Photo by le vente le cri
About 18 months ago I started on a journey to discover as much as I could about investing. I talked about that journey when I explain why I fired my financial advisor. During that time I seriously considered faith based investing. In this article I want to introduce you to reasons why I didn’t go ‘all in’ with ‘faith based investing’.
First, the misnomer. I am not a fan of the term ‘faith based investing’. When someone asks, “do you do faith based investing”, you are automatically in a lose/ lose situation. If you say ‘no’ that means you do not invest based on your faith. Who wants to say ‘no’ to that? Thus, intuitively we feel like the answer should be ‘yes’ because of how the question is defined. However, we need to realize that there is a spectrum to how that question could be answered.
In my article Your First Step in Developing a ‘Personalized’ Investing Plan I talk about the fact that you should always invest according to your values. Since your faith impacts your values, you should likewise invest according to your values and faith. Therefore, I suggest all Christians should be faith based investors. However, I feel that how individuals implement their faith in investing will vary greatly from person to person. Therefore, it is best to speak of a spectrum of faith based investors.
a b c d y
I screen all stocks according to a very strict standard I invest in what makes the most $
Look a the line above. I believe you can be an ‘a,b,c,or d’ on the line and be a faith based investor. However, ‘a’ will say ‘b,c, and d’ are not faith based investors. Who gets to decide if you are a faith based investor? If you are anywhere to the left on this spectrum you are a faith based investor even though many faith based investors would not accept you as one of their own.
Why I consider myself a faith based investor even though I am not a ‘faith based investor’:
- I will only earn money in ways I believe honors God and is a service to people. Thus, my investment dollars come only from sources I believe in.
- I will not directly support any organization that I believe violates God’s teachings.
- I will be as conscientious as possible living in the midst of a fallen world.
- I will use investment earnings in a way that aligns itself with biblical teachings.
Why I am not an ‘absolutely restrictive’ faith based investor:
- I will not directly invest in any company that directly violates what I believe the Bible teaches. Regardless, I do not invest in single stocks. If I were a single stock investor a more restrictive faith based investing regiment would fit perfectly. I would have more control and flexibility over my investments. However, because I invest in mutual funds, I automatically give up control over specific investments choice because mutual funds buy groups of stocks. To learn more about mutual funds click here.
- There is no standardized definition of what are “appropriate” companies. I am not really being a faith based investor if I delegate the investing decision to someone else. I am asking their faith to represent my own. I have never been in a room with five Christians where they all theologically agreed. Thus, I would not really be investing based on my faith, but based on yours. I will illustrate this with my internet filter. I recently got an internet program that does content watch. I got the program because I found that too often my searches took me to sites that did not agree with my faith. Now with the filter, when I go to a site the program rates the site and restricts my access depending on criteria like alcohol affiliation, tobacco, pornography, etc. However, I find often that sites my filter restricts are sites I visit that do not violate my faith. For example, www.christianpf.com is restricted. The internet filter revealed how difficult it really is to screen everything.
- The complexity of industries. I choose to be conscientious about my investments, but not paranoid. The complexities of faith based investing quickly surface when you recognize that many ‘good’ companies have ties to ‘bad’ programs either by affiliation or ownership. Take for example a company like Disney. Many faith based investment plans will exclude investments in Disney because of their social agenda. However, many of those same investors will visit Disney World or purchase Disney DVD’s.
- It is a time consuming practice. I believe that if I am really going to be an extremely conscientious investor I need to make my own investment choices. I believe, however, my time will have a greater positive impact on the secular culture by teaching, preaching, and writing than withholding my few dollars from an organization with whom I own .0005% of through a mutual fund.
In summary, I feel like there are much more effective ways to transform our culture. I choose instead to direct my energies to those efforts. I avoid any direct investment (and business exchanges) with companies that violate biblical principles. However, when situations become more complex I devote my energies to other things that I believe have a greater impact on God’s kingdom.
What about you? Are you a faith based investor? Why or why not?
Anyone want to suggest any faith based resources that might provide some good food for thought for those of us who have not yet jumped on an ‘all in’ faith based investing plan?