Is Investing a Sin?

Is Investing for Retirement Biblical? Absolutely!

As Christians, we are called to trust in God. The Bible has some fairly harsh things to say about those who trust in their own strength. With this in mind, some people are afraid that investing is actually a sin against faith. They argue that investing is mistrusting God, as we are trusting in our money to take care of us in our old age.

Investing in the stock market for retirement is actually supported by the Bible, both in the old and new testaments.

In the Old Testament, Joseph interprets Pharaoh’s dream of the seven fat and seven lean cows to mean a famine was coming. What was his response? Investing in food and storing it for the future. God does not punish Joseph for this action. In fact, He rewards him by reuniting him with his family. By extension, we all know there will come a day when times will be lean. Whether it’s the result of old age or a sudden loss of income, we will not always be living in fat times.

We should take Joseph’s example to heart and invest, saving the money we could use now for these future times.

The New Testament does not have a similarly straight forward example, but in St. Matthew’s Gospel, Jesus tells the parable of a man who discovers a treasure in a field. What does he do? He sells everything and invests in the field, knowing the financial opportunity it represents.

If investing were sinful, Jesus could not tell this parable.

He presents the man as having acted correctly and as a model for how we ought to live our lives. Everything we do should be an investment: an investment in eternity. In a more mundane way, though, even Jesus appears to have no problem with investing for financial gain. Who are we to contradict Him?

Proof Investing Is Not a Sin: Jesus Recommends It

We’ve commented before on the parable of the talents and its implications on Christians’ dealings with their worldly possessions. But there’s deeper meaning to be found in these parables. At first blush, they’re about people who do or do not use the financial gifts God has given them.

After all, on the face of it, the parable really is about people using the monetary gifts God gives them. Some of the servants do a better job following the master’s orders to use the money while he is away. Some don’t even try. The obvious meaning of the parable is that God will hold us accountable for how we make use of what He has entrusted to us.

But, the parable has a very important underlying assumption: investing is OK.

Think about what the master tells the servants to do in Luke 19:13. Depending on the translation, he orders them to put the money to work, do business with it or trade with it. What is he actually telling them to do? There’s one word that sums it up: invest. What else do you call putting money to work to make more money?

Similar to the parable of the man who sells everything he has and invests in a field with treasure in it, the parable of the talents presupposes investing is OK and sometimes a very good idea. In the parallel passage in Matthew 25:27, the master actually tells the wicked servant that he should have invested (some translations say deposited or put) the money in the bank at the very least.

Importantly, the presupposition here is that the money should have been invested in some way.

The clear conclusion is that investing cannot possibly be a sin. How could the master chastise the servant for not investing if investing were a sin? How could Jesus tell multiple parables about investing if it was a sin? Think about it, could Jesus tell a parable where the master faults somebody for not committing adultery? Or murder? Of course not.

From the example of Jesus’ parables, it’s clear that investing must be, at the very least, morally neutral, if not actually good.

In many of Jesus’ parables, the Master is God and we are a servant. Assuming these roles hold true in the parables we just referenced, it’s not too much of a leap to argue the Master’s statement that the bad servant should have invested his money is a divine command that applies to all of us. Taking this idea one step further, it could be that not only is investing not a sin, but not investing could be a misuse of the resources God has given us and, therefore, a sin.

Between the Old Testament story of Joseph investing in crop futures and Jesus’ parables of the Talents and the Treasure in the Field, it’s quite clear investing is not a sin. Moreover, the Bible actually supports the view that not only can Christians invest, but that they should invest.

An Often Overlooked Fundamental of Investing

Most people think that all investing is the same: buy low; sell high. But that’s actually only one kind of investing. Some people invest to aggressively generate more money in the short or long term. Others invest as an alternative to holding onto cash, so they don’t lose value as inflation lowers the actual value of currency. You can even invest to create a steady income stream.

There really is no one, single reason why people invest. Yes, it always involves money in some way, but there are different purposes for different people.

This is important to point out because a lot of the objections some Christians have to investing is that it’s seen as a form of gambling, little more than an attempt to get rich quickly. We won’t deny that there are some people who search for moon-shot stocks or see if they can take advantage of a pump and dump scheme. Yet these people are a small minority of investors.

Rather, most people understand that investing normally involves a long term plan that requires dedication and patience. Capital appreciation portfolios are probably the closest thing to what people imagine “investing” to be. It’s investing in companies in order to make money faster than the market in general. It is almost always a plan that is executed over years, if not decades, and bears no resemblance to the pseudo-gambling of get-rich-quick investment schemes.

Index investing is a slightly different take on investing where instead of trying to get ahead of the market, investors just try to keep pace with it. Generally speaking, the stock market goes up in value over time and usually faster than inflation. So index investing is an attempt to at least match the market with your investments so that you don’t lose money to inflation.

