Faith Based Investing | Thumbs Up or Thumbs Down?

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Some months ago the Consumerist Commentary had a post that introduced faith shares. I have previously mentioned that I am yet to be convinced that faith based investing (in the strictest sense) is right for me at this time. That said, I respect anyone who feels convicted to show their faith in this way.

Different Types of Faith Based Investing Options

When I visited a faith based investing website, I was bewildered to see the breakdown of the types of shares:

  • Baptist values
  • Catholic values
  • Christian values
  • Lutheran values
  • Methodist values

As a Christian, this makes me scratch my head. I don’t want to make this post a doctrinal post (as I know that can get ugly before you can even say Nebuchadnezzar). I understand that different Christian denominations have different doctrinal and theological beliefs. What I don’t understand, however, is why there needs to be so many denomination specific categories.

Would a Lutheran really be offended by holding a Christian values share? Would a Methodist violate their faith by investing in Lutheran values? I wonder which of these shares Jesus would buy?

I’ll be honest. I never knew that value shares were broken down into such intricate categories. As a result, it sort of turns me off from faith based investing even more.

The various options do highlight one point – it shows how murky the faith based investing waters can become. It shows how difficult it is to entrust others to make decisions according to your own faith.

What are your thoughts on the topic? Do you think the sub categories are good and healthy?


  1. says

    For years I have heard of the Timothy plan (and others). The problem is when you are trying to build your retirement, by cutting out everything that you disagree with, you are hurting yourself financially. The idea is to be able to retire and enjoy life, not spend your “golden years,” at the “golden arches.”
    So the idea behind it is a good idea, but not very piratical or prudent.

    As for the denomination specific funds, Lutherans and Catholics faith doesn’t discourage drinking, in fact there are occasions both those denominations will allow alcohol on church property. Whereas the Methodist, Baptist and other protestant denominations take a dim view of alcohol, some even going as far as teaching that its a sin to even touch the stuff. So, perhaps thats the difference in the these value oriented funds.

  2. Wil says

    I’m not the least bit offended by the fragmentation of faith based funds into subcategories. Although I don’t invest in any of them, I understand why my Baptist breatheren would not want to hold a fund that invested in a winery, as an example. To me, it is just a matter of giving people options that meet their specific wishes. This is just choice, which is alway good.

  3. says

    I didn’t realize there were so many breakdowns either! Besides….I thought they were all “Christian”. This is the way I understand the hierarchy…if I can call it that:


    I had a guest post a while ago on “sin stocks”. I’m not a subject matter expert and I think it comes down to personal preference, but I think you’d be able to build a more effective portfolio by avoiding sin stocks if you so desire, than seeking faith based investing.

  4. Gholmes says

    I am with Wil that I am not offended by the different options. Think I need more information myself if I need to adjust my investing. For now I have not paid much attention to it.

    Hate to think that my mutual fund is making big money because it invests in the local porn shop chain that I rail agianst in my neighborhood.

    @ Prince of Thrift. If I feel strongly about something it is practical for me to follow the Lord’s guiding. Even if it doesnt make sence to the world.

    • says

      Great point. I do check to make sure mutual funds I own don’t have major holdings in companies I don’t endorse. However, it is nearly impossible to avoid minor holdings with some companies.
      I also agree that if it is right even if it leads to a lesser return that is probably the way to go.

  5. says

    I would have never guessed that it would be broken down in such a way. I don’t associate myself with any denomination so I wont be participating in faith based investing.

  6. says

    I’m not shocked to see such detailed options. I don’t think it’s much different than the idea of so many denominations popping up in such a short period of time. I do think it is important for each person to go with their conscience on this issue, and that would call for a lot of research and discernment.

  7. says

    From what I understand, the Christian fund is intended to be a non-denominational fund. It is actually important that they are divided up they way they are. It gives the Christian the opportunity to invest without compromising his or her beliefs. Many people don’t understand that when you invest in stock, you are literally buying a portion of that company. Therefore, the money earned from dividends or from the stock value increasing come from a company that you (partially) own. If the company is involved in marketing tobacco or producing adult entertainment then you are profiting from those actions. The bible is very clear about avoiding ill-gotten gains (regardless of how much better your portfolio could do with them).

    About the denominational divisions; there are certain actions that pretty much all the funds avoid, such as abortion, adult entertainment, tobacco, and gambling. There are other issues that tend to be more denominationally based such as birth control (catholic), alcohol (baptist), handgun manufacturing (several) and immoral lifestyles (several). I believe it is in Romans when Paul discusses avoiding things that we believe to be sin (such as eating food offered to idols). While some things may not be a sin in themselves (such as drinking alcohol, in my opinion) many believe that they are, often because their faith is newer or weaker. They should not be looked down on or told that they are wrong. In fact, Paul even goes as far as to say that we should not participate in those actions around them because it could cause confusion and cause them to sin. The different funds are necessary because it gives Christians of all denominations the opportunity to invest in stocks or ETF’s without subjecting themselves to actions that would conflict with their faith (or would be sin to them).

    Faith-Based investing is not meant to make Christians into activists. It simply allows them to invest without compromising their faith. Craig, you said earlier that it is almost impossible to avoid minor holdings in some companies. That is because the amount of research needed to fully investigate a single company is astounding. Most all Christians, if given the chance, would avoid investing in Hustler because of the content it sells. But, did you know that General Electric, through it subsidiaries, sells more hard-core pornography than Hustler magazine each year? Most individuals do not have the resources or the time to do this sort of research on each of their investments, but large companies do. They can screen the stocks and design mutual funds and ETF’s that are free of these actions and help Christians to invest conscience free.

