Book: Proverbs 31
“She goes to inspect a field and buys it; with her earnings she plants a vineyard…She makes sure her dealings are profitable; her lamp burns late into the night.”
Many people pour money into stocks, mutual funds, and other investments based on what they have heard from others rather than doing their own research and planning. There is a very simple concept that says, “Buy low and sell high” but most retail investors actually buy high and sell low. Why does this happen? Usually it is because people buy based on greed and sell based on fear, although none of us would want to admit this.
In this proverb, we can learn some key points from this investor. First of all notice that she inspects the investment. She researches the investment to understand and identify both the positives and negatives. In this case it is a field that she is inspecting. She looks to see if the soil is good for growing food, is there water available for watering the crops, are there weeds in the field, is it fenced, and is there anything that would or could ruin her production.
Secondly, this investor makes sure that she is going to make a profit. It is not guess work for her. She takes the time to calculate what it will cost her to purchase the land, plant and harvest the crop against what her profit will be. Notice the last phrase of this proverb, “ her lamp burns late into the night.” This investor puts in long hours of analyzing the investment before purchasing it. She creates a clear plan to lower risk, and be profitable.
The third point in this proverb that some may find challenging is that “with her earnings she plants.” Notice that she does not borrow money for the investment but instead uses what she has already earned. Many investors get caught up with the idea that they can borrow money at a low interest rate and invest it making a higher return. When this doesn’t work they lose everything. With the investor in this proverb she is protecting her investment and lowering her risk of failure.
This proverb encourages investing by analyzing, planning, and using the resources they have on hand. This is the safest way of investing with the best potential return. Without doing these things it may not be investing but rather gambling.