As we look at investing and have confidence that the natural state of things is to grow, then one of the keys that many investment advisors will tell us was actually published in the Bible long before they became aware of it. Diversify! Read Eccl. 11:1, 6
Ship your grain across the sea; after many days you may receive a return. Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land…Sow your seed in the morning, and at evening let your hands not be idle, for you do not know which will succeed, whether this or that, or whether both will do equally well.
The reason to diversify and spread our investments out between different areas and venues of finance is that it minimizes risk. If we hold a variety of investments that perform differently in various environments, then we are protected from loss if one area goes bad. This minimizes risk or as some will say…it is a hedge. What that means is it functions as a hedge against losses.
Bill Gates sold some of his stake in Microsoft years ago to diversify his holdings. The money was then invested in other areas that created financial return. If he would have held all his Microsoft stock he would have made more than if he would have diversified, however he saw diversity as that important he was willing to earn less to achieve it.
Another practical reason for a Christian to hold a variety of investments that perform differently in various environments is that each one will be an education for us. As we try different things, I believe we will find one area that has more “grace” for us than others. So maybe we can grow that area significantly while maintaining the other areas of investment.