Investing in Your Beliefs: Let Your Faith be Your Compass
Jay Peroni, CFP, and author of The Faith-Based Millionaire and The Faith-Based Investor. Jay is also the founder of http://www.FaithBasedInvestor.com, a faith-based investing newsletter and the founder of http://www.ValuesFirstAdvisors.com a firm dedicated to faith-based financial planning.
It’s not uncommon. Many well-educated, morally conscious, faith-based investors wind up buying shares of companies whose beliefs and business practices are far removed from their own. Why? Most investors simply have not thought about merging their personal beliefs with their investment strategies. Some may not even be aware of where and how their money is invested. I encounter people on a daily basis that have never even pondered the question, “Where does my money really go?” I routinely get the response, “I never really thought about investing from a moral standpoint.” So if you have never entertained that thought, you are not alone.
Is it that big of a deal? Only you can answer that. For some it is, and for others it is not. What matters to you may not matter to the next guy, and vice versa. But consider this – when you invest in a company, you own part of that company. Some investors would prefer to separate themselves from their investments, but any shareholder cannot. So what you really need to consider, based on what the company does and how they conduct business, is whether you would feel comfortable being a partial owner of that company. Being an investor essentially means that you have a vested interest in the company. It should matter to you where your money goes.
If investing in morally sound companies is important to you, then you need to educate yourself on exactly where your money is going. Ignorance is no excuse. Do some research and find out more about the companies you have in your portfolio. You can consult with your financial planner and the internet is an invaluable to when it comes to research. Do not let the excuse “I did not know” be the reason why you do not make changes in where and how you invest your money.
Voting with your wallet. That’s right. The old saying “money talks” is unfortunately, quite true. Corporations are interested in their bottom line. Companies aim to keep their stockholders happy. How we invest or do not invest our money can be a significant statement of our beliefs and personal principles. For example, if someone is strongly opposed to gambling or pornography, they could choose not to invest in any company that contributes to those industries. If everyone who opposed those industries sold (or didn’t purchase) shares from those companies, that could potentially send a powerful message. On the flipside, if someone firmly believes in eco-friendly alternative energy sources, they could choose to invest in wind farms rather than big oil (for example) as a way to show their support.
Surprisingly, many people are very conscious about what companies they make purchases from. You may go out of your way to avoid doing business with a company that is known for its investments in morally unacceptable practices. You may eagerly boycott a store for its known support for Planned Parenthood but at the same time, may unknowingly be investing in the parent company of that very same store. The result is that not much is accomplished. In order to send a powerful and clear message, you need to make morally conscious buying decisions and investing decisions.
The tradeoff. Investing according to your beliefs and convictions can definitely affect your rate of return, but in many cases it does not. Whether the effect is positive or negative depends upon the investments you choose and the performance of those investments. But it is entirely possible, and perhaps probable, that at some point you could face a situation where you feel the best return on your investment would come from a company that is absolutely contrary to what you believe. In that case, what do you do? No one but YOU can answer that question. The choice is yours. You must decide for yourself which is more important – your convictions or your potential financial return.
If you would like to take a closer look at how your money is invested, or if you would like to start an investment strategy more in tune with your beliefs,then you need to find a financial planner who is willing to do that for you. They should be able to help you select investments you can believe in and be proud of. The companies selected should be ones that you can be proud to own. The companies should be ones that strive to make this world a better place or are morally sound companies. You want to be rest assured that your money is not only invested in successful companies, but in companies that share your beliefs.
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