When “ethical” is used in connection with any investment or financial service, it often feels like an afterthought. After all, who wouldn’t want to invest their money in a way that aligns with their values?
Yet, ethical investing still doesn’t feel like a first-choice option for many people. The reasons are understandable; after all, reputation matters. And when it comes to choosing which companies you’d like to support with your hard-earned money, there are always going to be risks involved.
This is why many prefer not to think of ethical investments as such – but rather as a portfolio with some simple guidelines and principles.
So, if you believe in certain beliefs or actions enough to put your money where your mouth is (and vice versa), read on for everything you need to know about setting up an ethical investment portfolio.
Know What Your Morals Are
This may seem obvious, but it’s important to know what your personal ethics are when investing ethically. For example, it might be important that your investments are not connected to any actions that harm animals or the environment. Or maybe you have a strong opinion about not investing in companies that use sweatshop labour.
These things will allow you to narrow down the different types of investments and securities you can choose from once you get to the research phase.
Research Your Investments
Once you’ve figured out what you want your investment portfolio to say about you as an individual, it’s time to start researching potential investments.
There are numerous ethical investment funds and companies that will help you to build an ethically sound portfolio. Websites like Ethical Investment Research Consultants have a database of companies and funds that invest in sectors ranging from fossil fuels to tobacco.
Use the information you collect to narrow down your choices and start evaluating the different options available to you.
Consider Your Investment Goals
Some people choose to go all-in on ethically investing in their ethical investment portfolio. Others choose to take a more balanced approach. So, it’s important to consider your goals in terms of your investment portfolio.
Are you saving for retirement? Do you want to start a side hustle? Are you saving for a house?
Once you’ve figured out your general investment goals, you can then start to decide how much to put towards ethically-invested securities.
Talk to an Investment Broker
It’s important to remember that ethically-invested companies may offer lower returns on average than their non-ethical counterparts. This is because they don’t have the same access to certain resources or economies of scale that others may have.
As such, you may want to speak to an investment broker to see if they can help you to offset the costs associated with ethically investing in your portfolio. A good broker will help you select the right combination of ethically-focused funds but also help you find the right amount of risk in your portfolio based on your personal risk tolerance.
Do you believe the world is heading toward a future of clean energy, sustainable food production, and fairer societies? Then investing in companies that support these values could be the perfect ethical investment.
Hopefully, the advice highlighted above will motivate you to start an ethically-focused personal portfolio if you’re thinking about doing so yourself.