Many investors want to apply their faith to the way they invest their money. And a small, but growing industry of faith-based investments is seeking to meet that desire. But many still have questions. Matt Rusten joins us to help answer those questions today on MoneyWise.
Matt Rusten is executive director of Made to Flourish, a ministry dedicated to helping Christians live their faith seven days a week, not just on Sunday.
- Matt writes for the Eventide Center and recently penned an article titled “Why I Was Skeptical of Faith-Based Investing — and What Changed My Mind.”
- Matt share his journal now an advocate for faith-based investing.
- His first real concern: Matt believed faith-based investing funds were fiscally irresponsible, and therefore, represented unwise stewardship.
- He said his analysis of the numbers led him to a clear verdict: smart money commits to low-fee index funds, while stupid money chases returns in actively managed, high-fee funds. Faith-based funds, values-based funds, socially responsible funds — they all seemed simply like the latest gimmick by which actively managed funds continued to underperform.
- But Matt said that was only true on the basis of my second concern:
- He believed faith-based funds were shrewdly packaged products designed to make money from those with a weak conscience. This is a reference Romans 14, which described Christians with a “weak conscience,” whose moral alarms were always going off like a malfunctioning alarm clock.
- To the issues of stewardship and conscience, he added a third critique, this time with a theological lens:
- He believed faith-based funds were overly optimistic about their moral purity, and weren’t sufficiently realistic about the moral ambiguity of our world.
- Afte the Fall, he reasoned, life and work in this world is always tainted by sin. In the prophet Jeremiah’s words, “the heart is deceitful above all things.” Since sin is pervasive, it crops up in unexpected ways and places.
- The implication for investing seemed simple: it is naive to think we can invest only in companies that align with God’s creational purposes. The world — especially the world of business/investing — is far too messy.
- Even companies with the best of intentions can cause untold harm, which is not always evident until many years later.
- The solution, he thought, was not to embrace a highly developed boycott mentality, but to recognize that we are not polluted by participation in an imperfect world. After all, Jesus told his disciples to pay their taxes to an evil government, and Paul ate meat sacrificed to idols, arguably aiding the idolatry industry. Such is life in a fallen world.
- WHAT CHANGED HIS VIEWS
- Over time, Matt said his views bagan to shift.
- Regarding underperformance and high fees, he began to see that ethically-run companies who create compelling value for people and planet tend to perform very well over the long term. Their business models are intrinsically sustainable — making them less susceptible to the unpleasant surprises that can plague unsuspecting investors.
- Secondly, on the issue of faith-based or values-based funds being packaged for those with weak consciences, he came to see that investing is ownership. For two reasons, this magnifies our moral responsibility:
- Owning shares in a company helps the company succeed. And, more importantly, shareholders are directly profiting from the company’s business activities. Effectively, a shareholder becomes a partner in its business model.
- His tangible first step was to ask what companies he actually owned through his investments, and whether he was happy benefiting from them financially.
- Thirdly, his thinking about the moral ambiguity of companies changed. He realized that some companies practice business in ways that align with God’s ‘Love your neighbor’ command while others do the opposite. Some companies purposely create value for their various stakeholder neighbors — customers, employees, suppliers, etc. Others often exploit those same neighbors.
- Eventually, Matt says he realized he had come to a different view of business.
- You can read the full article here.
- Discover more resources for faithful investing, ate Eventide’s Faith and Investing Center at FaithandInvesting.com.
On this program, Rob also answers listener questions:
- Is it wise to move a portion of your investments into physical gold?
- Do have to wait until you’re at least 62 years old to take Social Security benefits?
Remember, you can call in to ask your questions most days at (800) 525-7000 or email them to Questions@MoneyWise.org. Also, visit our website at MoneyWise.org where you can connect with a MoneyWise Coach, join the MoneyWise Community, and even download the free MoneyWise app.