Tips and resources to put your money in ethical investments.Like what you hear? Help us out by writing a review at iTunes. Questions go to money@qdnow.com. Thank you!
Money Girl
128 MG Want More Ethical Investing?
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I'm Laura Adams. In this show, I'll give you some resources and ideas about ethical investing. This topic has been on my list to write about for some time, and then Ian inspired me with this email. Hi, Laura. I've been following your podcast for a while now, and even though I live in Europe, your information has been a huge help. Great work. I'm currently taking my first tentative steps into investing and have serious issues with the thought of my money ending up supporting certain large corporations that engage in what I might deem to be globally unethical practices. Perhaps you could discuss ethical investing, so-called green investing. Is it possible to make a sizable profit and help the world at the same time? Ian, thanks for your kind words and for realizing that as investors, we speak through our money. What we choose to purchase each day, as well as how we invest, is a loud and powerful vote in favor of particular companies, agencies, or ideals. Many investors are realizing that though a company might provide you with a good return on your investment, it may clash with your principles. Whatever you call it, ethical investing, mission investing, socially responsible investing, sustainable investing, or triple bottom line investing, it means putting your money into companies or funds that share your personal beliefs or ideals for the best returns possible. Triple bottom line is a term for a new way to measure organizational success, which considers people, the planet, and profit. For some, ethical is what Ian referred to, green or environmental investing. Others may choose to focus on issues related to community, religious, or social issues. I'll go a little deeper into each of those broad styles of investing and give you resources to make your money align with your personal interests. Let's start with environmental investing, since that's what Ian mentioned. The goal is obviously to support industries and companies that are ultimately doing what's best for the earth, such as improving air quality, water quality, forests, and biodiversity. Doing good for the environment can be accomplished through improved methods of manufacturing, distribution, and consumption, for example. So investing in successful companies that employ environmentally sensitive practices is one way to achieve the goal. At the annual World Economic Forum, a list of the 100 most sustainable corporations in the world was revealed. Find the 2009 list at Global100.org. Another way to make eco investments is to choose companies within specific eco-friendly industries. Alternative energy, water utilities, food processing, transportation, and technology may be broad sectors to consider. September is a great month for planning. We start thinking about the rest of the year, whether it's back to school, big year-end work projects, holiday plans, or travel. 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It's one thing falling in love with a house, picturing yourself moving in and calling it home, and quite another navigating the world of price negotiating, mortgage lenders, and finding the budget that works best for you. An agent who's a realtor can make understanding that world easier. Realtors have the expertise, access to proprietary data, and tools to help you get from imagining living somewhere, to actually doing it. That's the kind of help we can provide. Because that's who we are. Realtors are members of the National Association of Realtors. My dad works in B2B marketing. He came by my school for career day and said he was a big row, as man. Then he told everyone how much he loved calculating his return on ad spend. My friends still laughing at me to this day. Not everyone gets B2B. But with LinkedIn, you'll be able to reach people who do. Get $100 credit on your next ad campaign. Go to LinkedIn.com/results to claim your credit. That's LinkedIn.com/results. Terms and conditions apply. LinkedIn, the place to be, to be. Look for companies that are creating products or providing services that appeal to your green spirit. If you want to learn more about environmental investing, I recommend reading Investing in a Sustainable World, Why Green is the New Color of Money on Wall Street by Matthew Kiernan. Also visit series.org, which is a network of investors and organizations that promote environmentally friendly investments. If you're interested in backing small local interest with your investment dollars, that's called community investing. Community investing helps bring capital to people and small businesses in underserved towns and regions by giving them access to credit and banking services. A growing movement within community investing is called microfinance. It provides loans directly to those in poverty. Kiva.org and microplace.com are two micro lending websites to check out. For example, Kiva highlights a 30-year-old entrepreneur from the Philippines who's seeking a loan for $175 to expand her fruit and vegetable stand. She's been in business for two years and plans to repay the loan over a seven-month period. For those who want to invest according to their moral beliefs, religious investing may be for you. This method screens potential investments in large and small companies for practices that don't violate specific religious principles. I'll put links to various religious funds as well as all the resources mentioned in this show at moneygirl.quickanddirtytips.com. Socially Responsible Investing, or SRI, is a broad investment strategy for those who want to support companies that have a positive impact on society. SRI entails doing research and screening organizations for a demonstrated record of respecting human rights, paying fair wages, making products that are safe, and having good relationships with governments, for example. Social investors may lean on company management to improve their policies and become better corporate citizens. Good websites to find social investments are Parnassus.com and Domini.com. Ethical investments can be found in just about every type of financial instrument, such as stocks, bonds, mutual funds, and exchange traded funds, or ETFs. Some specific ETFs to consider are the iShares Social Index Fund, which trades as symbol DSI, and the PowerShares Global Clean Energy Portfolio Fund, symbol PBD. Google Finance has a free screener that you can use to find stocks and funds that do or don't meet your objectives. So let's get back to the question he imposed. Is it possible to make a sizable profit and help the world at the same time? I believe the answer is yes. How much profit you earn depends, of course, on the investment you choose. Some microfinance opportunities, for example, may only provide moderate financial returns, but allow investors to demonstrate philanthropy at the same time. However, social and environmental factors are increasingly relevant to financial performance. Companies that show a commitment to these issues can gain an edge over their competition, which usually results in higher returns for investors. For more about how to make smart investment decisions that can help you beat the market, be sure to check out the newest Quick and Dirty Tips podcast, The Winning Investor. Find it at quickanddirtytips.com or in iTunes. Thanks to everyone on the Pragtastic Pregnancy Podcast for having me on the show last week. We had a great time talking about many different ways expecting parents can save money. Check it out at Pragtastic.com. That's all for now. Courtesy of Money Girl, your guide to our richer life. 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