Dividend investing is another option where the goal isn’t the amassing of wealth but rather the securing of a new income stream. Some, but far from all, companies pay their shareholders a portion of the money the company holds. Dividends vary based on the company and one investment approach is to seek out stocks that have an unusually low price to dividend ratio. Through clever stock purchases, investors can essentially buy themselves an income through low price, high dividend equities. Oftentimes, this income focused strategy will result in attractive capital appreciation too.

None of these three types of investing come anywhere close to the investing-is-gambling line of thinking. In its proper context, investing is a very complicated, well thought out and long term plan for financial security. It is definitely not a gamble if done properly.

When Investing IS a Sin

At this point, it is safe to assume that investing is not, in and of itself, sinful. Like most actions, it could become sinful in certain circumstances. For example, eating is not necessarily sinful, but if you intentionally gorge yourself or eat something just so somebody else can’t eat it, then eating may, in that situation, be sinful.

Yes, there are certain situations where investing is or could be a sin.

Possibly the most obvious examples of when investing is clearly a sin is when it is done with ill gotten money or money that should not be invested. Stealing money to invest it is still sinful even if you make money off the investment and return the original amount you stole. Or if you invest the money you need to pay your mortgage or buy groceries you are most likely sinning as this is not an appropriate use of the goods entrusted to you.

Where the waters get murky is when the investments are in companies that perform objectively evil actions.

Remember that when you buy stock, you really, truly become an owner (a very minor one, to be sure) of that company. So if you buy shares of a company that performs abortions, you are part owner of a company that performs abortions. Clearly, this is sinful.

But what if you don’t know that the company is engaging in morally evil activities?

Some companies go to great lengths to hide the questionable activities they engage in. Others don’t. The sinfulness of investing in a company that does evil is, to a certain extent, relative to how easily you could have found out that they’re doing it. If it’s no secret and you know they are doing it but invest anyway, you are absolutely committing a sin.

With today’s technology and readily accessible information, there’s really no excuse for not knowing if a company is engaged in morally evil activities. A few Google searches, phone calls or records requests and you should be able to find out if a company is up to no good. So investing in a company that engages in morally objectionable activities is pretty much always going to be sinful because there’s always a way for you to find out.

Essentially, investing is a sin when done with the wrong money or in the wrong companies.

It’s quite clear that investing is morally permissible and, depending on how you understand Luke 19 and Matthew 25, possibly even required. So, what are Christians supposed to do to avoid sinfully investing? It’s admittedly a lot of work to find out who you can or cannot invest in, but nobody ever said being a faithful Christian was going to be easy.

Bottom line: investing is not sinful, if you do it right.

But Aren’t Gambling and Investing the Same Thing?

Committed Christians looking for a way to support their families sometimes struggle with the morality of investing. They can be afraid to invest because they fear it may be a form of gambling. After all, in both activities, individuals are staking money on an outcome which they do not control. Whether it is the roll of a die or the price of a stock, they have no control over the result.

For the sake of argument, let’s begin by assuming that investing is gambling.

If this were true, there is still a very important point to bear in mind. Namely, gambling is not, in and of itself, always and everywhere sinful. Simply making a wager on the outcome of an event is not a sin if the following conditions are met:

1) The amount wagered is not necessary to support yourself or meet other, preexisting obligations.

Essentially, if you are gambling or investing your grocery money or money that belongs to somebody else (e.g. an employer gambling with employee payroll), you are sinning. In contrast, the richest man in the world playing penny poker with his billionaire friends is almost definitely not sinning. By comparison, it would most likely not be sinful for the richest man in the world to invest $500,000 in a moonshot stock option but this same investment almost assuredly would be sinful for a school teacher.

2) You are not being forced to gamble or invest.

This is fairly self-evident, but be aware that this extends to being pressured into gambling or investing against your will. If you are not comfortable with the situation, do not gamble or invest.

3) The game must not be rigged.

If you are cheating to win, you are sinning. By extension to investing, insider trading and pump and dump schemes are not legitimate.

4) Everybody must have an even chance at winning.

This means expert players cannot trick novices into gambling against them. The stock market essentially guarantees everybody has an even chance. Even Warren Buffett loses sometimes. The only real difference is expert investors lose less often than newer ones.

As we can see, even if we grant that investing were the same thing as gambling, it would not in itself be a sin.

Individuals can use disposable income to invest, freely decide to invest, refrain from cheating the system and do stand a fair chance of successfully investing. Whether we call these individuals gamblers or investors, they are not sinning, Even if those who claim gambling and investing are the same were correct, it still would not necessarily be a sin to invest.

Investing Is Not Gambling

As stated above, even if investing were the same as gambling, it would not necessarily be sinful to invest in the stock market. In reality, though, investing simply is not gambling. The simplistic equating of the two is partially accurate, in that you cannot make a stock’s price rise or fall just like you cannot force dice to come up any specific number, but it misses important truths about investing.

Investing, in its simplest, broadest definition, is just spending money in order to make more money.

