Are Christian Mutual Funds Right for Me?

When it comes to investing, you’ve got plenty of important choices to consider: 401(k) or IRA. Traditional or Roth. Mutual funds or single stocks. (Pro tip: Always go for the mutual funds. You don’t want to put all your eggs in one basket with single stocks.)

And if you’re a Christian, you can add another layer to your decision-making process when it comes to investing—your Christian beliefs and principles.

Maybe you’re unsure about where to put your money, or you’re worried about investing in something that goes against your values. Listen, folks—we get it. It’s a crazy world out there, and as Christians, we’re called to be good stewards of our money and talents. But we also know the last thing you need influencing your investing decisions is fear and uncertainty!

So let’s talk about your options. We’ll dive into faith-based investing, cover sin stocks (yep, that’s a real thing), and see if Christian mutual funds can help you reach your long-term savings goals. Because the more you know, the better choices you can make when it comes to growing your money.

What Is a Christian Mutual Fund?

Christian mutual funds are types of mutual funds that invest money in companies that line up with Christian values. They’re a type of values-based investing, an investing philosophy where investors put their money into stocks they hope will have a good return, but they choose those investments because they align with their values and principles. It could be based on a company’s environmental, social, political or ethical standing.

Let’s say you want to invest in mutual funds, but you’re concerned about profiting from the growth of a company whose values don’t line up with yours. If so, investing in so-called clean funds, like Christian mutual funds, can give you peace of mind because:

• Christian investing companies are super picky about what stocks they buy, so you don’t have to worry about profiting from a business that goes against your beliefs or values.
• Some Christian mutual funds have decent long-term rates of return. So they can be just as good as other mutual funds you’d want in your 401(k) or Roth IRA.

If these are big concerns for you, it’s worth talking with your investing advisor about adding Christian mutual funds to your retirement investments. They can go over the specifics and see if faith-based investing is right for you.

What Are Sin Stocks?

Heads up—you won’t find a little pitchfork next to their title. Sin stocks usually fall into the category of all things tobacco, alcohol, gambling and weapons. These companies aren’t doing anything illegal, but their businesses are based on activities some people find unethical or immoral.

Because mutual funds buy shares in hundreds of companies, they almost always include at least a few “sin” stocks. And it’s up to the individual investor to decide if it’s worth their time and energy to comb through all the holdings in a mutual fund to see what companies it includes.

What Does Dave Ramsey Recommend for Christian Investing?

Investing in Christian mutual funds that provide a good rate of return while avoiding sin stocks are one option for Christian investors to look into. Another option is to look at the investments you’re making from a different perspective. Here’s what we mean:

Market chaos, inflation, your future—work with a pro to navigate this stuff.

Dave doesn’t look for mutual funds that specifically avoid sin stocks. That’s because buying a stock in a mutual fund company isn’t the same as supporting that company. When you buy stock in a mutual fund that has holdings in a company like Anheuser-Busch (who makes beer), you’re not giving a penny to Anheuser Busch. All the profit on the sale of that share goes to the shareholder you bought it from. So you’re really not harming or supporting any of these companies with your mutual fund investment. 

Think of it like buying a car. The first time a BMW is sold, it’s sold by BMW, and BMW makes money. But after that, the car is sold at dealerships, used car lots or through private sellers on the internet. It’ll be sold to a lot of different buyers over the years. And BMW doesn’t make any more money off the sale of that same car once they sell it the first time.

Plus, if you were to start boycotting companies you don’t agree with, you pretty much rule out even having a bank account. Grocery stores and gas stations, for example, sell beer, wine and lottery tickets. Most banks indirectly support Planned Parenthood, which most Christians disagree with. See where we’re going with this? It would be practically impossible for every transaction you make to uphold that standard.

The most important thing you can do before you ever invest a single dime, is to make sure you understand what you’re investing in. Always. Don’t just let someone else pick and choose what you invest in. Make sure you understand your investments and where you’re putting your money.

Bottom line? Don’t invest in companies you don’t agree with. Also, don’t invest in something just because your views align—that doesn’t automatically make it a good investment. Think things through from all angles.

Get Started Investing Today!

Still not sure if Christian mutual funds are the best investing path for you? Reach out to a SmartVestor Pro. They’re a group of investment professionals who can answer any questions you have about faith-based investing and help you form a game plan for your savings goals.

No matter where you are on your investing journey, a SmartVestor Pro can help you make investing choices that are right for you and your situation.

This article provides general guidelines about investing topics. Your situation may be unique. To discuss a plan for your situation, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros.