Protecting Your Investments: Abraham’s Seven Ewe Lambs

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Theme / Financial Planning

What can we learn from the story of Abraham in Genesis 21 about protecting our wealth?  The crux of the story is Abraham’s gift of seven ewe lambs to King Abimelech.

Abraham settled in an area called Gerar which was ruled by the King.  Without Abimelech’s knowledge, the King’s servants seized a well dug by Abraham.  Abraham brought this to Abimelech’s attention, who quickly rectified the situation (read Genesis 20 for the backstory).   To confirm that the well was for Abraham’s use, they made a treaty.   In response, Abraham gave seven ewe lambs to Abimelech to ratify it.

What do seven ewe lambs, a well, and a treaty have to do with protecting our wealth today?   Abraham had spent effort to dig the well, anticipating the future use of it.  Likewise, we can spend our lives investing for retirement, anticipating the use of our investments in retirement.   But, as we near retirement, or are in retirement, we may need to take steps to protect those investments, just as Abraham took steps to protect his “investment.”

Sequence risk, also called sequence of returns, can be an enemy of investments in retirement.  It occurs when a person is invested in stocks or stock mutual funds and takes regular withdrawals while the stock market is in decline.  Even if the stock market begins a long upward trajectory, damage will still have been done to the portfolio.  In the long-term, the portfolio will have a hard time recovering from the initial decline and withdrawals. 

How can a person in retirement reduce the risk of sequence of returns?   One approach is to put a portion of their overall portfolio into more protected investments; investments that reduce the chance of loss.  These could include Fixed Annuities, Fixed Index Annuities, Registered Index-Linked Annuities, or increasing exposure to bonds.   

Abraham’s gift of seven ewe lambs to King Abimelech protected his well for the future; Abraham could anticipate using the well for years to come.  The effort he made to dig the well, combined with the protection of the treaty, provided him confidence in future access to the well.   How confident are you in future access to your retirement investments?   Consider how Abraham’s gift of seven ewe lambs to protect his investment may translate into how you can protect your investments today. 

Doug Hanson, MBA

Wealth Advisor

208.697.3699

doug@christianwm.com