What is Faith-Based Investing?
Faith-based investing involves aligning financial investments with an investor’s moral values.
The investor does ethical screening on a company
based on their individual religious beliefs.
For Christians,
this often means selecting investments that adhere to biblical principles.
Businesses that engage in practices contrary to Christian ethics
are usually avoided.
This approach to investing only supports companies
that promote positive social and environmental impacts.
Faith-based investing not only aims to generate financial returns
but also seeks to honor God.
And this is through wise and ethical stewardship of resources.
Faith-based investing, like any other,
is not immune to the risks that are associated with investing.
Just like usual investments,
it’s prone to risks such as inflation, geopolitical issues and even interest rates.
Carrying out proper research is advisable,
even if you are looking through a religious value lens.
It would help if you also considered your own goals
and your current financial status.
If you feel overwhelmed,
you can always seek the services of financial advisors.
They usually offer insights that are valuable to your financial situation.
In this article, we shall be looking at how Christians
can align their investments to their beliefs and values.
Also, we shall look at Timothy funds
and other investment funds.
And later on, strategies to guide you on this path.
“True greatness is not measured by the headlines
a person commands
or the wealth he or she accumulates.
The inner character of a person
-the undergirding moral and spiritual values
and commitments-
is the
true measure of lasting greatness.”
Key Concepts in Faith-Based Investing
1.Biblical Principles
Faith-based investors look for opportunities
that align with Christian teachings.
Such as integrity, stewardship, and generosity.
Proverbs 13:11 (NIV)
“Dishonest money dwindles away,
but whoever gathers money little by little makes it grow.”
These verse stresses the importance of earning money honestly.
And also the value of patience and integrity in financial growth.
2.Ethical Screening
They avoid investing in companies involved in activities
like abortion, gambling, etc.
3. Positive Impact
They invest in businesses that promote community development
and environmental sustainability.
Christian Denominational
Approach to Faith-Based Investing.
1)Catholic
The Catholic framework for economic life
has guidelines on finance and the economy.
Investors have to adhere to the moral law
and promote the dignity of humanity.
Of interest are firms that have environmental responsibilities
and human rights practices.
Catholic values do not support firms that promote contraceptives and abortion.
Again,
Catholic faithful’s don’t put their money in institutions that support gender
or racial discrimination.
Examples of entities that guide investments that support these values include;
- the LKCM Aquinas in the US, which was founded in 2005.
- the Catholic Investment Services.
2)Protestants
Their faith encourages investing in entities that are socially conscious.
Like Catholics,
they do not advocate for firearms for destruction, gambling, alcohol production, etc.
Mutual fund examples that agree with the protestant guideline include:
- Guide Stone Funds
- The new covenant funds.
Timothy Plan Funds
The Timothy Plan is a pioneer in biblical responsible investing (BRI).
It offers a range of mutual funds that avoid companies
involved in activities contrary to biblical teachings.
The fund summary list includes;
- US equity,
- fixed income,
- non US Equity
- inflation sensitive
- asset allocation.
They also offer smart beta ETFs
where stocks are valued based not on the company’s size
but rather on their volatility.
The current ETFs are listed as;
- Market neutral ETF(TPMN)-designed to be an innovative solution to income generation in a low-rate environment(source; Timothy Plan)
- US large/mid cap core
- US large/mid cap core enhanced
- High dividend stock
- High dividend stock enhanced
- Small cap core
- International
Here are some key funds the Timothy Plan offers;
-
Timothy Plan Large/Mid Cap Growth Fund
This fund focuses on long-term growth
by investing in large and mid-sized companies.
The companies meet the Timothy Plan’s stringent ethical guidelines.
-
Timothy Plan Fixed Income Fund
This fund seeks to provide income while adhering to biblical principles.
It invests in bonds and other fixed-income securities.
-
Timothy Plan Defensive Strategies Fund
This fund aims to protect capital by investing in various asset classes.
It uses strategies designed to mitigate risk.
Other Christian Investment Funds
In addition to the Timothy Plan, there are several other funds dedicated to Christian investors:
-
Ave Maria Mutual Funds
These funds are managed with a Catholic perspective,
They exclude companies that violate the core teachings of the Catholic Church.
.
-
Thrivent Mutual Funds
Thrivent Financial offers a variety of funds
that integrate Christian values with financial performance.
Christian Investments
Christian investments are broader than just stocks and mutual funds.
They include a range of financial products.
And opportunities that align with Christian ethics:
-
Real Estate
Investing in real estate projects
that support community development and affordable housing
-
Microfinance
They support microfinance institutions
that provide small loans to entrepreneurs in developing countries.
-
Green Energy
They invest in renewable energy projects
that promote environmental stewardship.
Christian Companies to Invest in;
Here are a few companies that are known for their ethical practices
and commitment to Christian principles:
-
Chick-fil-A
It’s known for its strong Christian values.
Closes on Sundays to allow employees to rest
and worship if they choose.
-
Hobby Lobby
This company also observes Sunday as a day of rest.
It does various Christian charitable activities.
-
ServiceMaster
This company owns brands like Merry Maids and Terminix.
It operates on principles that reflect Christian ethics and values.
5. Essential Strategies to Guide in Faith -Based Investing
1. Know Your Values
You need to understand your personal and religious values.
Ask yourself;
- What principles are most important to me?
- Which industries or companies align with my faith?
- Are there specific practices or products I want to avoid (e.g., gambling, alcohol, tobacco)?
By defining your core values,
you can ensure that your investments seek financial returns
And also promote the principles that matter most to you.
2. Understand Your Risk Tolerance
It’s crucial to understand how much risk you are willing to take.
Consider;
- Your age and financial situation
- Your investment horizon (short-term vs. long-term)
- How comfortable you are with market fluctuations
Risk tolerance helps create a diversified portfolio
that can withstand market volatility.
This is while staying true to your beliefs.
3. Set Your Goals
Clear, specific goals are vital for any investment strategy.
Think about;
- What do you hope to achieve with your investments? (e.g., retirement, education, charitable giving)
- What is your timeline for achieving these goals?
- How much capital do you need to invest to meet your objectives?
Setting defined goals helps keep your investment strategy focused and measurable.
It ensures you stay on track towards achieving your financial and spiritual aspirations.
4. Find a Fund That Fits Your Faith
Not all investment funds are created equal,
And especially when it comes to aligning with religious values.
Always look for;
- Faith-based mutual funds or ETFs that screen investments according to religious principles
- Funds managed by companies committed to ethical investing
- Performance history and fund management strategies
Researching and selecting the right fund
ensures that your investments support practices that reflect your faith.
5. Seek Advice from Financial Professionals
Navigating the world of faith-based investing can be complex.
Professional advice can be invaluable.
Therefore;
- Consult with a financial advisor experienced in faith-based investing
- Seek guidance from your religious community or leaders
- Consider online resources and faith-based investment platforms
A knowledgeable advisor can help tailor your investment strategy
to fit your financial goals
And also your faith-based criteria,
This can provide you with peace of mind
and confidence in your investment choices.
Conclusion
Faith-based investing is a good way for Christians
to align their financial goals with their spiritual values.
Believers can ensure that their financial activities reflect their faith.
Whether through mutual funds like the Timothy Plan
With good strategies,
you can pursue financial growth while staying true to your religious values.
Faith-based investing allows you to support causes that matter to you.
Contributing positively to society,
and ensuring that your financial activities reflect your deepest beliefs.