For example, a store that buys $100 worth of products it intends to sell for $200 is investing in those products. Proponents of the “investing is gambling” theory would be forced to argue that stores are actually major gambling dens. After all, just like you could lose a bet, the store could fail to sell the products. But this is clearly not the case. What they fail to take into account is the general concept of risk. Everything we do has some level of inherent risk.

If any activity that involved risk and money were considered gambling, then almost any activity could be considered gambling.

For example, a worker invests their valuable time in return for the promise of money, but there’s always the risk his employer folds and he gets nothing. Is working for a paycheck gambling? It most definitely is not.
Gambling, then, must be defined as staking money on an event where the outcome is strictly or mostly determined by chance.

Betting on dice or the winner of a sporting event is clearly gambling. Buying a product to sell it and make a profit is obviously not. The question then becomes whether investing is determined purely or mostly by chance.

Unlike Gambling, Investing in Stocks Is Not a Game of Chance

Those who insist that investing is gambling seem to view it much like roulette, an actual game of chance. Players put their money on a number, a wheel spins and a winner is determined. While it is true that you could invest like this by randomly picking ticker symbols and investing in them, this is not how investing should be or normally is done.

Investing in stocks should not be anything like roulette.

Serious investors spend time to investigate a stock to see if it is a worthwhile investment. How do its fundamentals look? Is this business doing well overall? Is there a market expectation for it to rise? This is very similar to the kind of inquiry a store owner does before purchasing products to sell. They need to know if this specific item is a good choice for making money in the long run.

After doing this due diligence, an investor determines which stocks to buy and then invests in them. A major difference between a game of chance and the stock market is that all casino-style gambling is rigged against you. The odds are always set so that if you play long enough, you will lose everything. Roulette has 32 possible outcomes but the best bet only pays 30 to 1. When gambling, you will always lose in the long run. The stock market, on the other hand, has no set odds. You can play your entire life and come out ahead. Any stock can go up or down, it’s up to the investor to spend the time to figure out which has the best chance to rise in value the most.

Randomly picking stocks or selecting equities without sufficient knowledge of the company is, essentially, gambling.

The investor who puts money on tickers like a gambler puts money on a roulette table is definitely gambling. For individuals who simply do not have the time to investigate stocks with the attention they need to avoid gambling on the market, financial advisors exist to help. They devote their careers to finding out what stocks are good picks and which should be avoided. To continue the gambling comparison, working with a financial advisor is akin to having a world class professional poker player assist you at a game of Texas Hold ‘Em. The professional insight and analysis they offer makes it a much less risky proposition.

Investing, in General, Is Absolutely Not a Sin: The Final Argument

Perhaps the most convincing modern day argument that investing in and of itself is not a sin is the fact that the USCCB Investing Guidelines exist. If investing were a sinful activity no matter what, how could the United States Conference of Catholic Bishops write a guideline for it? It would be as if they wrote a guide for committing adultery. Clearly, investing, by its nature, cannot be a sin.

What the USCCB Investing Guidelines very clearly show is that there is a norm to follow when investing.

While we cannot say all investing is not sinful, we also cannot say that all investing is sinful. The Bishops felt the need to publish the guidelines because faithful Catholics wanted to know what the Church teaches with regard to investing. The Catechism does not offer any clear cut answer, so the Bishops stepped in to provide the insight and guidance the faithful need to be socially and morally responsible investors.

It would seem prudent to apply the four requirements for gambling to investing. Namely, you must not use money needed to support yourself now, you must freely choose to invest, you must not use the money you make for immoral purposes and you cannot cheat the system. To these four items, the Bishops added two more:

1) You must not invest in companies that are primarily engaged in activities that are immoral.

The bishops listed several categories of activity that are prohibited: abortion, contraception, embryonic stem cell research, racial or gender discrimination, pornography, arms production and morally wrong business practices.

2) You must actively promote the good.

This includes advocacy to stop evil practices like the use of child labor and advocacy to improve the world through better corporate policies and practices.

If investors follow the USCCB’s guidelines, in all likelihood they are not committing a sin by investing. Even hypothetically granting that investing in the stock market is gambling, it still would not be sinful if it is engaged in according to the USCCB’s guidelines and the normal rules that apply to gambling.

For investors who want to go above and beyond the USCCB’s guidelines and exclude even more companies, like tobacco and alcohol related businesses, they should find a financial advisor who offers separately managed accounts.

A separately managed account allows the advisor to create a unique portfolio for every investor, customizing the equity selection to your specific needs and moral requirements.

Investing is not gambling, nor is it a sin. People of faith can invest with a clear conscience, provided they are not investing in businesses that engage in immoral activity. Financial advisors like those at Summit are always available to help fellow Catholics invest in accordance with their faith. If you’ve been hesitant to invest for fear of sinning, lay your fears aside and start investing in eternity today.

To learn more about investing for people of faith, contact the financial advisors at Summit for a free consultation.

Post from: Insights