this blog. See if you can explain the concepts to someone else (no looking)!
I want to talk to someone about what I learned.
Message me! Let’s talk about what you learned.
I want to share this knowledge with someone else.
Share this link with them: https://youlovedfirst.blogspot.com/2021/07/lets-learn-about-stock-market-together.html
I just wanna say thanks for the post, Grace!
You’re welcome!
So….why didn’t I do what I did in the Let’s Learn about Credit Cards Together and teach you everything you need to know and then actual steps you can take to get started (and get your first credit card).
That’s the thing: my blog series is not about quick money, it’s about financial literacy which takes time and learning to achieve. You can definitely download any investing/stocks app, buy some stocks, and get started.
That’s easy, but taking the time to learn, absorb, and apply from wisdom and knowledge takes effort. I’m helping myself and you build a stronger foundation. Easy money comes and goes just as easily.
All this information is readily available, but why don’t people just go into stocks then? Fear, again, is a huge factor since we are overwhelmed and afraid of change/risk. Then, there’s just so much information, and all these experts coming at you.
I’m just a girl learning all these things alongside you!
Faithful finances is about community and friendship too. I am sharing this information so that you can be encouraged and grow with me, and you can have someone to go to and talk about what you learned!
I hope to make financial literacy accessible to the everyday person, and to put money in its rightful place under the Lordship of Jesus. As a Christian, even with stocks, I will give my own perspective with knowledge and wisdom from the Bible. This is very different than just looking up any finance article, not all financial advisors know or acknowledge God.
If someone told you that they had direct and 24/7 access to not only the creator of money, but the whole universe (forget Bezos, Musk, and Gates), I would hope that you would seek their thoughts and advice on all matters and that you would be pointed to God who is giving them all these insights.
I have something a lot of people who are rich and powerful in this world don’t have, and it’s God. I walk with Him, and I am corrected and guided by Him. I am making mistakes, but God will not let me fall and will give me the authority and wisdom I need as I continue to lean on Him. He informs me in all areas of my life, and this entire blog is only a small peek into that: love, life, family, emotions, finances, career, etc. I know the best advisor!
I can have all the financial knowledge in the world, but without Jesus, it’s nothing to me. I could be rich or poor. I could be smart or dumb. I could have everything but still have nothing unless Jesus is the center of it all.
Money is temporary. No one can take it to their graves. Find true wealth in Jesus who is the giver of all good things!
Ending Prayer
God, I thank You for this opportunity and platform to speak to others about the stock market and financial matters. As much wisdom and knowledge as we can get, I pray that we would seek out You and Your presence more. God, You give so abundantly and Your promise goes beyond a single area of our lives but it touches everything that we go through.
I ask that You give everyone the truth, and that You empower us to master money under You so that we live in freedom and grace. I ask that Your peace be with us during this time.
In Jesus’ Name I Pray,
Amen
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