When it comes to investing, the first thing that comes to mind is returns. The second? The ethics of where your money is going.
But with so many funds these days promising high profits and ethical investments, how do you know which one is right for you?
Investing in an ethical fund means making a statement with your money by putting it in a fund that aligns with your values. Whether you’re a vegan, animal rights activist, or just want to make sure your money isn’t going towards something you don’t support, there are funds out there that support what’s important to you.
Here are some tips you need to consider as you choose an ethical fund.
Outline Your Values
It’s important that you outline what your values are in terms of your investment. You might value environmental sustainability, for example, or a particular type of social cause.
You might also think it’s important for your investment to go towards certain geographical areas like Latin America or Asia. You might even have specific types of companies you don’t want to invest in, like tobacco or mining companies.
Whatever the case, knowing what you consider right will help guide your investment decisions.
Check the Fund’s Track Record
A fund with a proven track record will give you more confidence in your decision and peace of mind that your money is being put in the right place.
If it hasn’t been around long enough to show you how it performs in the long term, it’s not worth your money.
Ethical funds typically have the same return as conventional funds anyway, so why would you want to put your money in a fund that has no proven track record?
Look for Investment Transparency
Making sure that the fund you’re investing in is transparent about where your money is going is one of the most important things to look at when considering an ethical fund.
A fund can be as ethical as it wants, but if you don’t know where your money is going, you have no basis for making an informed decision on whether or not it’s ethical.
Transparency comes with having a clear statement of what the fund is investing in, who they are investing in, and where the fund is located. It allows you to make an informed decision as you choose an ethical fund.
Look at the Fund’s Holdings
A good way to figure out how ethical the fund is is to look at the companies they own stock in and how they make their money.
A fund might be “ethical” but be invested in companies that don’t align with your values. For example, there are a lot of funds out there that are “socially responsible” but are invested in fossil fuels like coal. Make sure you do your research and make sure that the companies you’re investing in line up with your values.
Look Into the Management
Finally, you should look into the people who are managing the fund to make sure they are ethical. It’s important that the managers are ethical because they are the ones who are making the decisions on where to invest your money.
Do you research and try to find out about the people managing the fund, their qualifications, and their history of investing so you can know how they make their decisions.
In Conclusion
When you’re choosing an ethical fund, it’s important that you make sure it’s really ethical. If you don’t think the fund is really investing ethically, then you should save your money for an investment that’s worth it.
Keep in mind that investing ethically can cost you some money. It’s not just about avoiding something that you don’t like, it’s about making a statement with your money. And choosing an ethical fund is a great way to do that.