Investment

Investment is the employment of assets (money or otherwise) into a scheme that is potentially profitable in the foreseeable future. This simple definition contains four assumptions: (1) assets should be put to work; (2) they should be profitable and fruitful (that is, you should get more than you put in); (3) the future rather than the immediate present is in view; and (4) there is managed risk of loss or failure. In this article we will consider these assumptions, reflect on them theologically and offer some general guidelines, leaving specific investment advice to qualified professionals. In addition we will consider the Christian life as a form of investment in which both monetary and nonmonetary investments may accumulate what Jesus called “treasure in heaven.”

The Confusing Array of Investment Opportunities

Investment takes several forms: savings accounts, ownership of one’s home, pension plans, putting money into one’s own business, purchasing government bonds or bank-guaranteed investment certificates, owning a fraction of a corporation (stock) and gaining a promissory certificate from a corporation with specified amount of interest (debenture). The option of hiding money in a mattress or burying it in the back yard is always present, but besides the obvious risk of theft there is inflation, which means that one hundred dollars tucked into a mattress in 1945 had only fifty dollars’ purchasing power in 1970. Hence, not investing means reducing the value of your capital.

Most people recognize the importance of putting aside some of their disposable income into a savings account to be kept for emergencies or a rainy day. This form of investment has the advantage of permitting the money to be withdrawn anytime but the disadvantage that it earns a small rate of interest (a percentage of the total) while it is “working” for the bank or credit union. Usually the interest paid on savings accounts is less than inflation—the increasing price level of a basket of defined consumer goods, usually measured as the annualized increase in the Consumer Price Index. In some Third World countries the inflation rate is so high (upward to 100 percent a year) that investing in savings accounts appears counterproductive. One usually finds the wealthy minority investing in foreign so-called hard currency countries, draining the home country of desperately needed capital.

Another common investment worldwide is one’s own farm or home. This is generally a double-duty investment: first, property like this meets a family need for housing, and, in the case of a farm, income; and second, it is a hedge against inflation since the value of a home normally increases through time. In Canada and the United States it remains one of the few legitimate investments that do not attract taxation for the profit earned. (The other tax-exempt gain is proceeds from life insurance and, for Canada only, the winnings of a lottery or other “windfall” venture.) Indebtedness associated with home ownership usually is in the long run wise (see Debt; Home). Real estate, however, is not a “liquid” (easily converted to money) asset, may take months to sell and is susceptible to cyclical market trends.

In urbanized, industrialized or information societies a pension plan is usually an important investment because it is likely that we will be forced to retire from remunerated employment before we die, and it is unlikely (though desirable) that family, community and church will be able to care for us in our extended declining years. In older societies and in some Third World countries the family farm provided free housing and food, and one’s children cared for the aging until they died. But even in these countries rapid urbanization and industrialization is breaking down the family pension-plan system. In most Western countries pensions are wisely built up over one’s working years through participation in a government plan, and wisely augmented through one’s own workplace and/or a voluntary program such as a registered retired savings plan (RRSP or IRA). Most corporation or voluntary pension plans involve a wide selection of investment vehicles (stocks, bonds, mutual funds, mortgages and real estate) that are calculated to grow continuously with only a reasonable managed risk of loss, since the risk is diversified into many different investments. The expected return should be rationalized to the managed risk to the capital: the more risky the venture, the greater the “cost” expected for the capital loaned.

In addition to the above investments, many citizens are able to invest in private businesses (through personal loans), the government (through bonds), banks (through investment certificates) and public corporations (through purchasing stocks and convertible debentures). Principles that are important to consider in making such investments are safety and preservation of the invested capital; diversification (not having “all one’s eggs in one basket”); liquidity (how easily the principal sum could be recovered); expected income and the previous performance of the investment; and tax consequences. For example, an RRSP or IRA allows investors to defer taxes on the principal amount invested until the pension is actually used. Through the magic of compound interest (interest earned on the capital increased by the interest), with time and prudent investing one could have a sizable nest egg in this tax-deferred program for retirement.

Toward a Theology of Investment

Some Christians think it is wrong to plan for the future. After all, have you ever seen a worried bird (Matthew 6:26)? What if Jesus comes tonight? Isn’t it wrong to think about making money—a form of greed? The only safe investment is in the Lord’s work: “Only one life, ’twill soon be past, only what’s done for Jesus will last.”

Return to our original assumptions about investing. First, we said that money or assets should be put to work. This is in effect what God said to Adam and Eve in the Garden of Eden: put it all to work (Genesis 1:26-29; Genesis 2:15). Second, we said that it should be profitable or fruitful. God’s creation mandate to the first couple was to be fruitful, to fill the earth and to flourish. Seeds are not meant to be kept in bottles or bins forever. That way they can never bear fruit. Rather they should be sown into the soil and produce a hundredfold—a rather good return on the original investment (Matthew 13:23).

