4 Principles to Catholic Investing

Or: 4 Ways to Know If You Invest Like a Catholic

Whether we like it or not, money plays an important role in everybody’s life. From buying milk and paying your electric bill to saving for the time when you are no longer willing/able to work, money will always be part of your life.

We’ve talked about whether or not a Catholic should invest (hint: yes), now it’s time to discuss HOW Catholics should invest.

Yes, most of this site is dedicated to Catholic investing and we go into some depth on a variety of topics. At the same time, other than our explanation of the USCCB’s guidelines, we’ve never really discussed Catholic investing principles in general.

Like most parts of Catholic teaching, the principles are few, simple and rather general. This helps guarantee they’re broadly applicable and don’t get lost in the details of specific cases. Here are the four main principles Catholics should follow while investing.

1) Do Not Do Evil

A very basic moral principle that is true always and everywhere is never deliberately do or promote what is evil. This is just as true in finance and investing as it is in every other part of life. You cannot invest in companies that actively do evil as a way to promote that evil.

Complicating matters a bit is whether or not you are responsible for the evil a company does. After all, you are not the person making business decisions nor shaping corporate policy. Then again, as a shareholder, you actually are a part owner of the company and vote on corporate leadership. This is not some farce or legal fiction, it is a fact that by owning stock in a company, you are one of the company’s owners. One of potentially millions, but an owner nonetheless.

So, are you promoting evil by being a part owner of a company that does evil? Rephrasing it slightly may shed a bit of light. Are you promoting evil if you buy a stake in a human trafficking ring that entitles you to vote on the group’s leadership and potentially share in their profits?

A counter argument that some try to raise is that when you buy a stock in any context other than an IPO, none of your money goes to the company itself. Much like if you buy a used car from a friend, the original manufacturer of the vehicle doesn’t make any money. Some use this as justification for owning any equity whatsoever. While we do not deny that the company whose stock you buy doesn’t actually get your money (outside of an IPO), this argument fails because it still overlooks the very obvious fact that all stockholders are part owners of the company regardless of how they acquired the stock.

Returning to our previous analogy, buying a stake in a human trafficking ring is still wrong even if you buy from a third party. You similarly cannot buy shares of companies that are morally bad actors outside of IPOs.

Thus, to invest like a Catholic, at a bare minimum, you absolutely must avoid being a shareholder of companies that do or promote evil.

What makes this difficult is how hard it can be to find out what companies are behind which products and services. Who makes the drugs used in assisted suicides? What companies use slave labor in foreign countries? Which healthcare organizations quietly perform abortions? The sheer amount of research required to learn answers to what appear to be simple questions is staggering.

And this assumes that all companies are fully transparent about what they do. This is rather naive. Many companies are understandably reluctant to admit they engage in behavior that may lose them sales and clients if word got out.

In fact, we’ve uncovered some situations where corporate leadership was actually unaware of the decisions being made on a lower level until we told them. On some occasions, the lower ranked individuals were actually violating existing corporate policy.

Avoiding evil while investing is definitely a situation where it is easier to understand the concept than put it into practice. All the same, being a faithful Catholic is never easy. We should view our investments as a time to be in the world but not of it; wise as serpents yet innocent as doves. Invest; but under no circumstances invest in evil.

2) Do Good

Jesus commands us to do more than avoid sin. We are told to be the light of the world and to go forth and preach the Gospel. That is why Catholics cannot avoid evil and assume they’ve done all that they need to do. Remember Jesus’ harsh words in Matthew 25: 31-46. People who believe in Him, people who call him Lord, are sent to Hell because they did not do good while on Earth.

We must also use our time, talent and treasure to help build the kingdom here on Earth.

While the exact way in which each of us is called to participate in bringing about the reign of Christ on Earth is different, there’s no question that we must do something. In our role as Catholic investors, though, it’s readily apparent that we should, in some way, work to change the corporate landscape to more accurately reflect Gospel values.

To return to our point above, as a shareholder, you are part owner of a company. So, it is incumbent upon us to work for the betterment of humanity through the businesses we own a share of through our investments.

Exactly how this happens is generally one of two ways. Either shareholder action pushes a company away from evil or towards greater good or a direct intervention with company leadership effects change. Given the prohibition on owning stock in companies that are morally bad actors, shareholder action is generally limited to leading an ethically good company to moral greatness.

Where we really help promote the good is by engaging basically decent corporations in direct advocacy. Many times, they may be highly resistant to our overtures. But we need to keep trying. It’s important for us to never lose sight of the fact that the truth is on our side and, eventually, the truth will win. So we must take the light of Christ to the boardrooms of corporations and get them to realize what they’re doing and how they should change.

While this may seem fanciful at first, we have seen firsthand how successful this can be. From stopping corporate donations to Planned Parenthood to removing adult movies from hotel rooms, advocacy has changed and, in the future, can and will change the world for the better.

On an individual level, having an impact is very difficult. After all, Catholic investors are most likely not going to own stock in truly abhorrent companies and, even if they did, almost assuredly lack the votes to make a difference. What is a faithful Catholic to do with regards to promoting the good through investments?

