This is the second part of a three-part series in which I wish to speak about ethical investing from a Catholic perspective (though there is a debate!) This series was prompted by an interview of Jacob Imam by Pints With Aquinas. In my first article, I addressed the question of ethical investing and how the USCCB has recommended Christians navigate the modern economy. In this piece, I will discuss the responsibility to invest. In my third piece, I will break down usury and why (most) modern investing would not fall into this category.
“The Conference should exercise responsible financial stewardship over its
economic resources. In practical fiscal terms, this means obtaining a reasonable
rate of return on investments. A reasonable rate of return is considered one that
matches the level of the market or at the least allows the Conference to meet its
fiduciary responsibilities and maintain its mission. This requires prudence and
caution in terms of the risks taken or not taken.” (Socially Responsible Investment Guidelines, pg 6)
We have a duty to be financially responsible with our resources at all times. The USCCB even says that we should target a reasonable rate of the market return.
We are charged, especially those of us with families, to care for those under our care. Our budget should not be present-focused but focused on the future as well. One of the first lessons you will hear when trying to become financially stable is to get out of bad debt. Spending all of our money at the moment does not prepare us well for a fiscally responsible life. Not saving up some for the future of ourselves, our family, and our community similarly does not prepare us well for the difficult seasons to come.
Life is not created for us to be stable and without change. Our ability to work itself is a blessing God gives us and is not something we will always have. Just as Joseph helped Egypt save during its seven years of plenty, we should recognize when we are given more than we need. We should still have money for donations, but this should balance with a reasonable amount of preparing ourselves for the future ahead. There are times in life, as Jacob points out, when have little to no earning potential. Those times of childhood and old age should be supported by the years we are vigorous and able to work. Christians should prudently manage wealth rather than shrink from it.
Amassing wealth is not a concept foreign to scripture. The patriarchs all became leaders of great caravans whose wealth was something much beyond their need. The book of Job ends with Job receiving countless blessings and throughout scripture, we see biblical heroes managing money responsibly for their families. While there are exceptions in the prophets, Christ, and some of his disciples, we should recognize that these exceptions are in the minority. For those who take vows of poverty as a part of religious life, the amount of financial responsibility they need is minimal. Yet for those who are called to the raising of a family, this skill is indispensable in how we live our vocation.
Jacob Imam brings up two points I want to address. He first scrutinizes the growth rate of investments in the past 50 years. Then Jacob argues that we should expect our children to take care of us in our retirement and not rely on 401(k)s, IRAs, or other forms of saving.
Regarding high growth, three factors that account for this. First, we live in a period of time where inflation is the status quo. Whereas in ancient Rome the value of the denarius was relatively fixed, we can expect the value of the US dollar to decrease as time goes on. When we own an asset, like a property or stock, this acts as a hedge against inflation and is accounted for in the stock’s growth. We also live in a time of rapid growth where our economy is producing more this past ten years than ever before in history. GDP growth can account for a few more percent of our expected return.
Let us take an example from the more tangible housing market to emphasize my point. Assume I have a property worth $200,000 that I buy in a moderately growing area (the house grows in value 1% a year). I then rent out that property for $2,000 a month or $24,000 annually. Let’s say after taxes and maintenance I can pocket $12,000 of the rental payment every year. That would translate into about a 7% return on my property investment every year. For most of us I would not think this sounds absurd, but over 11 or 12 years my value would double. In fact, in 40 years my net growth would grow 14 times what I initially put in. The “crazy growth” of these numbers is not a factor of some sort of monetary deception; it is just the value of putting your resources to work for you rather than being unthoughtful with money. 
With the issue of growth addressed, let me provide a simple answer as to why relying on our children to care for us is irresponsible: healthcare. A truly double-edged sword, we are blessed with a lifespan, on average, nearly double that of people living 100 years ago. With greater healthcare has come a blessing of a longer life. However, that longer life does result in a greater cost. Where our great grandparents may have only had to care for their parents for five years if at all, we would have to see our parents financially through most of our working life.
In operations management, one of the common questions we ask is how the company policies we have today encourage or discourage the behavior we want. If I were to look at the “policy” of expecting our kids to take care of our heightened healthcare bills I would find myself encouraging our kids to (1) dedicate more time to work and (2) seek to offset the other cost by minimizing child responsibilities. Even if we don’t intend it, Jacob’s retirement strategy effectively encourages young couples to work more and have less time spent as a family.
Work is not our vocation; family is. While remote work may help offset some of the social costs of trying to support aging parents and children for 20-30 years, there is a tradeoff. Greater time away from family trying to support it means less time for involvement in the parenting of your children.
This is not to say that we can’t make a good work-life balance, but adding the strain of trying to support penniless aging parents will only make things worse. While many of us struggle with living in the world, there are some well-meaning Christians who get swept up in a particularly idealistic take of not living “of the world.” Our world is always changing and now is different than it was 100 years ago. While the principle of supporting your aging parents remains as pertinent then as it does now, this can and should be done by spending more time with them. If you talk to many aging grandparents in retirement communities you will find that their primary concern is not money but time with their children and grandchildren.
This article is meant to address moral issues and is not financial advice. Any ideas or strategies discussed herein should not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial objectives, needs, and risk tolerance. Morning Walk and I expressly disclaim any liability or loss incurred by any person who acts on the information, ideas, or strategies discussed herein.
 In fact, many would consider property investments to perform better than investments in the market, though they usually demand more attention.