Investing in today’s world comes with its own set of implications. It’s no longer enough to focus solely on the bottom line. Now there are other costs and benefits to consider, and they have to do with the greater good. If you are interested in growing your money in a way that your conscience can feel good about, then you owe it to yourself to learn about socially responsible investing. Here is your guide to understanding what, exactly, socially responsible investing is all about:
What is socially responsible investing? Socially responsible investing, also commonly referred to simply as SRI, is a socially conscious investment strategy that places just as much importance on ethics as it does on financial return. Socially responsible investing encompasses stock holding (both through mutual funds and directly), advocating for stock holders, and investing in the community.
Investments to look for. If you are concerned with socially responsible investing, then you should be conscientious about investing only in corporations that exhibit the same values you stand for. Namely, socially conscious and ethical corporations are those that promote equality in the workplace, advocate for human rights, take proactive measures to adhere to eco-friendly business practices, and support non-profit “green” endeavors.
Investments to avoid. There are no cut and dry rules when it comes to socially responsible investing, as what may seem socially responsible to one person may seem socially reprehensible to another person. However, generally speaking, socially responsible investors tend to avoid certain types of investments. These include things like tobacco, alcohol, military, gambling, weapons, and pornography.
How do you get involved in SRI? It would take a lot of time, work, and skill to weed through all of your investment options in order to find those that are most socially responsible. Fortunately, a new type of investment firm is taking root in today’s economic landscape – the socially responsible firm, grounded in the conviction of the greater good. What that means for you, the investor, is that by choosing such a firm, you know that all of the research and legwork has been done for you. Search the web for a wide array of socially responsible investment firms, each with its own philosophy, in order to find the best fit for you and your values. Just keep in mind that, if you are truly concerned with being socially conscious on your own terms, you may need to shop around before you settle on a fund that is in line with your goals.
Socially responsible investing means putting your money toward things that matter most to you in the big scheme of things. Therefore, it is an endeavor that obligates you to some thoughtful consideration. Keep these pointers in mind when you take your foray into the world of socially responsible investing.
About the Author: Damian Gulliksen is studying finance and investing. He’s currently reading about how to short sell stocks and is fascinated by the entire investment buying and selling process.