Ethical Investing and Your Portfolio

ethical investing
July 31st, 2019 0 Comments

Every portfolio is different because every investor is different. When it comes down to it, a portfolio is driven by the investor’s motives for investing and the values that drive their decision-making processes. Perhaps you value high returns. Perhaps your desire to support a certain emerging market trumps your desire for getting the highest return. Or perhaps you do not want to support certain industries or products.

Whatever your reason for investing – or not investing – it is personal to you and that is what matters.

Ethical Investing: Global and Social Responsibility

Over the last two decades more and more investors are investing based on their moral compass— yet also enjoying great returns. According to Investment News , globally and socially responsible investments grew by 34% to $30.7 trillion over the past two years. The term “ethical investing” has grown out of this movement.

Are you already an ethical investor?

Or are you interested in what it would look like to be one?

Let’s take a deeper look at what ethical investing is and how you can do it.


How Ethical Investing Works

There is no industry definition for ethical investing. Ethical investing uses one’s ethical principles as the primary filter for deciding which investments an investor will take on. The term socially conscious investing is often used in place of ethical investing. However, the two terms aren’t necessarily interchangeable.

Socially responsible investments actually refer to a type of fund that is directed by an overarching set of guidelines. On the other hand, ethical investing is based on the individual investor’s personal beliefs. An ethical investor allocates capital toward companies whose practices and values align with their own beliefs. These beliefs may be rooted in environmental, religious, or political precepts.

In addition, investors may even eliminate specific industries entirely or eliminate companies that over-allocate to other sectors based on the investor’s personal guidelines.


Where to Begin with Ethical Investing?

  • First and foremost, get clear on what your values are. If you aren’t sure how to go about that assessment, work through this exercise on Taproot.


  • Then, draw up a set of guidelines by which you will make investment decisions. Keep them simple and clear so you can easily say “yes” or “no” to each investment option.


  • Also, do your research before investing, and talk to your investment guide at Saddock Wealth. Do as much digging as you can on each company, their mission, and their actual practices. Does the mission statement mirror your values? Do the company’s actual practices follow their mission?


  • Look into the leaders of the companies. Do they appear to have a commitment to their ethical beliefs?


  • If you are looking at a mutual fund or index funds, take them apart and research the companies that make them up. Do they all align with your ethical guidelines? Do some fall short?


  • Review the company’s finances. Are they able to reap the returns your investment strategy requires?


  • And finally, as you do your research, separate out which investments you want to avoid and which are of interest to you.


More about the benefits

As you can see, your decisions will be based on ethical preference rather than performance. But as with any investment, it is important to take performance into consideration. There is a common belief that ethical investing means a dip in returns. Your scope may be more limited but ethical investing doesn’t appear to have any financial downside.

On the contrary, Ethical or Socially Responsible Investment mutual funds have generally performed as well as “regular” funds.

Ethical investing therefore not only empowers you to engage in the market according to your values. It also allows investors and investment management companies to have influence over individual company’s and entire industries’ business social and environmental practices.

Additionally, ethical investors are:

  • fostering more transparency among businesses and markets
  • changing how investment managers think
  • positively influencing governments, small nations and emerging markets


Let Saddock Wealth Be Your Investment Guide

Ethical investing is all about you. The only person who decides what is ethical and what is not is you. But you don’t have to go it alone.

If you get bogged down in the research or aren’t sure which way to go, our team at Saddock Wealth is here to help. Our team of experts is already familiar with a variety of funds and industries and can help narrow down the field.

We will guide you through the decision-making process based on your ethical guidelines and build the portfolio that matches your needs exactly. We listen and research carefully to make sure your portfolio generates more wealth for you and your family. But we also want you to feel comfortable with your investments.

Call us or schedule a meeting here, and let’s start preserving and growing your wealth!

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Ethical Investing and Your Portfolio
Do you what ethical investing is or if you have made any investments that are socially or globally consious? Read on to see choices investors are making.
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