Faith Based Investing written on notebook

A Guide to Faith-Based Investing: 3 Steps to Getting Started

Financial Planning, retirement Nov 2nd, 2020 by: Darryl Lyons

As a financial advisor in San Antonio and founder of PAX Financial Group, I talk to people every day who want to invest. Something I’m seeing more and more recently is people who want to invest in a way that honors God and allows them to be good stewards with their money. 

Strong in my faith, this has always been a priority of mine. In fact, I published Small Business, Big Pressure, a Faith-based Approach to Guide the Ambitious Entrepreneur, back in 2015 to encourage a faith-based financial planning strategy for business owners. Needless to say, I’m very excited to see this trend take off!

Are you also passionate about your faith and curious how to incorporate your values into your financial planning strategies?

One solution is faith-based investing – also known as Biblically Responsible Investing (BRI) – which allows you to invest in companies that align with your Christian values.

As this wonderful trend continues to pick up steam, I want to further explain what Biblical investing is, how it works and how to get started. Yes, faith-based investing in San Antonio is possible!

 

What is Faith-Based Investing?

Faith-based investing does not mean you only invest in Christian companies. Instead, you invest in companies that have Biblically aligned principles and you avoid those that don’t, companies that support things like alcohol; tobacco; gambling and other addictive behaviors; pornography; and other anti-Christian lifestyles. Depending on your beliefs, you can also avoid companies involved with firearms and high-interest lending.

 

How Does Faith-Based Investing Differ from Socially Responsible Investing?

Faith-based investing is a type of Socially Responsible Investing (SRI), so the two have quite a few things in common. 

The major difference is that socially responsible investors typically choose companies that promote environmental sustainability, social justice, peace and morality. 

Faith-based investing, on the other hand, is rooted in Biblical principles and the desire to honor God with your financial returns. 

The two types of investing have some overlapping areas. They both allow you to invest in a way that aligns with your morals, ethics and values. But they typically diverge on key issues like abortion and LGBTQ rights.

 

Limitations of Faith-Based Investing

Historically, faith-based investing had quite a few downsides:

  • You couldn’t diversify as much as regular investors because you had limited options. 
  • You had to pay high fees and expense ratios for Biblically responsible investments.
  • Your faith-based portfolio would’ve historically underperformed your peers.

Thankfully, investors no longer have to sacrifice performance for their beliefs. Faith-based investing has grown tremendously over the years. And this rapid growth means there are now more faith-based investment options than ever before.

 

Does Faith-Based Investing Work?

Historically, faith-based investment portfolios underperformed similar, secular portfolios. But recent studies indicate this is no longer the case (likely due to more investment options and lower fees). 

A study conducted by the Christian Investment Forum found that return performance isn’t reduced by incorporating Biblically responsible investing into your portfolio. In fact, over the last five years, it composited returns from all the equity mutual funds held within the Christian Investment Forum and found that it outperformed the industry by an average of 77 basis points on an annualized basis. 

 

Want to learn more about faith-based investing? Contact PAX Financial Group and get the conversation started.

 

How to Get Started with Faith-Based Investing

The Biblically responsible investing movement has taken off nationwide, changing financial planning in San Antonio and across the country.

If you’re ready to join the Biblically responsible investing movement, and you want to start building a faith-based portfolio, here’s how to do it in 3 steps: 

Step 1: Use a Screening Tool to Identify Your Options

Sifting through hundreds of mutual funds and ETFs to find out which ones are faith-based can be time consuming. Save yourself the hassle by using a screening tool to narrow down your options. 

At PAX Financial Group, we can do the screening for you. We can make sure you’re choosing investments that align with your beliefs. We can look for investments that: 

  • Do not include any company that is publicly recognized as being in the alcohol, tobacco, gambling, pornography or abortion industries.
  • Do not invest in companies whose products, services or activities are publicly recognized as being incompatible with the moral and ethical posture of Biblically investing standards.
  • Have moral and Biblical principles.
  • Are not on the Timothy Plan Hall of Shame, also known as Know Your Investments, which gives a detailed breakdown of 30 Fortune 500 companies that failed the Timothy Plan screening process. 
  • Honor God and serve clients by investing in companies that create compelling value for the global common good.
  • Offer good returns and good values.
  • Avoid companies with exposure to pornography, alcohol, tobacco, gambling, bio ethics, human rights violations and other values.

Step 2: Watch Out for Fees

It’s common for mutual funds to have fees, but no- and low-fee ETFs are becoming more and more popular. Regardless of which route you choose, research fees so you know what to expect when you invest. 

Once you find a faith-based mutual fund, ETF or stock, speak with a financial advisor to see how these fees compare to similar investments. PAX Financial Group can help you with this.

Step 3: Work with a Financial Advisor who Uses Faith-Based Investing

Many financial advisors are still new to the concept of faith-based investing. Some may not be willing to explore the idea. If faith-based investing is something you feel strongly about, take the time to find an advisor who can help you put together a portfolio that honors God and aligns with your beliefs. 

At PAX Financial Group, we specialize in working with high net-worth professionals in the San Antonio area, many of whom prefer a faith-based approach to investing. If you’re new to Biblically Responsible Investing, we know it can be difficult to know where to start. That’s why we’d love to help you put together a portfolio that honors God and helps you reach your financial goals. 

With more than 100 years of combined experience, San Antonio, Texas-based PAX Financial Group is passionate about helping you live the life of your dreams. Locally owned and independent, our financial advisors are deeply committed to helping you achieve your vision of financial success. We offer holistic financial assessments, investment management and insurance all in one place.

Contact us to get started. We look forward to talking with you. 

Retirement Guide - PAX Financial

This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.

Darryl Lyons

Darryl Lyons

CEO and co-founder of the PAX Financial Group, Darryl Lyons has been a licensed professional in the financial services industry since 1999. A lifelong Texan, Darryl began his career in the financial sector just one day removed from earning his bachelor’s degree in corporate financial management and accounting at St. Mary’s University. Throughout his career, he has won awards for recruiting and development from Fortune 100 companies. In January 2007, he chose to begin and develop his independent practice. He joined Andres Gutierrez and Joseph Schuetze to form the PAX Financial Group. Darryl also served as the Chairman for Brooks Development Authority. Shortly after his service, Mayor Julian Castro, named a park “The Darryl W Lyons Park” in honor of his service. He was named to the 2010 San Antonio Business Journal’s “40 Under 40 Rising Stars,” which honors people making a difference in business and in the community.