Third, the future rather than the immediate present or the past is in view. Some African and Asian cultures are oriented backward as the spirits of ancestors keep “catching up” to the present generation. We would then be like people standing on a bridge over a fast-flowing river watching the water come toward us. But the Christian perspective is to turn around and watch where the river is going. We are future-oriented. Heaven calls us. The Second Coming of Christ beckons us toward the new heaven and the new earth. We are, as Jürgen Moltmann so accurately says, living not at sunset but at the dawning of a new day. Christ might come today—we should be ready. But he may not come for a thousand years—we should be ready for even a long wait like the wise virgins in Jesus’ parable (Matthew 25:1-13). It is precisely this balanced Christian view—longing for Christ to come soon but building for the long haul—that is the eschatological perspective provided by the New Testament. Martin Luther once said that if he knew Christ was coming tomorrow he would still plant a little tree today. Investment in the future is exactly what Christians should do, no matter how black the sky may seem according to a secular analysis.

Then take the fourth assumption—that risk must be assumed. Most people think that investment risk is simply the potential to lose money. But there are at least four kinds of risk to be considered: business risk (that the business or corporation will go out of business and not be able to meet its financial obligations); liquidity risk (that there may not be a buyer if you want to sell an investment quickly); market risk (that the fluctuating financial market may render your investment of less value); purchasing power risk (that the investment will not be able to exceed inflation by a satisfactory margin). All four kinds spell the potential for some kind of loss or failure. The more immediate issues are to consider whether the process is in place for continuously monitoring the risk and whether the expected return is proportional to the monitored risk. But it is impossible to invest without some risk. And failure might even become one of the most important learning moments. Wisdom comes more from failure than from success.

We explored a theology of risk briefly in the article on insurance. Risk theorists note that there are several ways of coping with risk: ignoring it, assuming (or retaining) it, eliminating the possibility of loss, transferring the loss to someone else, and anticipating the loss and planning toward it. On the first, it is folly to ignore risk, a game of let’s pretend that is bound to catch up disastrously with reality someday. On the most important possibilities and uncertainties, we must assume or retain the risk. By retaining or assuming these noninsurable risks we are called not only to trust God but to exercise faithful stewardship of our lives to reduce risk. In making investments this means diversifying, seeking wise counsel and not taking unnecessary risks to make big money quickly, the latter falling into the category of speculation or gambling. The proverbs counsel rejecting get-rich-quick schemes in favor of making small regular gains over a period of time, so accumulating wealth through wisdom and patience. “Dishonest money dwindles away, but he who gathers money little by little makes it grow” (Proverbs 13:11). In all cases eliminating the possibility of loss totally is possible only by refusing to accept the adventure of life, for there is the dwindling of our purchasing power through inflation.

What would make us accept the risks attendant on making investments? One thing would be a God who takes risks! God took an enormous risk in making a creature with free will, in committing to the family of Abraham, in slipping into the human family as a vulnerable child. But the lamb was slain from the foundation of the earth. For the Christian this means trusting in God’s providential care of us and of God’s world, and believing that even temporary reverses will be transformed into general good, as exemplified by the victory of the cross of Jesus.

God Loves Investment

Although not addressing the issue of financial assets, the parable of the talents in Matthew (Matthew 25:14-30) and the parable of the ten minas in Luke (Luke 19:11-27) are suggestive with regard to a theology of investment. There are three things we can do with what God has entrusted to us. First we can squander it, wasting it as the younger prodigal did in the far county, as humankind has largely done with the created earth. Some people think they are undertaking Christian stewardship when they give away large amounts of money without any regard to the effect it has. They feel good, but the recipient feels obligated, patronized or disempowered. In reality it is squandering—disinvestment.

Second we can hoard it, like the one-talent man who, with his wrong view of his God (Matthew 25:24-25; compare Luke 19:21), wrapped up what he had in a handkerchief because he was afraid to lose it. He did not realize that he could keep this only by giving it away! What motivated the one-talent man was fear. Most people would commend him for his prudence and find the judgment of the master unbelievably severe. After all, did not the one-talent man return what was trusted, all in one piece with nothing lost? Did he not treasure what was entrusted to his stewardship? Yet the master condemns him. The reason for the fear of loss and failure is the one-talent man’s inadequate view of his master: “I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed.” With that kind of God, who would want to take a risk?

In many of his parables Jesus presents an apparently ridiculous view of God—though one often held subconsciously—to shock people into converting to the real God, who is not immovable and harsh but wonderfully personal. Though Jesus does not actually say this, he expects us to think, “Believe in a God who will squeeze everything he can out of you, who will never forgive a mistake, who will swat you down to hell if you mess things up even once, and this is what you get: a pinched, unimaginative, no-risk-taking and utterly deadly life. Believe in the God and Father of the Lord Jesus, and you will be inspired to try things out, to experiment, to take risks and to flourish.” So instead of squandering or hoarding with such a God, we are invited to invest, risky as it is. Investment is another word for stewardship, which is simply another word for Christian service. But there is more to investment than putting our money into a mutual fund.

