If investing has left you feeling like the world is going to end in a dystopian nightmare of greed and consumption where artificial intelligence robots hunt humans for their meat while we destroy our planet with carbon emissions, then yes — building an ethical investment portfolio can be a great way of aligning your investments with your principles.
Because let’s face it — money is one of the greatest tools we have as human beings on this planet. If we want to make this world a better place than what we see today, we need to adopt smart strategies for managing our finances so that we can be intentional about the impact that our earnings can have on other people and the environment.
So, if you’ve heard of “sustainable investing” and are wondering if it could work for you, or maybe you have no idea what it is at all and want to learn more, this article is right for you. It will help you understand what ethical investing is, if it’s right for you, and how to build a sustainable portfolio that meets your personal values.
What Does Sustainable Investing Mean?
At its core, ethical investing is about finding ways to invest your money in companies and industries that align with your personal values. While you might think that investing your money is an impersonal process that’s all about where you put your money and how much you earn from it, sustainable investing can make it personal again.
Using this approach, you can even use your investments to make the world a better place. You can select stocks from companies that produce goods and services that you care about — food, clothes, renewable energy, or whatever else is important to you.
Why Build a Sustainable Investment Portfolio?
As we mentioned above, investing your money is an important way that you can make the world a better place. But why should you invest your money at all?
When you invest, you’re taking your money and putting it to work for you. Instead of keeping your money in a savings account that earns next to nothing in interest, you can put your money toward investments like stocks or real estate that could earn you a lot more. That means that over time, your investments could really add up, earning you a nice sum of money that you can use for whatever you want.
As your investments earn dividends, you can use that money to support those companies. You can also use it to start businesses that employ people, fund charities that make our world a better place, or create positive change in other ways.
How to Build an Ethical Investment Portfolio
Building an ethical investment portfolio is a great way to ensure that every dollar you earn is working toward your goals.
If you want to invest ethically, there are a few key things that you’ll want to keep in mind when building your portfolio:
- Your investment philosophy : What is your investment strategy? What are your risk tolerance and time horizon? What are your goals for your portfolio?
- Your asset allocation : How are you dividing up your portfolio? Are you investing in stocks, bonds, or both? Are you investing in any alternative investments?
- Your portfolio’s holdings : What companies are in your portfolio? What percentage of your portfolio is invested in each company?
The Bottom Line: Finding Companies That Meet Your Ethics Criteria
After reading this article, you now have a good understanding of what sustainable investing is and how you can build a portfolio that meets your personal values. Now it’s up to you to implement these strategies and do something meaningful with your money.
So, as you begin researching companies, you’ll want to make sure that they meet your ethics criteria. For instance, if you care about social justice and want to avoid industries that profit from war, you can screen out all military contractors.