    …..sorry about the rant. That was much larger than i intended it to be. :)

    • says

      @Mark. I didn’t think that was a rant. I thought it was very helpful. When you dig deeply into most companies there will ultimately be these type of deep ethical issues. You use the GE example. Then there is the question about investing in companies like grocery stores that sell pornography. Thought they are not directly related with the industry they profit from the industry. At the very least we could all agree this is a very complicated issue.
      Thanks for some fantastic insights.

  8. says

    I wanted to add my comment to the topic of faith based investing
    I have been a financial planner for 25 years. 6 years ago, I believe God called me to “Biblically Responsible Investing” (not my term). For the past 6 years we use software to screen mutual funds, stocks, bonds, etc. to make sure the companies are not giving some of their profits (thereby supporting) things that “Christ Followers” would take a stand against.
    I believe there is a big difference between “avoiding” (boycotting) all companies that do immoral things vs. being a “stockholder” of those companies.
    I believe as a Christ Follower all that I have really belongs to God. I am simply the steward of His resources. I also believe God cares how His money is invested. One day I will stand before Him and give an account of the advice I’ve given and I do not knowingly desire to invest our client’s money in things that God’s Word takes a stand against. Can we perfectly screen out everything? Absolutely not, but I’d rather try than simply give up and say “it’s impossible”. I really believe we can make a difference and we can make a difference without hurting the overall performance of our portfolios. Thank you for letting me share my opinion. I appreciate the blog

    • says

      Thanks for sharing your opinion. I think you have some very valid points. In particular I do think sometimes we do ‘give up’ when doing something would be better than doing nothing.

  9. says

    I have mixed opinions about this as well. As a follower of Christ, I strive to have my whole life glorify God, including my finances.

    All the different faith-based options may give the different people what they want, but it may also overwhelm people who may not fall into a denomination. And at this point, I’m not so sure that it’s possible to agree 100% in what any fund invests in. Furthermore, you’re still placing trust in a fund manager to invest “the right way.”

    If you were to avoid certain stocks, you’d have to invest individually, which takes more time and costs a lot more. So there are many facets to this issue about faith-based investing that leaves me unable to come to a definitive conclusion as to whether I’m for it or not.

    In my opinion, I still think we can glorify God in many other ways.

  10. says

    Here is my question: when I buy stock in any company, does my money go to that company or to another investor who sold his stock at the same price? I am admittedly naive about how the stock market works (my question probably proves that), but buying and selling stock could be akin to someone selling me their used Chevrolet…none of the money goes to General Motors; it all goes to the seller.

    Not wishing to sound cynical, but do those who use faith based investing also refrain from buying groceries where alcohol is sold and gasoline where cigarettes are sold or pharmaceuticals where birth control products are sold? I guess I am a bit cynical, but in this world, it is difficult to NOT support some business who sell products we don’t agree with.

  11. says

    @ Joe, to answer your first question…Unless you are purchasing stock in an IPO (Initial Public Offering) or a Secondary Offering, you are purchasing from another individual and NOT directly from the company. However, from that point forward you are now a part owner of that company and will be participating in their profits and losses. So, if you have a moral objection to alcohol for example, and you buy shares of Anheuser Busch, then you are profiting from the very thing that you have an objection to. So that’s the reason why some people choose to avoid certain stocks even if their actual dollars will not go to the company directly during the initial purchase.

    On your second point, I agree that it can be extremely difficult and you can spend all of your time and energy on avoiding certain brands, just to find out that the parent company produces 10 other things that you buy. I think at that point, everyone must rely on Godly counsel, prayer, and their conscience (when properly under the direct influence of the Holy Spirit and informed by God’s word).

    • says

      @Khaleef and Joe
      Khaleef thanks for jumping in and answering the questions Joe asked.
      On question 1 – I have no idea :). Either way you do profit when a company profits.
      Your second question is why faith based investing is hard. You can spend so much energy trying to avoid a speck of dirt and then turn around and buy milk at a store that profits by selling porn. I prefer to devote my energy in making a positive impact on the kingdom rather than looking under every moral rock. That said, I do avoid purchases that clearly seem immoral. However, when investing in mutual funds it is impossible to completely avoid ‘sin stocks’.

  12. says

    My question to any investor is: do you think God cares about the amount of the profit or the source of the profit? God cares about us being faithful in the small things. Is faith-based investing practical? After over 5 years of research, I am fully convinced you can have your faith and performance too. It does take time and a commitment to find investments that are honoring to the Lord.

    By avoiding the most morally objectionable companies you are saying to God yes I care about where I am investing your money. Is the process perfect? No, but I believe God will reward those who seek to be faithful in all areas of life. This isn’t the motivation (financial reward) but rather through obedience we grow closer to the true character of God. No person or company is perfect like Jesus, but there certainly are companies that are in direct opposition of God’s Word. I start by avoiding those and then finding companies I can be “proud to own”!

    • says

      Thanks so much for your comment and your perspective. I think it helps give a good, fair, and balanced response to the article. I like how you point out that while there are grey issues some companies are clearly in direct opposition of God’s Word.

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