A recent study by a gifted investor revealed that using biblical concepts to guide your investing will not only earn you points in heaven – it may also earn you money here on earth.

The Bible does not write specifically about investing, but we learn from Jacob splitting up his camp (Genesis 32:7) before confronting his brother that it is wise not to put all your eggs in one basket. It is in direct contradiction to the method of Esau, who masses his men for a frontal attack. In investment terms, Jacob’s approach is called diversifying your portfolio. In other words, it is hedging your bets. You won’t get as rich when the market is bullish, but you’ll lose less in a bearish market. Esau’s approach is all or nothing – rags to riches and back again.

The Talmud (Baba Metzia 42a) expanded on that approach: “And Rebbe Yitzchak said, ‘A person should always divide his money into three: one third in land, one third in commerce, and one third at hand’.”

In terms of modern investing, this advice can be understood in different terms. Land gives low but safe returns. Commerce offers the possibility of high returns, but at a much higher risk. The final advice of the Talmud is to keep one third in liquid assets.

It turns out that investing according to this principle set out by the Bible is a good strategy. Thomas Pound, an American educator and mathematician with a passion for statistical analysis in the financial arena, made a study of this approach to investing on Seeking Alpha, and received surprising results. As an investor, he knew that different factors affect the performance of investments, such as security selection and market timing. He also knew that asset allocation, or how you divide your money, is 15 times more influential than those other factors.

For purposes of checking the Talmudic investment strategy against the available data on the stock market, Pound set the first third of his theoretical test portfolio as real estate investment trusts (REITs) which are traded in the stock market, as opposed to a less precise estimate of the real estate market as a whole. He set the second third for commerce as equity investing.

The final third, which the Talmud described as ‘at hand’, offered several possibilities. Pound considered using short-term securities or secure government bonds, but he preferred to take the literal meaning and leave one third in cash. The benefit of cash-on-hand in investing is that it enables the investor to take advantage of opportunities as the market develops. A conservative portfolio typically has up to 15% cash, or liquid assets. The Biblical arrangement of one-third cash-in-hand far exceeds that and would be considered ultra-conservative by today’s standards.

According to available data, he calculated that the Biblical approach to investing gave an annual return of 10.25% as compared to an annual return of 11.58%. Pound considers this a good return on the initial investment and a good way of coping with volatility of the S&P (VIX) over that period. The VIX is often referred to as the fear gauge, and is a reflection of investor perception of how much the market will change in the near future. It reflects public opinion but also has a very real affect on market prices, especially on options, and can make investing more risky. This means that the Biblical approach is good risk management for an investment portfolio, leading to safer investing with albeit less explosive earnings.

An investment strategy leaving no cash-on-hand, investing 100% of assets, would have produced 190% more profits over a 20-year period. However, it would have lost 37% of its total worth in a crash like that of 2008. The biblical method would have only lost 24% of its worth, but, more importantly, would have allowed the investor the means to buy up undervalued stocks that had dropped in price, leading to a stronger recovery.

One of the lessons that can be learned from this is that the Bible is a storehouse of wisdom for everyday life, and not just a guidebook to be pulled out when you feel a religious urge.