A Guide To Ethical Investments
Increasingly, people are becoming more aware of how investments work. They are looking for companies to invest in that act in an ethical way. However, some people may be cynical, suggesting that an ethical investment may not result in a higher return. As with any form of investment, it depends on getting the right advice and gauging the right choice for you.
The different types
There are three categories that generally form ethical investments. The first is funds that are specifically geared to remove “sins” such as investing in tobacco, alcohol, the arms industry or anything that might be considered exploitative. The second is companies that are considered to be well-governed and score highly in terms of transparency and social responsibility. Finally, there are impact funds, so-called because they are specifically created to have a positive impact in terms of the benefits they offer the environment or the local community.
An extra benefit
It is often recommended with any form of investment that you have a broad portfolio. A lot of the stocks and bonds that are available to ethical investors may not be found in other portfolios, potentially allowing for better returns that other investors may not have considered.
Of course, it is also fair to say that different people will have different standards as to what they consider their moral obligations or what they personally believe in. Therefore, when you are considering investing, you need to think about this.
For example, if you are against animal testing, then you should ask if the company you are looking to buy stocks in, has a policy on this. This will then make it easier to narrow down the options available to you as you select something in line with your own personal moral leaning.
Getting a return
As an investor, while you may have someone who you want to support, it is also about what returns you will receive as well. In effect, you need to balance out your personal choice alongside the numbers regarding what returns you are likely to get.
Ideally, you should be able to narrow down some options. With any portfolio, it is recommended that you keep it reasonably broad. You should have a mix of low, medium and high risk in order to balance out the likelihood of getting a reasonable rate of return.
It is also important to emphasise one crucial rule with investment- only put in an amount that you could conceivably afford to lose. You should not risk your property or saving funds with an investment.
We can help
At Larcomes Financial Services, we are here to guide people through the financial options available to them. If you are interested in investing ethically, we want to help you get the most from what you invest in, while at the same time ensuring that what you choose fits your own personal criteria. To find out more or to discuss your individual requirements in more detail please contact our team today.