Friday, August 23rd, 2019

Money as Master or Servant

Friday, February 28th, 2014

American Hero News
Money as Servant or Master

Carter LeCraw

As a servant money can be used for all sorts of beneficial goods and services. It buys food, shelter, clothing, and more for us, our families and others. Man has used money for accomplishing enormous amounts of good in the world. But, when Money becomes the primary goal of any endeavor it becomes the master and we become the slave. By definition a primary goal is one that is paramount and, therefore, any means can be used to achieve it. For example, if the main goal for a business is to reap profits then lying, cheating and/or stealing are fair means for accomplishing the end result.

One of the arenas where the battle for "Money as Master or Servant" is intense is the investment industry. It is often taken for granted that the primary goal for investing is to "obtain the highest possible return for the least possible risk". If this IS indeed the main goal for investing then money has become the master and the investor is the slave. Investment in anything that produces a good return, even if it is at the expense of society, is then acceptable.

At the heart of America is the concept of Freedom. If we truly value Freedom then should we not shun becoming the servant of that tyrannical master called Money? But, how does one keep Money from being the master when it comes to our investing? One suggestion is to intentionally establish a primary goal, other than financial returns. Our firm has the goal of helping investors help America become a better and brighter "City Upon a Hill". This is not our vision but was originally proposed by John Winthrop, in a sermon entitled, A Model of Christian Charity. It was written in 1630 possibly while still aboard the ship Arbella and just before the Puritans landed on our beloved soil. We feel we can help accomplish this by providing ways for investors to support public companies that better reflect the Timeless values that were passed down to us by our Founding Fathers.

By replacing "investment returns" with "helping America" our investment firm has a fighting chance to be free from the tyranny of serving that merciless master called Money. As the result of this goal we have excluded numerous stocks of companies that otherwise could be placed in our portfolios. Ironically, we believe our strategy affords opportunity for reasonable financial returns. But, whether our portfolios rise or falls, we can still contribute to our goal.

What benefit might accrue to individual investors who replace "investment returns" with "helping America" or other, more altruistic goals? One helpful result might be "peace of mind". If the long term goal is something other than financial gain then we will, most likely, not be as worried during periods of economic uncertainty or stock market downturns. We can be more free to concentrate on our families, jobs and communities rather than worrying about our financial future. For those of us who don't particularly mind a bit of financial success there is, also, some encouraging evidence that keeping Money out of the "master" position in investment decisions can often lead to, ironically ... increased money. For example, studies have shown that, as a whole, long-term index funds, with literally nobody at the helm driving returns, have repeatedly beaten funds with active money managers, many of whom use all kinds of elaborate, complicated, and mentally exhausting trading strategies (does not sound like peace of mind to me). Of course, some managers do beat the market, but, I sometimes wonder if there are hidden costs to many of these "winning" strategies.

Money as master or servant? It is our choice. Hopefully, and maybe to some small degree, our firm is helping investors be masters and not servants of their financial resources with all Americans as beneficiaries.

Carter LeCraw, CFP

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