Friday, October 12, 2007

What's Your Expense Ratio?

I invest money in mutual funds. In fact, I invest all of our savings in mutual funds. I don't feel lucky or gutsy enough to play the stock market straight out. I don't have time for real estate. I just invest in mutual funds and let the professionals choose the stocks or real estate for me.
But professionals have to eat. They have families, and they make very good salaries. In fact, they are paid with my money - mine and the other investors. Most mutual funds have an expense ratio of 1-2%. Out of any $1,000 invested with them, they'll spend $10-20 taking care of themselves and trying to figure out how to invest the rest of the money.
I don't mind giving them this money. They are good investors, and they are helping the rest of my money grow and a very nice rate so that the little bit they get is fully offset and then some.

What is your expense ratio? God has invested money and talents and education in you. How much of it do you keep for yourself? How much of it do you spend on yourself? How much of it do you invest in Kingdom causes that produce good returns? I don't think God minds us having expenses. We have to eat and have to live. Some entertainment is good for us. On going education will hopefully improver our ability to serve God. But I think God expects us to keep our expenses at a minimum and our investments in his causes at a maximum.

I remember talking to a Wal-Mart clerk from Africa. Somehow right there in the checkout lane we had an in depth conversation about his living situation. (I know, I know, I'll ask people just about anything.) This man worked 2 jobs, for a total of 80 hours a week. He was making money to send home to his struggling family in Africa. By living cheaply and sharing a home with 10 other people, he was able to send home 90% of his earnings to his family. His expense ratio was only 10%.

Most of us struggle to have an expense ration of less than 100% percent (to stay out of consumer debt). Even a 90% expense ratio, giving 10% of our income as a tithe is a real challenge for most of us. Yet this man from Africa, who was working low paying jobs, was able to give away 90% of what he earned and live on just 10% of the money that came in his paychecks. Why is there such a great difference between us and him? I expect there are two main differences. 1) Our expectations for our standard of living are very different. 2) He felt like poverty was a very personal issue, in his family even. We, however, feel like poverty is very far away and feel no deep desire to help those in poverty.

How can we become more like him?
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