1. Purify your heart

“For the love of money is the root of all evil” (1 Timothy 6:10).

“Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal: But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal: For where your treasure is, there will your heart be also” (Matthew 6:19-21).

“But wo unto the rich, who are rich as to the things of the world. For because they are rich they despise the poor, and they persecute the meek, and their hearts are upon their treasures; wherefore, their treasure is their god. And behold, their treasure shall perish with them also” (2 Nephi 9:30).

“He also that received seed among the thorns is he that heareth the word; and the care of this world, and the deceitfulness of riches, choke the word, and he becometh unfruitful” (Matthew 13:22).

“The getting of treasures by a lying tongue is a vanity tossed to and fro of them that seek death” (Proverbs 21:6).

“Then said Jesus unto his disciples, Verily I say unto you, That a rich man shall hardly enter into the kingdom of heaven. And again I say unto you, It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God. When his disciples heard it, they were exceedingly amazed, saying, Who then can be saved? But Jesus beheld them, and said unto them, With men this is impossible; but with God all things are possible” (Matthew 19:23-6).

“And he spake a parable unto them, saying, The ground of a certain rich man brought forth plentifully: And he thought within himself, saying, What shall I do, because I have no room where to bestow my fruits? And he said, This will I do: I will pull down my barns, and build greater; and there will I bestow all my fruits and my goods. And I will say to my soul, Soul, thou hast much goods laid up for many years; take thine ease, eat, drink, and be merry. But God said unto him, Thou fool, this night thy soul shall be required of thee: then whose shall those things be, which thou hast provided? So is he that layeth up treasure for himself, and is not rich toward God” (Luke 12:16-21).

“Think of your brethren like unto yourselves, and be familiar with all and free with your substance, that they may be rich like unto you. But before ye seek for riches, seek ye for the kingdom of God. And after ye have obtained a hope in Christ ye shall obtain riches, if ye seek them; and ye will seek them for the intent to do good—to clothe the naked, and to feed the hungry, and to liberate the captive, and administer relief to the sick and the afflicted” (Jacob 2:17-9).

“And you are to be equal, or in other words, you are to have equal claims on the properties, for the benefit of managing the concerns of your stewardships, every man according to his wants and his needs, inasmuch as his wants are just— And all this for the benefit of the church of the living God, that every man may improve upon his talent, that every man may gain other talents, yea, even an hundred fold, to be cast into the Lord’s storehouse, to become the common property of the whole church— Every man seeking the interest of his neighbor, and doing all things with an eye single to the glory of God” (D&C 82:17-9).

“And I say unto you, Make to yourselves friends of the mammon of unrighteousness; that, when ye fail, they may receive you into everlasting habitations. He that is faithful in that which is least is faithful also in much: and he that is unjust in the least is unjust also in much. If therefore ye have not been faithful in the unrighteous mammon, who will commit to your trust the true riches? And if ye have not been faithful in that which is another man’s, who shall give you that which is your own? No servant can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon” (Luke 16:9-13).

“And now, verily I say unto you, and this is wisdom, make unto yourselves friends with the mammon of unrighteousness, and they will not destroy you” (D&C 82:22).

2. Pay the Lord first

“Honour the Lord with thy substance, and with the firstfruits of all thine increase: So shall thy barns be filled with plenty, and thy presses shall burst out with new wine” (Proverbs 3:9-10).

“Will a man rob God? Yet ye have robbed me. But ye say, Wherein have we robbed thee? In tithes and offerings. Ye are cursed with a curse: for ye have robbed me, even this whole nation. Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it. And I will rebuke the devourer for your sakes, and he shall not destroy the fruits of your ground; neither shall your vine cast her fruit before the time in the field, saith the Lord of hosts” (Malachi 3:8-11).

“Verily, thus saith the Lord, I require all their surplus property to be put into the hands of the bishop of my church in Zion, For the building of mine house, and for the laying of the foundation of Zion and for the priesthood, and for the debts of the Presidency of my Church. And this shall be the beginning of the tithing of my people. And after that, those who have thus been tithed shall pay one-tenth of all their interest annually; and this shall be a standing law unto them forever, for my holy priesthood, saith the Lord. Verily I say unto you, it shall come to pass that all those who gather unto the land of Zion shall be tithed of their surplus properties, and shall observe this law, or they shall not be found worthy to abide among you. And I say unto you, if my people observe not this law, to keep it holy, and by this law sanctify the land of Zion unto me, that my statutes and my judgments may be kept thereon, that it may be most holy, behold, verily I say unto you, it shall not be a land of Zion unto you. And this shall be an ensample unto all the stakes of Zion” (D&C 119:1-7).

3. Avoid unnecessary debt

“The rich ruleth over the poor, and the borrower is servant to the lender” (Proverbs 22:7).

“And again, verily I say unto you, concerning your debts—behold it is my will that you shall pay all your debts” (D&C 104:78).

A letter from the First Presidency dated 2/27/08 counsels us to “avoid unnecessary debt, especially consumer debt.”

4. Save

“There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up” (Proverbs 21:20).

“A good man leaveth an inheritance to his children’s children” (Proverbs 13:22).

“There be four things which are little upon the earth, but they are exceeding wise: The ants are a people not strong, yet they prepare their meat in the summer” (Proverbs 30:24-5).

5. Diversify and properly allocate assets

The Parable of the Entrusted Talents is at Matthew 25:14-30.

The Parable of the Pounds is at Luke 19:11-27.

“For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it? Lest haply, after he hath laid the foundation, and is not able to finish it, all that behold it begin to mock him, Saying, This man began to build, and was not able to finish” (Luke 14:28-30).

We would like security. We would like our overall portfolio to be “crash-proof”. We avoid putting 100% of our savings into one stock, because if that stock crashes, we could lose everything.

A letter from the First Presidency dated 2/27/08 states that “While all investments carry an element of risk, that risk can be managed by following sound and proven financial principles.”

Asset allocation is key. What if last year you had the following annual return for your various investments:

Did you make money or lose money last year? You cannot tell from only the numbers above. How well your overall portfolio does depends on asset allocation.

If you invest in something with leverage (options, futures, Forex, etc.), it’s theoretically possible to obtain very high returns. However, it would be unwise to bet 100% of one’s life savings on, for example, buying one call option that expires within a few days.

Therefore, asset allocation is key.

Why? If the stock market ever crashes, and everyone else is selling, you could have difficulty closing out your position. Because of leverage, you could lose everything you have . . . and more.

Resist the temptation, for even a day trade, no matter unlikely a market crash is.

Resist the temptation, no matter how “sure” you are the market will go up in the time period you’re contemplating.

6. Monitor assets

“Be thou diligent to know the state of thy flocks, and look well to thy herds. For riches are not for ever: and doth the crown endure to every generation?” (Proverbs 27:23-4).

7. Acknowledge that you cannot predict the future

If we assume that for us the market is practically random, perhaps we may use probability analysis to aid us. The Dow may move 0.1%, 0.2%, or 0.5% in one day. It may move 2% in one day every so often. It rarely moves 10% in one day.

There is a saying that “the world is long.” Given the historical rise of the stock market, many people buy stocks and equity mutual funds believing that they have a good chance (P > 50%?) they can sell them in the future at a higher price.

For many people T is measured in years. These people would like their investments to double, triple, etc. while they’re still alive.

A low T allows you to take your money and move on. A high T ties up your money. Would you rather make 1% in one month or one year? One month, of course. Then after one month has passed, you can do something else with the money.

Putting these two variables together, the probability of “success” over a given time period = P/T. You want to have a high P/T.