In my experience, the following are the common elements of a “get-rich-quick investment.”
1. There is a promise of an abnormally high rate of return. If the expected rate of return is unusually high, then the risk associated with that investment is also unusually high. Hence there is a risk of very significant losses. If it sounds too good to be true, then it probably is.
2. Generally, the investor has a limited understanding of the investment. It is easier for a salesperson to sell you a high-risk investment when it is outside of your expertise.
3. It usually requires a quick decision that will prevent the potential investor from obtaining independent counsel from someone who has a thorough understanding of the investment.
4. Frequently, debt is utilized because debt increases the returns if the investment is successful; but debt also increases the losses if the investment goes sour.
5. Generally, a get-rich-quick investment is not diversified in accordance with Ecclesiastes 11:1, 2 but is focused on one investment or one sector, which increases the return if the promoters are right in their predictions, but it also increases the losses if they are wrong.
God clearly warns of the dangers of trying to get rich quick:
Do not wear yourself out to get rich; have the wisdom to show restraint. Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle. (Proverbs 23:4–5)
The emphasis in Scripture is to save and accumulate a little at a time over a long period of time and not to try to get rich quick. Proverbs 13:11 states, “Dishonest money dwindles away, but he who gathers money little by little makes it grow” (emphasis added).
As explained in my Financial Moment titled “Investing—Assess Your Tolerance for Risk and Invest Accordingly,” it is biblical to assume some risk within your investment portfolio. However, when investors try to make a lot of money very quickly (i.e., to get rich quick), then generally they assume an excessive amount of risk and debt, and they frequently lose everything. This is not God’s will.
Therefore, if someone recommends an investment that promises an abnormally high rate of return, or requires a significant portion of your portfolio, then I recommend the following:
1. Pray and ask God to direct you through his Holy Spirit. A lack of peace can be God’s way of communicating to you or your spouse that it is not God’s will for you to invest.
2. Ask God to reveal to you your motives. Motives are important to God (Proverbs 16:2). Ungodly motives include greed, covetousness, impatience, and pride; the corresponding godly motives would be generosity, contentment, patience, and humility.
3. Take the time that is required to obtain sufficient knowledge and understanding of the investment before you invest (Proverbs 28:19, 20).
4. Use godly counselors who have the necessary experience and knowledge and will not personally profit if you decide to invest (Psalm 1:1–3).
In summary, if you do not have sufficient time to complete the four suggestions above, then do not invest. Some of the best investment decisions ever made are the decisions not to invest. Hasty decisions are usually bad decisions (Proverbs 21:5). And remember, the emphasis in God’s Word is to save and accumulate assets for future needs over a long period of time—not to get rich quickly.
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