A Catholic Guide to Personal Investing
Peace Through Stewardship
by
Book Cover & Preview Text
Chapter 1
Giving Thanks to God
Watch carefully then how you live … giving thanks always and for everything in the name of our Lord Jesus Christ to God the Father.
—Ephesians 5:15, 20
All that we have—our souls, lives, faith, families, vocations, and worldly wealth—are God’s gifts to us, and we are to be thankful to Him for these blessings. Throughout the Scriptures, we see numerous examples of how we are to give thanks to God. As seen in Colossians 3:15–17, Paul states:
15 And let the peace of Christ control your hearts, the
peace into which you were also called in one body. And be
thankful.
16 Let the word of Christ dwell in you richly, as in all
wisdom you teach and admonish one another, singing psalms,
hymns, and spiritual songs with gratitude in your hearts to
God.
17 And whatever you do, in word or in deed, do everything
in the name of the Lord Jesus, giving thanks to God the Father
through him.
When we attribute our blessings to ourselves rather than to God’s generosity, we become self-centered, creating a myriad of problems for ourselves and for those around us. We are told about this in 2 Timothy 3:1–4:
1 But understand this: there will be terrifying times in the last days.
2 People will be self-centered and lovers of money, proud, haughty, abusive, disobedient to their parents, ungrateful, irreligious,
3 callous, implacable, slanderous, licentious, brutal, hating what is good,
4 traitors, reckless, conceited, lovers of pleasure rather than lovers of God …
Instead, as Paul writes in Ephesians 5:18-20, we are to give joyful thanks to the Lord for all of our blessings by being:
18 … filled with the Spirit,
19 addressing one another (in) psalms and hymns and spiritual songs, singing and playing to the Lord in your hearts,
20 giving thanks always and for everything in the name of our Lord Jesus Christ to God the Father.
Chapter 11
Stock Investing
Stocks are used for long-term investing.
Stock represents ownership in a firm and can be bought in small companies or huge companies, like Microsoft. A company’s size is measured by its market capitalization (market cap), which equals the total value of all of its stock. For example, Microsoft shareholders own roughly 10 billion shares of stock with a market price of $95. Its market cap is 10 billion multiplied by $95, or $950 billion. Companies with more than $5 billion market cap are called large-cap companies. Small caps are less than $1 billion in size, and mid caps are in the middle.
Now let’s look at a stock’s rate of return for a single year. Return includes the price gain or loss of a stock, plus any dividends paid. Assume Company ABC’s stock was $100 per share on January 1 and closed at $110 on December 31 one year later. Its price increased by $10 per share, or 10 percent ($10 divided by $100 equals 0.1, or 10 percent). If ABC also paid a $3 dividend during the year, then it had a 3 percent dividend return. The stock’s total rate of return is 10 percent + 3 percent, or 13 percent for the year.
Chapter 29
A Closer Look at Mutual Funds
Here are some important details about mutual funds.
As we discussed in chapter 13, mutual funds are pools of money formed when investors purchase funds’ shares. This pool of money is used to buy a portfolio of stocks or bonds, and the profits and income are passed back to the fund shareholders.
Investors can purchase no-load shares directly from some funds and pay no sales commissions. Alternatively, load funds can be bought from brokers who charge commissions of up to roughly 5 percent of the investment amount. These commissions may be paid up front when purchasing Class A shares, or they can be paid over time with other class shares.
Regardless of whether you select load or no-load funds, the managers of these funds are paid yearly fees for their work. The fees are paid to cover the expenses generated by the fund, which include record keeping and portfolio management. Annual fees range from approximately 0.1 percent to 3 percent of assets, depending upon the portfolio managers’ activities.
Chapter 30
Catholic-Oriented Mutual Funds
There are several Catholic-oriented mutual funds to choose from.
In this chapter, we look at Catholic-oriented mutual funds. As explained in the prior chapter, index funds and most ETFs build portfolios that mimic a particular segment of securities. For the vast majority of actively managed funds, investment choices are usually based solely on anticipated returns. Because of their decision criteria, most funds hold the securities of companies that clearly violate Catholic moral teachings. For example, many funds have holdings in drug companies that violate the pro-life position of the Church.
Fortunately, for those who want to keep with Church teachings, there are several mutual fund families that focus on securities meeting USCCB guidelines. The four most popular groups of Catholic-oriented mutual funds are: (1) Ave Maria Mutual Funds, (2) Epiphany Funds, (3) LKCM Aquinas Funds, and (4) the Timothy Plan. This chapter presents an overview of these fund groups. In table 30.1, each fund is listed with its symbol, total assets, Morningstar ranking, and category of securities held. The Morningstar ranking shows how a particular fund has performed relative to similar funds, with five stars being the best.
Ave Maria Mutual Funds is the largest family of Catholic mutual funds, with total assets of approximately $2 billion. It has five different no-load funds. The five primary funds and some descriptive information on each one are seen in table 30.1.
Table 30.1
Ave Maria Mutual Funds
Name Symbol Holdings Assets Begun Ranking
Growth AVEGX Stocks $580 million 2003 *****
Value AVEMX Stocks $252 million 2006 **
Rising Dividend AVEDX Stocks $861 million 2005 ****
World Equity AVEWX Stocks $63 million 2010 **
Bond AVEFX Bonds $316 million 2003 ***
Formats
Book Details
About the Book
This book addresses the numerous practical and moral issues confronting Catholics in their investment endeavors. The work is divided into four parts:
Part 1 focuses on faith-related matters relevant to investing as seen in scripture, the catechism, and the writings of various saints and others. The topics include thanksgiving, stewardship, prudence, anxiety, and others, all of which can affect our investing.
Part 2 presents an overview of investing principles and facts to be considered when managing a portfolio. Herein are four primary objectives: (a) to explain basic investing, (b) to familiarize readers with the return characteristics of different types of investments, (c) to show how expenses impact returns, and (d) to address the issue of professional help versus your own efforts for investing decisions.
Part 3 addresses morally responsible investing. This section draws from the pastoral letter Economic Justice for All and summarizes the United States Conference of Catholic Bishops’ (USCCB) Socially Responsible Investment Guidelines.
The final part offers help with both secular and faith-related challenges in investment ventures. For example, topics addressed include how to temper investing with prudence as opposed to blindly following the investment practices promoted by the investments industry. This section addresses investments that are harmonious with church teachings. The largest groups of Catholic-oriented mutual funds are introduced.
About the Author
The author of more than sixty published articles and books on investments, Seth C. Anderson, PhD, has worked in the investments area for a wide range of business organizations and universities. He received his doctorate in finance from the University of North Carolina at Chapel Hill. He also holds certification in spiritual direction from Spring Hill College and attends St. Pius X Catholic Church in Union Springs, Alabama. He is married to Linda Slaton Anderson, and they have three grown children.