3 Objectives for Successful Investing
20th century humorist Will Rogers once said, “I'm not so much interested in the return on my money as I am in the return of my money. It’s a funny line, but also something every investor should keep in mind. What are the objectives you should consider when risking your money? We’ll give you three of them today on Faith and Finance.
Here are 3 Objectives for Successful Investing:
UNDERSTANDING INVESTING OBJECTIVES:
Rob West clarifies the difference between an objective and a goal, emphasizing the significance of objectives in the investment journey.
There are three main objectives in successful investing: safety, income, and growth. The more prominence one has, the lesser the other two will have.
SAFETY:
It's the primary objective investors usually want.
Though no investment is entirely safe, government-issued bonds are considered the safest, backed by the U.S. government's full faith and credit.
AAA-rated corporate bonds from large stable companies like Apple or Amazon are nearly as safe.
Other relatively safe investments include the "money market," which covers Treasury bills, CDs, commercial paper, and bankers’ acceptance slips.
However, with safety comes the "opportunity cost." For instance, funds in CDs might be safe but could forego higher potential returns from more aggressive investments.
INCOME:
Income-centric investors are usually retirees looking for a steady stream of income and are willing to take on slightly more risk.
They may choose government and corporate bonds but are also open to Double-A, A, or Triple-B rated bonds for higher income despite the increased risk.
Some might venture into purchasing preferred stock shares or dividend-paying common stocks.
CAPITAL GROWTH:
Capital growth is the increase in value realized upon selling the asset.
Investments in this category include stocks, mutual funds, index funds, exchange-traded funds, precious metals, and real estate.
While these investments carry more risk than safety and income categories, they hold the promise of potentially higher returns over time.
CONCLUSION:
Investors need to determine the right balance between safety, income, and growth based on their financial goals and risk tolerance.
On today’s program, Rob also answers listener questions:
- Giovanni (Florida): Why don't some ministries that provide health care coverage explicitly mention that they don't cover pre-existing conditions?
- Donna (Fort Lauderdale, Florida): How do I choose the right Real Estate Investment Trusts (REITs) to invest the $70,000 I earned from a property sale, and how can I ensure they're reliable?
- Kevin (Charleston, South Carolina): Should I use the excess from my emergency fund, which is more than three months of income, to purchase a used vehicle?
- Paul (Chicago): What's the difference between term and whole life insurance, and which one is better for investment?
- Michelle (Wheaton, Illinois): Will consolidating my debt through Trinity debt consolidation affect my credit score, especially since I'll need a new car lease soon?
RESOURCES MENTIONED:
Sound Mind Investing
Kingdom Advisors
Christian Credit Counselors
Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network as well as American Family Radio. Visit our website at FaithFi.com where you can join the FaithFi Community, and give as we expand our outreach.