The first, and most obvious, answer is vote appropriately in corporate elections. Even if you lose, at the very least you’re witnessing to your beliefs and trying to effect a change. Second, we should investigate avenues to engage in corporate lobbying. This doesn’t mean that each investor needs to start calling the CEO of every company he owns a share in. In fact, that might be counter-productive.

Instead, Catholic investors should find a way to leverage the power of shareholder action and personal witness.

Shareholder advocacy is effective because it provides a direct line to the highest levels of an organization and represents a unified front. Person to person communication is still the most effective way to influence other people and change hearts and minds. Fortunately, there are advocacy groups that specialize in corporate work.

Catholic investors can avail themselves of advocacy groups to effect change in the corporate world.

The only trouble is finding these advocacy organizations. It’s no secret that many organizations do not share our values. Finding people who agree with Church teaching and will argue our case in a convincing way with corporate executives can be difficult. While not impossible, it is not easy to find the right people with the right connections to effect the change we need. Having said that, it is possible and there are groups that have a history of helping Catholic investors.

What is not debatable is that Catholic investors need to promote the good through their investing and change the corporate landscape to more accurately reflect Gospel values.

3) Keep Money in Its Place

Just like the first two principles, the third is taken straight from Catholic teaching on ethics in general. The thrust of this principle is that money is not necessarily good or bad per se, what matters is how one uses it. For example, money can be used to buy food for starving people or it can be used to pay for abortions. From an ethical point of view, money is significantly less important than an activity it is being used to fund.

Where people often go astray with money is by making it an end in itself.

It’s important to remember that money, in its most basic form, is nothing more than an exchange medium. It’s simply a way to make the exchange of goods and services smoother, easier and fairer for all parties. Making an arbitrary system of exchange a goal is wrong.

As investors, we’re walking a bit of a fine line here.

Obviously, we invest with the primary goal of making money. But, at the same time, the money itself cannot be the reason for our investments. We invest to make money so we can use it for other reasons. It’s easy to get caught up in the amassing of fortunes for the sake of amassing a fortune. This is especially true in a society that has, to a large extent, bought into the Prosperity Gospel.

The idea that our material well-being is directly tied to how blessed by God we are is very Calvinist and not at all Catholic (or scriptural).

There is always the temptation to see material success as a sign of God’s special favor. While we aren’t arguing that God does not bestow real, temporal gifts, we strongly caution against the urge to equate the two. This religious self-justification is something to be aware of in addition to the very common and understandable urge many people have to see just how much they can gain. After all, when we’re doing great, it’s easy to want to see if we can do a little bit better for no reason other than that.

Returning to our opening comments on this principle, money is not in and of itself evil. Where we run into trouble is when we seek monetary gain simply because we want more money. As for how much is too much, we have to leave that question to everybody to answer on an individual basis. This might seem like evading the question, but remember that we all have different expectations and standards of living. What is considered a comfortable living in one part of the country may be near or even below the poverty line in others. Similarly, what many people consider essential or at least important, others view as extravagant luxury.

We can, however, offer some guidance. Perhaps the easiest, most direct way to determine if you are letting money become its own object is to ask yourself why you are seeking more of it. Do you have a goal or end in mind and you need the money to reach it? Are you saving for retirement? Or are you really just storing up massive amounts of money simply because you can?

A final word: if you are wondering if money has become an idol in your life, we strongly recommend you talk to a priest or spiritual director. Hopefully, he will be able to help you get to the bottom of it and put money back in its rightful place or give you the green light to continue.

4) Stewardship, Not Ownership

The fourth major principle is that of stewardship. We need to remember that we are simply the stewards of what actually belongs to God. What this means for us as investors is that we must use what He has entrusted to us wisely.

Generally, this means following some rather basic, common sense maxims. Do not invest money you cannot afford to lose. Live within your current means, not at the level you think your investments will take you to at some future time. Make sure to balance the money you invest with the money you need to live; there’s no point investing if you can’t afford groceries.

That advice is applicable to everybody. Catholics are called to stewardship, though, not just common sense.

We need to remember that God will ultimately judge us for how we live our life. This clearly includes how we spend and invest our money. His judgment of our actions will be based not on how we would spend money if we had it, but on how we did spend the money we actually had.

Being stewards of God’s money means prayerfully considering how we are called to use it. While this certainly includes praying about how to invest, it also encompasses if we should invest at all and how much money to invest. God gave us the intelligence to make judgment calls and determine what is the best course of action, but He still expects us to ask Him for guidance on how to use what’s ultimately His money.

Investing Like a Catholic: A Final Summation

It’s hard to put it any better than Ecclesiastes 5:10: He who loves money will not be satisfied with money; nor he who loves wealth.

The investor who takes the Catholic faith seriously really just needs to live out the faith the same way with regards to investing as with any other part of life. You can never do evil. You must do good. You should keep things in their place and be a good steward of the gifts God has given you. These four principles are essentially the same with regard to anything. Time, food, work, or play; they apply universally.

Of course, understanding what the faith requires and actually putting it into practice are two different things. All we can do here is help shed some light and offer a bit of guidance on what faithful Catholic investing involves.

Ultimately, the rest is up to you.

If you would like some help or advice on investing like a Catholic, don’t hesitate to reach out to our investment advisors.

Post from: Insights