Investing in Heaven

Giving directly to church, Christian missions and our families can be one form of investment even though the returns are not gained personally and one’s personal capital is reduced (see Gift-Giving; Stewardship). Further, not all investments are monetary and this-worldly. Jesus’ words are haunting: “Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also” (Matthew 6:19-21). What does it mean to invest in heaven? How is it possible that this investment has guarantees of a “return” which can never be given for investments “on earth”?

First, we are to invest in heaven through our everyday life, work and homemaking by doing even the simplest chores with faith, hope and love. According to Paul in 1 Cor. 3:10-15, it is not the religious character of the work (Bible studies, witnessing, charitable work) that makes work last forever but Christ: this is a call to do our work with faith, hope and love. In some way beyond our imagination even simple work is actually a ministry to Jesus (Matthew 25:31-46); that is what faith points to. Love makes chores and quilt-making last forever (1 Cor. 13:8-13). And hope? There is a wonderful correspondence to work we do in this life and work in the next. Our ultimate future is not to be free-floating spirits in heaven but fully resurrected persons in a new earth and a new heaven (Rev. 21-22)—working, playing and worshiping in one glorious eternal sabbath. Just as the resurrected body of Jesus had scars, though now glorified, so this material world, scarred and worked over by humankind, will one day be transfigured into a new world in which even the glories of the nations will be brought into the New Jerusalem (Rev. 21:24; Stevens, p. 31). So our first eternal investment is simply to do everything in everyday life for God (Col. 3:22-24). It is literally true that “only what’s done for Christ will last,” though this does not require going into a Christian service career or spending one’s time in church work, as is commonly thought.

Second, we are to invest primarily in people, especially the poor. The only treasure we can take from this life to the next is the relationships we have made through Jesus. The teaching of Jesus leaves us with the unmistakable challenge to have a hands-on relationship with the poor and to accept some form of voluntary impoverishment. We must do this for the sake of the poor and for the sake of our own souls. A newspaper article asks, “Why should we care about the Third World?” and answers, “Because our economic, environmental and political future is inextricably linked with it.” But there is a deeper reason. The rich cannot be saved without the poor.

There is no doubt in my mind that in telling two parables about money and friendship (the shrewd manager and the rich man and Lazarus—Luke 16) and by placing them in juxtaposition, Jesus and Luke intend to motivate us to make friends with the poor. With outrageous freedom Jesus tells about a shrewd manager who used money to make friends by reducing the loans owed to his master so when he would lose his job these friends would look after him forever (Luke 16:1-9). The magnetic center of this parable is a shocking exhortation from the lips of Jesus: “I tell you, use worldly wealth to gain friends for yourselves, so that when it is gone, you will be welcomed into eternal dwellings” (Luke 16:9). The second parable, Lazarus and the rich man, gives an empowering negative example of a person who did not use his wealth to make friends of the poor and thus was not welcomed by them into an eternal home. Sandwiched in between these two parables is a section about the Law and the Prophets, which uniformly teach mercy to the poor (Luke 16:16-18).

The thrust of Luke 16 is the call to use our money to make friends with the poor, the sick, the powerless, the stranger and the refugee. The unconverted heart believes that there is nothing the poor can do for us. They are not worth being the object of our investment. They will not advance our cause or increase our security. But these two parables make the daring claim that what we gain through befriending the poor is love. Often the poor are richer than the rich in the treasures that really matter—in relationships. “He who is kind to the poor lends to the Lord, and he will reward him for what he has done” (Proverbs 19:17). Genuinely disempowered people cannot pay back loans, and therefore we should regard such giving as lending to the Lord. Paradoxically we gain it back with interest (Proverbs 22:9)!

Most of this article has focused on the return we are looking for in our own investments. But there is another way of considering the matter of investment. God is looking for a return on his investment in us (Matthew 25:19). What we do with assets and money entrusted to us is like a foreshadowing of the last judgment; our use declares what we really think about God. The gambler has no faith in God but hopes for good luck. The hoarder believes in a vengeful, demanding God. The investor declares that God can be trusted, that God gives what is required and that all investments made with faith, hope and love will bear a return, if not in this life then in the next.

» See also: Credit

» See also: Debt

» See also: Money

» See also: Poverty

» See also: Power

» See also: Principalities and Powers

» See also: Stewardship

References and Resources

F. Amling, Investments, 5th ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1984); J. Chrysostom, On Wealth and Poverty, trans. Catherine P. Roth (Crestwood, N.Y.: St. Vladimir’s Seminary Press, 1984); J. Ellul, Money and Power, trans. L. Neff (Downers Grove, Ill.: InterVarsity Press, 1984); R. Foster, Money, Sex and Power (San Francisco: Harper & Row, 1985); E. B. Gup, The Basics of Investing (New York: Wiley, 1986); R. P. Stevens, Disciplines of the Hungry Heart (Wheaton, Ill: Harold Shaw, 1993).

—R. Paul Stevens