When it comes to investments I always recommend buying stocks rather than bonds. If you are adamant about investing your $10,000 into this company, stocks are a much better choice. They are morally acceptable unlike bonds for a number of reasons. In addition, stocks can prove to be much more profitable. As an Investment Banker, I feel very strongly about this opinion and insist upon a $10,000 stock investment.
As you already know, owning stock means you are an owner of the company, however, owning a bond is more or less a loan to the company with no ownership in the company. What makes bonds morally unacceptable and stocks ultimately fine to gain profit is the concepts that lay behind the interest acquired. Theoretically stocks do not acquire interest in my eyes, they simply grow in value. Buying stocks can be thought of as a conversation stating the following, “If you help us start this company we will give you a portion of our profits as we progress.” (much better)
With a situation like this, you are taking a chance that the company may fail and you may lose all your money invested. It is a gamble, but it is not usury in my eyes. As an owner of the company, your ownership, or stocks (stock??), in the company increase or decrease depending on how successful the business is doing. This has the opportunity to either prove very profitable or to lose the initial investment altogether. What matters is that the profit gained will be due to success in the company, not usury.
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On the contrary, bonds lead directly to interest, or usury. By purchasing bonds you are essentially buying a piece of the company’s debt. In contrast to stocks, the agreement is an, “If you lend us money for our debt now, we will give it back plus more later”, situation. This is most definitely usury. The incentive to do this is the interest your initial investment acquires. This proved to be a safer, less risky form of investment, but the concept of the whole process is not right and is sinful. I expanded upon this concept in my writing, “Of the Sin of Usury from The Summa Theological” by stating, “by this we are given to understand that to take usury from any man is evil, simply because we ought to treat every man as our neighbor and brother.”
This opinion derives directly from the Torah, which stated, “He that hath not put out his money to usury, and who hath not taken usury.” From a Jewish perspective usury is wrong when exchanging with a brother. The Catholic doctrine believes in the same idea, however, according to the catholic doctrine all men are brothers. Using this logic usury is not acceptable. As you can see, part taking in the process of investment bonds is generally sinful.
What I would also suggest is that you research the stock you wish to purchase a little more because stock investments are a riskier form of investment. This risk can lead to far greater profits if chosen wisely. Both investment bonds, and stocks offer a degree of risk. Although, bonds are usually a less risky approach, they do risk loss of investment if the company goes bankrupt. If the bonds prove to be successful the bonds will be paid back in full along with a determined amount of interest.
Unfortunately, according to the rules I set forth in my “Summa Theological” you would not be allowed to keep the interest. If the interest was paid in consumption items, which are an item that’s use results in the consumption of the item, such as wine and bread, but also including cash, you must return the usury acquired. However if the interest were a non-consumption item, such as a house, it would be even more difficult. You would be required to pay back the house and any monetary gain made from the house such as rent. The only type of interest that is acceptable is a form that cannot be measured in money, such as friendship, which from a business standpoint, I’m sure you are not interested in.
The interest gained in stocks is justified because it is not technically interest at all. When you own stock you are considered an owner. You are given the power in the company to vote on decisions that will affect the future of the business, in turn, affecting the fait of your stock. As the business succeeds your stocks will increase in value proportionally to the success of the business. As you can see, this is not usury. Usury is the enrichment of money for money. In the situation of stocks, money is enriched from the value of the business. On the other hand, bonds create a monetary gain from money itself. For this reason I recommend investing in stocks.
