If you are left feeling nauseous by the recent revelations of the extent to which big business and the wealthy elite have been willing to exploit the less fortunate in order to feather their own nests, then there is a positive take-away.
People are starting to care more about where their money is going, so now is an excellent time for you to switch your investment strategy from vices like alcohol and tobacco products, casinos and fast food chains — all things that tend to be associated with being rich — towards something more wholesome, such as ethical or sustainable funds.
So, how do you locate ethical investment funds that you can invest in? Here’s what you need to know:
Know Your Ethical Values
The first thing you need to do is to decide what ethical values you want to embed in your investment portfolio. This will be your guiding principle when it comes to selecting a suitable fund. You may have a desire to support particular industries, such as renewable energy, or cause-driven businesses, such as feeding hungry children.
Once you know what you stand for, you can start to identify funds that will help you achieve the ethical investment portfolio you desire.
Do Your Research
Once you know which funds you want to invest in, you should look into them in detail. You can do this via financial websites and also by visiting the websites of the funds themselves. This will enable you to understand what they do and how they go about it.
When you understand what the fund does and the way it works, you will feel more confident about your investment.
You should also look at the fund’s performance over a period of time to see how it has done in the past. This will enable you to predict how well it will perform in the future and decide whether it is a fund that you trust with your money.
You should also be aware that certain ethical funds will be riskier than others. But the higher the risk, the greater the potential return.
Decide Between An ETF or Mutual Fund
If you decide that you want to invest your money in ethical funds, then you need to decide which type of fund will be best for you — an ETF or an ethical mutual fund.
An ETF stands for an Exchange Traded Fund, which is an investment vehicle that allows you to invest in a basket of assets. An ethical mutual fund, on the other hand, is a fund that is managed by a professional fund manager and invests in a variety of companies, sectors and geographical locations.
Ethical mutual funds allow you to choose the specific companies, industries or cause-driven businesses that you want to invest in. Therefore, you can be sure that your fund is ethically sound. Ethical ETFs, on the other hand, do not allow you to select specific companies or industries. You simply invest in a basket of assets, which means you don’t have control over the specific companies that your money is invested in.
Ethical funds are a great way for you to choose funds that align with your values and help you to make the world a better place. However, you need to know your ethical values and do your research before you select a fund to ensure that it is a good match for you.
Consider how much of your investment portfolio you want to put into ethical funds. Some people choose to invest at least 50% of their money in ethical funds, while others may decide to invest less than 10%.
This will be down to your individual circumstances, so you will want to take these into consideration when selecting ethical funds to invest in.