Jul 08, 2003
July-Aug 2003

I would like to introduce to you a new section in our magazine— the Business Reform Investor. So many of our readers have told us that they are interested in more investment articles because —quite simply—our readers are in the business of making money, and that is great. As always, we are taking our publication to a new level by teaching you how to really grow your money so you can become a better steward of what God has given you.

We have articles for the beginning investors who are just trying to understand a little bit more about biblical investing philosophy, as well as articles for the mature investor who is always looking for new ways to increase his returns. Unfortunately, for many, Christian and investing don’t go together.

Many so-called Christian investors and financial counselors just don’t know what they are talking about when it comes to investing, especially within the context of the proper Christian life. We are here to correct that. Capitalist vs. Consumerist Many Christians struggle with this whole issue of wealth, but for a proper biblical perspective, I recommend our Wealth issue (Jan/Feb 2001).

Most would say wealth is not evil, per se, but we shouldn’t pursue it or get that caught-up in it. We shouldn't, in essence, be materialistic. This so-called Christian concept couldn’t be further from the biblical truth. God, in fact, throughout the whole Bible, encourages us to attain wealth. Jesus Himself was probably one of the most predominant capitalistic teachers in history. To get an idea of Jesus’ philosophy on capitalism, read Matthew 25:14-30.

Whenever you see a strong Christian culture, you see a capitalistic society. Capitalism is an outworking of Christianity. I am not talking about the economic system of capitalism in this case, but I am referring to an investment philosophy and lifestyle. A capitalist is someone who simply creates capital. They forgo present pleasures to accumulate wealth for future purposes.

The opposite of a capitalist is a decapitalist, or what I call a consumerist. Such a person does the exact opposite by forgoing future income for present pleasures. That’s the basic economic problem with consumer debt. You buy now, so you can enjoy present luxuries, but you pay later, which means forgoing future income. Investing, on the other hand, creates a situation in which you have the money, but you would rather not consume it now, so you can have more in the future.

Christianity—and even more specifically, Puritanism—has furthered capitalism (growth of resources) more than any other faith. And as the Christian influence erodes, so does capital. For example, since the 1930’s, America, beginning with our government's embracing of Keynesian economics, has adopted the philosophy of consumerism, which instructs that the more we spend, the more our economy grows. This lie is still being preached today;: we hear continuously that consumer spending is good for the economy.

In Keynesian economics, the only way you can increase consumer spending is by consumer debt or spending your savings—which is nothing else than decapitalism. In the case of debt, this methodology works until you have to pay the bill. Eventually, however, it comes crashing down, a result that John Keynes was well aware of. America has not yet had to pay the bill. Biblical economics, however, teaches us that the key to a strong economy is productive growth (capital creation)—which means that instead of spending, one should be always investing in productive ventures, then living off the returns while always increasing capital. Capitalism is then a fruit of Christianity, where consumerism is a product of anti-Christian thinking.

Capital Cash Flow

What does all this mean to you as a Christian investor? It means that you need to become a Christian capitalist. It does not mean that you don’t enjoy present pleasures, but it does mean that you live within your means after your tithe to God and increase your capital investments. The more your capital investments grow, the more your tithe grows, and the more your standard of living can grow.

The most basic Christian strategy is that you must always be growing your capital from year to year, month to month, and day to day. The sooner you start this, the easier it will become. Your goal should be to invest in the most capital productive investments as possible and consume as little as possible until you get this capital growth trend going. As a visual aid, the following chart shows the continuum of consumable items to capital creation investments.

The farther you move to the right, the greater the creation of capital. The farther left you go, the greater the destruction of capital. The goal for the Christian capitalist is to go as far to the right of this continuum as possible.

Small businesses are, by far, the biggest creator of capital, while eating food is one of the biggest consumers of capital. One minute it is there, the next it’s gone. Investing in yourself and your business education can also help you become a much better investor or capital creator. While stocks do create capital, their benefits are very limited because buying stock is like going to buy something at a retail store (publicly traded company), where you compete with a ton of other buyers who bid-up the price, versus buying wholesale (private ownership) where earnings are the key. Buying stock is less about value and much more about investor psychology, which essential distills to how much confidence consumers have in the market at any given time.

Where most people get confused is how they view their homes. So, here is a free investing tip: Your home is a horrible investment. Sure it doesn’t get consumed like a vacation or depreciate like a car—but those aren’t investments. Instead, they are all expenses, and so is a house. A home maintains its value and even appreciates in a lot of communities, but it does not create capital and, therefore, does not give solid returns like a business does.

If you really want to get your capital creating more capital for you, sell your house and then rent. Take whatever equity you had and put it towards investing in a small business. If you don’t own a house yet, hold off and put all your money towards a small business. In fact, if you do this, at the end of 30 years you will have at least twice or three times (conservatively, with 10% growth) as much wealth as someone who put all their money in their home.

Most people think this investing strategy is crazy and if you are one of them, well that’s the kind of thinking that will keep you from being a great Christian capitalist, or at least as great a capitalist as you could have been. The Bible tells us to first build your business, then build your house (Prov. 24:27). We usually like to do the opposite.

The key is cash flow. Let’s say you start a business today with only a few thousand dollars;, after a few years that business, annually, should be making—profits after all expenses, including owner’s salaries—more than your initial investment. Instead of taking that profit to buy a house or spend on yourself, use it to reinvest in your business if you are experiencing rapid growth, or a different business if you feel it wisest to diversify at that point. Eventually, you will have so much cash flow coming in that you will be able to buy a new house every year. Look at this chart to see what I am talking about.

Stages of a Christian Capitalist

It will take some time and sacrifice to become a successful Christian capitalist, but eventually you will get there. In the meantime, you will have four stages that you will need to go through in order to become successful:

1. You need to learn how to manage yourself in order for y ou to become productive by producing capital through your labor (working for someone while developing your skills, for example).

2. You need to become a steward by managing others for others. This kind of stewardship happens when you go from being a laborer to being manager for someone else. Having developed self-managing skills, you now take steps to learn how to manage others.

3. Then, you start being rewarded more for your management skills by now managing others for yourself and others as you start your own business or buy part of the business for which you are working.

4. Eventually, you will have more capital than you can effectively manage yourself through your business, so you will need to invest in other businesses by using other good stewards who are still on the second level. By then, you will have your business skills so fine tuned that you will know exactly what businesses to invest in and what businesses to stay away from.


So, as you can see in this chart, it’s not that difficult to become a successful Christian capitalist. You just need to understand business, biblically, and then be disciplined to invest in or start small businesses.

Remember, you need to invest in businesses that produce cash flow and consume a lot less than the capital you create—a situation that will allow you to consume, create, and give much more later on.

If you are not currently successful at creating capital, start working through the phases of a Christian capitalist toward your ultimate goal of being a great investor in other businesses. Master level one, which most people never do, then level two, then level three, and once you do this, you will easily be able to master level four. Helping you through this journey is exactly what Business Reform is all about.

This world needs a lot more good Christian capitalists and philanthropists. I hope that our new investing section will better serve you, so you can create much more capital for the glory of God!

ED. NOTE: Swiss America supports Business Reform magazine. To request a complimentary issue of July/Aug 2003, please register at this link.

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