If you’re concerned about the world, the environment and a company’s track record on ethical business practices, then you might want to think about investing ethically.
Ethical investing is all about putting your money where your morals are. It’s about thinking about where your money is going, as well as why. Rather than worrying about the profit that might be generated by investing in a particular company, an ethical investor will take into account the impact that company has on people and the planet when choosing which companies to support with their capital.
With so many options out there, getting started with ethical investing may seem like a lot to take in all at once. Where do you even begin? How do you know if an investment is ESG-friendly? What kinds of companies qualify as ethical investments?
The good news is ethical investing isn’t rocket science. Even if you’ve never invested before or don’t consider yourself especially green or altruistic, you can find ways to incorporate your personal values into your stock portfolio.
Investing ethically doesn’t have to be complicated or expensive; here is a guide to get you started.
Step 1: Know Your Values
At the end of the day, ethical investing is all about knowing your values and finding a way to invest while adhering to them.
The first step is to really reflect on what matters to you and what your core values are.
What do you care about most? What issues are most important to you? What do you want to stand for?
You should also consider what you’re against. What are your core beliefs that run against the grain of society or the status quo? What issues do you feel strongly about? What kinds of companies do you wish did not exist?
By identifying what you’re against, you can start to home in on what you’re for. Another helpful exercise is to track what you read or consume. What types of news articles or blog posts do you find yourself clicking on? What podcasts or TV shows do you love? What books are on your bedside table? Getting a handle on the topics that really resonate with you can help you identify your values.
Step 2: Find the Right Broker
One of the first things you’ll need to do as an ethical investor is to choose a broker. A broker is the company you will use to buy and sell stocks. It’s where you’ll execute your trades and it’s an integral part of the investing process.
There are a few things to look for in a broker if you’re hoping to invest ethically:
Are they fiduciary? If so, that’s a good sign they’re committed to your best interests. A fiduciary is required to provide advice in your best interest and cannot profit from your investment decisions.
Do they offer a large selection of funds that are ESG-friendly? If so, you’ll be able to find plenty of options to choose from.
Are their fund offerings diversified? You don’t want to put all your eggs in one basket. You’ll want to choose funds that cover a variety of industries and sectors to help spread the risk.
Note that depending on the company you choose, you’ll have access to a variety of different funds and stocks. Some brokers specialize in ethical investing, while others offer it as just one option among many. Ethical investing tends to be a specialty niche, so you’ll want to make sure the broker you choose offers funds that align with your values.
Step 3: Research The Companies You Care About
Once you’ve selected a broker, you’re ready to start researching the companies you care about. Every year, investors rank the companies they invest in. It’s a good idea to keep tabs on what the most popular stocks are to get a feel for the market. (thegamedial.com)
Once you’re familiar with the top companies, you can start to investigate them further and decide whether or not they meet your ethical investing standards.
One thing to keep in mind is that ethical investing isn’t just about what companies you don’t invest in. Ethical investing is not a “no” approach. It’s a “yes” approach. You want to find companies that meet your ethical standards and then invest in them.
Step 4: Decide How To Balance Ethics With Returns
Once you’ve done all your research and decided which companies you’d like to invest in, you’ll have to decide how heavily you want to weigh ethics against returns.
At the end of the day, ethical investing is still investing, and your decisions will have an impact on your overall portfolio. The trick is to find the right balance between the companies you care about and the ones that are likely to generate the best returns.
Step 5: Now’s The Time To Invest
Now that you’re familiar with the process, it’s time to get started.
Ethical investing is not a one-and-done process. It’s a continuous journey. What you care about today may not be what you care about six months from now.
As you learn more about the world and what’s going on in it, you’ll naturally get more involved and concerned. You’ll likely find new issues that you care about and you’ll want to make sure you’re putting your money where it can help make a difference.
At the same time, the world and the economy are constantly evolving. New companies emerge and old ones go out of business. New government policies are put in place and old ones are phased out. That’s why it’s important to stay engaged and engaged often by staying up to date on the latest news and the biggest issues of the day.
Final Words: Where To From Here?
Ethical investing isn’t for everyone, and it’s certainly not one size fits all. Not everyone wants to invest ethically or has the resources or capacity to do so, and that’s fine.
Making sure your money is going towards beneficial ends isn’t the only way to make a positive impact. At the end of the day, it’s about making choices that align with your values and that make you feel good.
If investing ethically is something that resonates with you and you’re able to do it, then it’s definitely worth the effort. There are a lot of ways to make an impact as an investor and to support companies with your money that are ethically sound.
From choosing socially responsible funds to investing in renewable energy or backing impact ventures, there are plenty of ways to invest ethically and make a positive impact on the world.
