You probably already shop, vote, travel, gift, and offer charity while staying in alignment with your values. But did you also know that you can invest faithfully? It’s true.
Faith-based investing is an approach whereby you screen potential investments for those that uphold your values and eliminate those which don’t. Most investors who practice this avoid investing in unethical companies/industries.
All investors seek to profit from their investments, but Christian investors specifically are wary of profiting from investments that are the result of immoral business practices. And because the idea of conscientious investing is catching on like wildfire, it’s easier than ever to be both successful and a faith-based investor.
If you’re new to the concept of faith-based investing, here are five essential things to know:
1. Faith-based investing isn’t new, but it’s a trend right now.
The idea of faith-based investing has been around for years, but has become more popular in Texas and other states. Investors realize they can make a significant social impact with their money and have the ability to invest with a virtuous conscience.
Faith-based investing is somewhat similar to socially responsible investing in that it can be applied to all asset classes and industries. It links dollars and causes, which allows those with strong religious beliefs to use their investment dollars to grow their wealth while making a difference in their community or a cause they adore.
This is about more than just how you identify yourself spiritually or what church you go to; it’s also about your morals, beliefs, ethics, and values. You can be Jewish and invest in a Christian-owned company, as long as that company adheres to the set of standards you have set for that company or your portfolio.
As a general rule, faith-based investments usually don’t include funds or companies with bad social reputations or which are involved in the production or selling of things like weapons, cigarettes, alcohol, tobacco, or adult entertainment. Investments like these are referred to as “sin stocks.”
However, every investor is different and has his/her own beliefs, so where you draw your own moral line is entirely up to you.
2. You may consider choosing a faith-based investment firm over a secular one.
Once you’ve decided to take the faith-based investing approach, you may find that it’s worth it to employ a financial advisor who either specializes in or has considerable experience with faith-based investing. The reason is simple: if you want to make money with this strategy, you want an investment firm that has not only an encouraging track record of faith-based investing but also has a reputation for being ethical/moral.
Who better to give you the specific kind of guidance and advice you’d need to be a successful faith-based investor than a firm or advisor who takes a faith-based approach themselves?
3. Is faith-based investing like traditional investing?
There is no sacrificing on potential returns and growth potential in exchange for your clear conscience. Faith-based investing is just like traditional investing in that the ultimate goal is to maximize your financial return.
There is no reason you shouldn’t be able to be true to your faith while growing your wealth.
4. Anyone can use faith-based investing as a way to invest in companies that align with their values.
If you’re already an investor, evaluate your current holdings and decide if you want to make some changes. Maybe you will leave your portfolio as-is and take a faith-based approach for all new investments. Or perhaps you want a clean slate, in which case you will need to liquidate any investments which fall short of your standards.
You are likely to come across investments whose red flags are obvious, like stock in a major beer brewer. Others may not be quite so obvious, like an organization that has holdings or subsidiaries. As mentioned, faith-based investing is a personal, subjective investment approach, and there's no right or wrong way – it’s a matter of soul preference.
To make things easier, of the 250+ socially responsible funds in the U.S., about 40 are designated faith-based or religiously accountable investments. Most of the screening work is done for you. You can also find free faith-based investment screening tools online with many brokerage firms or financial websites. Ask us about those!
5. How to choose a faith-based financial advisor in Texas
If you want a local faith-based financial advisor or investment firm, ask around. Talk to your friends, neighbors, meet-up groups, and fellow church members.
You can also search locally with the following:
- Certified Financial Planners Board
- National Association of Personal Financial Advisors
- Financial Industry Regulatory Authority (FINRA) Broker Check
- Securities and Exchange Commission (SEC) Advisor Check
To a neophyte, faith-based investing can seem intimidating, confusing, and overwhelming. There are many potential investment opportunities; how can you possibly vet them all?
A financial advisor or investment firm with faith-based investment experience or expertise can help you navigate the possibilities and make decisions. How you feel in your heart about where you invest is what matters most. Your truth resides there.
Offering you years of experience, we’d love to be of service! Schedule a no-obligation call with one of our investment advisors to see if we are aligned with your truths. Be sure to download our helpful eBook to support your newest endeavors.
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: Biblically Responsible Investing(“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome. 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 and should not be relied upon as such.