Don’t forget, you are investing in companies!
It’s common to hear people talk about being invested in “the market” or owning this or that mutual fund or ETF. These investment vehicles are a blessing to investors who can now easily and affordably diversify their investments. However, one consequence of the growth of mutual funds and ETFs is that it has commoditized what is really the core of investing: supplying capital to companies to grow their businesses in return for a share of the profit. Don’t forget, when you invest in that mutual fund it is actually a number of companies in which you are investing!
What is investing?
Let’s take a step back and remind ourselves what is investing? Companies make money from their products or services — profit. Sometimes a company wants to grow even more; for example, open a new store or factory or research and market a new product. They need additional funds to make that happen, so they sell shares of the company to raise the money they need. The people who buy these company shares become part owners and hope to receive some of the profit.
The Dutch East India Company was the first company to issue stock in 1602. From that time up until 1924 with the issuing of the first mutual fund, investors invested directly in companies. While they certainly invested to make a profit, they also knew what they owned and knew the business activities from which they were profiting.
Do you know what you own in your portfolio?
One difficulty with mutual funds and ETFs is that they have distanced investors from the companies themselves. Most investors today do not actually know what companies they are invested in and what business activities they are profiting from. There are two problems with not knowing what you are profiting from:
- You may be profiting from industries and activities that go against your beliefs or values. Many Christians oppose things like abortion and pornography and yet they are unknowingly profiting from these activities through their investments.
- You may be missing out on investing in companies that are making a positive impact on the world. There are many admirable companies discovering cures for diseases, creating helpful technologies, or going above and beyond in how they treat their employees and suppliers. Wouldn’t you want to invest in a company making a difference?
Aligning your values with your investments
For Christians, the method of aligning your values with your investments is called faith-based investing, or biblically responsible investing. Unless you have the time and expertise to financially research companies in our complex economy of conglomerates and mergers, you will need help implementing faith-based investing.
Beacon Wealth Consultants offers comprehensive financial planning with expertise in biblically responsible investing. This has been our focus since 1997 when we first began helping our clients align their values with their investments. We research and screen companies, not only avoiding investing in unbiblical practices but seeking out companies with a positive impact.
Remember, when you invest you are investing in actual companies with actual products and services. You are praying with your dollars because you want to make a profit from your investments. You should know and be excited about the companies you are profiting from and our team at Beacon Wealth Consultants can help!
Do you know what Business Practices You Are Supporting through your Current Investments?
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