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Ministry Helps Personal Growth Practical

Investing for Retirement – Part 2

            Length of time is the most important aspect of preparing for the future. At some point every preacher will face the fact that he will no longer be a pastor and at some point, he may not be able to preach. If he is no longer able to conduct his ministry because of age or physical inability, how will he live?  It is a tragedy that many churches have no plan to provide for the elder years of their pastor. 

As money is saved and accumulated it should be invested. But how? The safest way to invest savings is in fixed income such as CD’s, money markets, treasury bills, municipal or corporate bonds. The rate of return will normally be lower than other financial tools but they provide a guaranteed return. These can be purchased through a bank or a brokerage firm such as Schwab, Fidelity or a similar brokerage. Another way to invest in order to potentially receive a higher rate of return is to invest through a brokerage and purchase ETF’s (exchange traded funds.) The simplest and easiest way to invest in the largest companies of the world is through these funds. By investing in the S&P 500 (SPY) you own a little piece of the 500 largest companies in America, and historically it has returned about 10% per year on average. The Dow Jones Industrial (DIA) allows you to invest in 30 large and established companies in America and it has an average return, with dividends, of about 8% per year. A third fund, the Nasdaq 100, (QQQ) returns about 13% yearly. If you put 1/3 of your savings in each of these three funds you will outperform most professional money managers. If you follow this plan, you should average 10%-12% return which means you will double your investments every six or seven years. 

Another option to invest your money is to purchase real estate. Unless you are acquainted with real estate it may not be for you. Contrary to what you may have heard you can lose money as well as make money in real estate. But there can be a significant amount of money made in real estate. However, owning and managing rental property is not for everyone. Owning your own home is a wonderful thing and it can be an important investment.

Starting a business or a side hustle may be a way to increase income, but for preachers it is usually not a good way to grow their savings. In addition, it can rob you of valuable time that is needed to build the church.

Consider an illustration of a young man with a salary of $50,000 per year, that saves 10% of his income, ($5,000) and invests it for forty years. The result would be $2,784,935. If the interest rate was 12% the result would be $5,231,429. If a person did this for fifty years at 12% the result would be $17,356,431. These examples are not unrealistic. Then why don’t more preachers do this? Why don’t more churches do this? I’m not sure there is one single answer except this has been disregarded for many years. 

The real question is, why don’t you do this?

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