What is faith-based or values-based investing?
We know that nonprofit organizations, churches, and other worship places refrain from issuing shares to the public. So, why is there such thing as faith-based investing? No, it does not concern buying and selling equities across religious organizations. Religion and investments are an uncommon combination, but they sure can mix. Actually, faith-based investing is like any other philosophy about investments because it wants the investor to have the highest possible return. The only difference is how the investors pick the investment professional and instrument they will work with. Unlike traditional investing methods, secular investment plans involve choosing the manager, companies, and even the investments. They need to ensure that they all match their religious beliefs. Hence, the strategy used is also called values-based investing.
Tell me more about faith-based investing.
Have you ever encountered a church selling securities to investors directly? They do not do that, but religious groups tend to be more open about the investment principles that they follow. One can quickly figure them out. Faith-based investing is not that different from other strategies out there. It also aims to get a high return. However, they consider a lot of investment factors before they decide. It should match the principles they follow. These principles focus on ethical, social, and environmental aspects. For example, we know that Catholics and Christians do not support birth control, addictive substances, pornography, and the like. Hence, they would instead prefer to work with Catholic or Christian companies since they will understand more what they prefer. Their only offer investments that follow the same faith principles, and they are in any way involved with all the things we mentioned earlier.
Different religious groups, different strategies
Several religious groups have their own investments strategies. Investment styles may depend on one’s religion. Sometimes, the denominations can also be different. Here are some of the religions that have different strategies that we can encounter:
- Islamic investing
- Jewish faith investing
As we have said, faith-based investing is not too different from any other kind of investing. It does not guarantee more profits because the investments align with one’s faith principle, although the aim is also to have maximum returns. It will also face the same risks like market sentiment, government policy changes, economic conditions, interest rates, geopolitical issues, and the like.
Faith is important but
If you can find investments that match your faith principles, you can also find those that suit your financial profile, economic situation, and goals. Always do research first, and it’s much better if you can work with the help of a financial professional. They should know just the right ETFs, stocks, bonds, and other investments for your personality and even faith.
In a nutshell
Indeed, you cannot buy investments from a church because they do not directly sell. However, you can always donate if you want to give more than receive. It will provide support to the church or institution. Who knows? Your taxes might even be reduced for your kindness. Other people who want to give may look into estate planning. It will transfer one’s wealth to the church after passing. These are only some options, but there are still more ways in which religion can guide one regarding financial growth. Lastly, ensure that you are investing smartly. It’s important to be aware of the risks, and case studies (read the one that involved PR agency Instinctif Partners to make financially sound decisions.