Socially Responsible Investing

Values-based investing

What is value-based investing?
It is investing in companies that line up with your values.
A value-based investment portfolio can be based on environmental factors, moral factors, or your faith.
Investments based on a set of values are usually called, “Ethical Investments,” but it all depends on your code of ethics when deciding on what constitutes ethical investing. It is more commonly known as “Socially Responsible Investing,” but I prefer to call it “Values-Based Investing,” because not everyone shares the same values.
What may be ethical for one person may not be so for another, therefore, it is up to each one of us to do our homework and read the information provided by the fund’s website. It is important to know what is ethical to you when choosing a fund to invest in.
A prudent investor after he or she has done their homework will discern between what is fact and fiction and whether a company lives up to its claims.
Greenwashing is when a company uses marketing to make claims of being a socially responsible company but in reality, they do not practice what they preach.
A company may make donations to charities but that does not necessarily make them green, ethical, or socially responsible.
One company I know has stopped selling coal yet sells imported clothing from third-world companies where the working conditions in the clothing factories are unknown.

There are several variations of value-based investments and they come under different names; here are the ones I know of:

SOCIALLY RESPONSIBLE INVESTMENTS

These are investments that follow socially acceptable guidelines. They invest in companies whose activities are not damaging to the environment. You can be sure that these kinds of investments do not have funds invested in companies that are involved in fossil fuels.

ETHICAL BASED INVESTMENTS

An investment fund based on ethics may not invest in companies involved in the gambling, alcohol, and cigarette industry. Any investment related to the meat industry may also be off-limits if you are a vegetarian.

FAITH-BASED INVESTMENTS

Some churches have their investments which are used to fund various church activities. For many investors in church funds, the return on their money is a secondary consideration to the work carried out by the church with the investor’s money.

GREEN INVESTMENTS

This is concerned with climate change and the environment. It is another name for socially responsible investing.

GOLD INVESTMENTS

Sovereign Gold Bonds were introduced by the Government. The objective behind launching it is to offer an alternative option for investment in solid gold.

IMPACT INVESTMENTS

Another name for socially responsible investments.

It is important to follow the basic rules of investing and diversify your investments and invest according to your age and life goals. Investing in Bonds is an excellent way to reduce your risk as your money is spread over different companies. Diversification as it is commonly known is a good strategy to have particularly when you are older and have less time to recover from financial setbacks. The young ones can take more risks.
Balancing risk and reward is an art and to become good at it requires experience

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