–– Charles Russell
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Bitcoin has recently hit new all-time highs, breaching $120,000 per coin last month. R10,000 invested 5 years ago would have been worth R103,000 today. In comparison, an investment in the JSE all-share index and the S&P500 index would have only yielded R18,000 and R19,000, respectively.
As a Christian, what should we be doing with this information? Could a significant investment in Bitcoin have solved many of the problems Africa faces today? Could it have solved your own financial problems?
Firstly, Africa’s long list of problems will never be solved by an injection of more money. Let me explain. From the time of creation (before the fall), it has been God’s design that man should work. This is God’s ordained means of providing for you and your family’s needs. Paul rebuked the idle Thessalonians, saying that if anyone is not willing to work, let him not eat (2 Thessalonians 3:10b).
It has never been God’s plan for reaping where there has not been sowing. The Proverbs state that wealth gained hastily will dwindle, but whoever gathers little by little will increase it (Proverbs 13:11). The principles in scripture are clear:
Work heartily as unto the Lord (Colossians 3:23).
God provides using work as the means (Proverbs 10:4).
Be generous and ready to share (1 Timothy 6:18).
We save little by little (Proverbs 13:11).
Then, as we devote ourselves to Christ, we will lack nothing (Matthew 6:33).
It is not God’s plan that you gamble, play the lottery or throw money at racy “investments” or get-rich-quick schemes as a silver bullet to provide for your future needs. Your desire to dabble in these things is likely indicative of an attitude of laziness and a heart that is bent towards greed, neither of which honours the Lord. Africa is poor because, in general, it lacks a biblical work ethic that flows from a changed heart in response to the gospel of Jesus Christ.
Secondly, I want to stress the importance of diversified investing. Solomon, in his wisdom, said of the wise merchants transporting their goods by ship, “Give a portion to seven, or even to eight, for you know not what disaster may happen on the earth.” (Ecclesiastes 11:2). It is equally true in investing. Wise investors will spread their savings across several assets.
Saving for the future is biblical. In Proverbs 6:7-8, Solomon commends the wisdom of the ant who, though she has no chief or ruler, gathers food in the harvest. In Proverbs 21:20, Solomon notes that a wise man keeps treasure and oil in his dwelling while the foolish man devours it. The wise save, and so should you, Christian!
Practically, I would advise having some savings in an interest-earning bank account. Additionally, I would advise any South African to make use of a tax-free savings account. Furthermore, open a retirement annuity and benefit from the tax deductions as you contribute. Since most people will not have the time to research specific stocks, I would generally advise avoiding single-stock investing and rather invest in ETFs like the Satrix40 that track the returns of the Top-40 companies on the JSE, or for offshore exposure, one could buy the S&P500 index.
One could consider actively managed funds. In South Africa, there are several reputable fund managers with a strong track record of beating the market through cycles. Though it has not been my best-performing asset, rental property can be another source of investment returns. Cryptocurrency, if properly researched, may be appropriate as part of a wider diversified portfolio.
Thirdly, whenever you approach an investment, it is extremely important that you understand what you are getting yourself into. There are countless stories of people who have lost their life savings after investing in a “sure thing”. Ask questions like: What are the commercial use cases? What drives its value? What are the risks? A key risk to be aware of is the risk of changing regulations.
Bitcoin’s portability makes it a prime target for funding criminal activity and laundering the proceeds of crime and illicit gains. Changing regulation could materially erode value. Never invest if the only thing that you know about it is that it has performed well in the past. Past performance does not guarantee future performance.
This is not to say that Bitcoin will not go up any further. There are reasons to own it. For one, it is scarce (fixed supply of only 21 million coins). Unlike central banks that routinely print money, Bitcoin can be a long-term hedge against fiat currency losing its purchasing power.
However, I urge you, Christian—do your own research! Bitcoin is a volatile asset. Only invest in what you understand. Even one of the greatest investors of our time, Warren Buffett, let some opportunities go due to his own lack of understanding of the investment thesis. He said, “We have three boxes [that we use to classify our potential investments]: In, Out, and Too Hard. You don’t have to do everything well. At the Olympics, if you run the 100 meters well, you don’t have to do the shot put.”
I’m not going to tell you that it is ok for a Christian to invest in Bitcoin—you may be motivated by greed and laziness, and for you, it is sin. For another who has diligently studied the risks, understands the path towards day-to-day use cases, has allocated a modest part of their savings to an investment in Bitcoin, and entrusts the future outcome to the Lord—as far as I can tell, this is not sin.
If you want to honour God in your investments, work heartily as unto the Lord. As the Lord prospers you and as you learn and grow to give sacrificially, I trust that you will also save into a diversified portfolio—one in which you are well-informed of the risks before parting with the valuable resources that you steward on behalf of God.