How to Invest According to Your Values
Investments made in equities are investments made in ownership of individual stocks or a group of companies within a fund. If you invest in a stock, you own a share of the company you invest in. It’s that simple.
Nonetheless, your motivations for investment may have nothing to do with the belief systems of the companies you put your cash into. You may be investing out of the fact that the stock is rising and you want profit. As a result, you’re not making a value-based investment, as you have no idea about the company’s mission.
The mindset of investors has been largely like that described above. Nonetheless, nowadays, investors, especially a breed called millennials, are bringing idealism into the investment picture. They not only want to make money, but make a difference, too. Money matters to them, but so does where they put it.
Morality and ethics has a large role to play in new investments today. How do you invest in a company that gives you (or humanity) more than mere money? Here are some handy hints at how to go about investing in companies that are not solely ‘all about the money’.
Impact Investing
Investments in companies that give you more than monetary benefits are often better investments. Companies that deal with environmental factors could be examples of such companies. Those that advocate for issues like climate change policies, or invent green house emission strategies, could be called companies with ethical considerations at heart. Some may have to do with eliminating carbon footprints by manufacturing products that do so, and wind and solar device corporations.
Individuals look at themselves as socially responsible investors. Social factors are connected to a corporation’s treatment of its employees in terms of diversity, benefits, workplace safety, and above all, pay. You may want to invest in a company that touches your sense of judicial efficacy, and takes a stand on social justice.
An Investor’s Choice
When investors want to make value-based investments, they choose either environmentally-friendly corporations, or those that do more to reduce the carbon footprint than produce it. Socially responsible investors wish to invest in companies in which they feel make some social impact. Alternatively, if the corporation is complying with social guidelines, the value-aligned investor will choose it to invest in.
It’s what is important to you that matters while making investments. For instance, you may want to invest in an energy-producing company that is doing something to eliminate fuel emissions in polluted regions.
Putting your Money into the Planet
The reason for investments of value is that people want to see an impact being made with their money. Nonetheless, experts advise that only around 15% of your total portfolio should go into such investments. Still, you can check which companies have the most renewable energy as a percentage. Additionally, find out which ones have the fewest spills if you’re evaluating energy and oil.
Companies that produce batteries that save power and produce security software are good “value” companies too.
Align Your Assets with Your Values
Aligning your assets with your values, you can track great ESG (environmental, social and governance) and SRI (socially responsible investing) companies. The S&P Dow Jones Indices have an ESG platform. Fidelity and Vanguard also have portals with ESG and SRI sites. Furthermore, Schwab offers exchange-traded funds with a socially conscious aspect on its own platform. Companies like Colorado Capital impact investing puts their funds in places that are the most impactful in society – according to clients’ values.
Bottom line, making profits shouldn’t be your sole goal in growing a business. Giving back to the society according to the values you hold matters, too. What you need to do is to find the right balance of the two aspects. If you can find a common middle ground, chances are, you win the competition.
About the Author
Ivan Widjaya A mobile entrepreneur who loves to work anytime, anywhere he wants. He runs several popular business blogs, make money online and live a geoarbitrage lifestyle. He typically works at home and travel with his family when he wants to, often without his business.
