The Wisest King Advocates True Investment Diversification

Give portions to seven, yes to eight,
for you do not know what disaster may come upon the land. (Ecclesiastes 11:2, NIV)

In 1990, Harry Markowitz won the Nobel Prize in Economics. Dr. Markowitz was one of the founding architects of  Modern Portfolio Theory (MPT). One of the key underlying tenets of MPT is the use of diversification to optimize investment portfolios.

Nowadays, diversification is a mainstream principle within the realm of financial management.  It makes sense from a number of perspectives.  You can design a portfolio so that when the economy is not so hot, at least a portion of your investments should fare better.  Diversification is regularly touted as an advantage in investing in mutual funds as this investment vehicle offers diversity that may not normally be available to “small-fry” investors.

However, this verse goes beyond investments as we typically think of them.  To get a greater perspective, let’s examine the prior verse:

Cast your bread upon the waters,
for after many days you will find it again. (Ecclesiastes 11:1, NIV)

Bible scholars often interpret this verse as an exhortation to charitable giving.  Certainly, “bread” is indicative of provisions necessary for life.  “Waters” can represent multitudes (see Rev. 17:15).  Water also gravitates to the lowest levels.  Therefore giving substance to the poor is not lost.  We will “find” it again and in our time of greatest need — when disaster strikes (as we can infer from verse 2).

Thus we have an expanded definition of “investment diversification.”  These verses examine wise investing.  Waters are described as a place of sowing seed (Isa 32:20).  “Investing” however goes beyond the marketable securities and savings of everyday business.  God views the use of our substance in meeting the physical needs of those less fortunate than ourselves as wise stewardship that will generate “returns.”

While these verses reinforce some basic principles of wise financial management that we should follow (e.g. maintaining an emergency fund and investing in diverse areas), do not overlook the “investment potential” of those in need around you.

Related posts:

1. Giving: Unless It Feels Good Don’t Do It!
2. 8 Biblical Reasons to Invest
3. Is Tithing Obsolete?
4. God Distributes Wealth Where He Sees Fit
5. Talent Management Tip: At Least Act With Interest