Making Ethical Decisions When Investing
Just like there are different kinds of savings accounts, there are different types of investment accounts. You probably are aware of tech stocks and high-risk funds. You may be aware of foreign funds. However, did you know there is a socially responsible funds category too? If you want to follow your conscience while investing, you can take a look at the socially responsible investing funds described by Morningstar, for a start.
Socially Responsible Investing
According to Morningstar, an investment research firm, there are about 70 funds right now that would qualify for the socially responsible investing (SRI) category. They aren’t particularly focused on green technology or social endeavors either. Some may get the rating due to the fact that they don’t include any stocks in their funds which may be equated with vices like tobacco, gambling, alcoholic beverages, weapons, or nuclear energy. If a fund can prove it is not involved in these “sin stocks” then it can qualify for the socially responsible label.
That doesn’t mean you won’t get some companies that are trying to actively support social or environmental concerns. It’s just that, first, they must pass the filter for sin stocks and then, if they do anything extra it’s just a bonus. It’s not required to earn them the socially responsible label.
Do Your Homework With SRIs
Regardless of whether you want an active or passive SRI, you are going to have to do your homework on the type of business, earnings, and performance it has achieved. Just because a stock is socially responsible, does not mean it is going to make money for you. The same due diligence you perform on other stock choices should be done for these as well. Then, you can get the best of both worlds: ethical stocks and a fat return on your investment.
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