Understanding ethical investments

Ethical investments can be an excellent way to achieve your financial ambitions, while at the same time considering environmental, social and ethical factors. An experienced investment advisor can assist you in making money, while also only making ethical investments that match your personal values.

In the following sections, we’ll explore this type of investing, helping you decide whether this approach is the right method of investment for you.

What is ethical investing?

Ethical investing is a term used to define the practice of using a person’s principles as the main filter when selecting investments. These investments are typically dependant on the investor’s personal views. Sometimes, the term “ethical investment” is interchangeably used with “socially conscious” investments. It’s worth noting, however, that socially conscious funds commonly have a single set of established guidelines that are employed when selecting an investment portfolio, while ethical investment will result in a more personalised investment portfolio.

Ethical investment in brief

Essentially, ethical investments are selected based on moral or ethical principles. The types of investments avoided by ethical investors often involve what are sometimes referred to as “sin stocks”. These are stocks in enterprises that are involved in activities that carry a social stigma, such as alcohol, tobacco, gambling and firearms, but they can also relate to unsound environmental practices or unfair conditions for workers. An analysis of investments in accordance with ethics must also consider whether a firm’s claims of a commitment to ethics align with its actions when choosing whether its stock is a sound choice.

How do ethical investments work?

Ethical investments provide people with the power to select certain amounts of capital and allocate it to enterprises using practices that are aligned with their personal values and beliefs. In effect, when you invest your money in a company, you are lending your support to them, so this may be an important factor for you when selecting where to invest.

Your personal beliefs may involve political, religious or even environmental principles. An expert financial advisor can ensure that your money is allocated to sectors that are within your personal ethical guidelines and make sure that any industries that do not match your criteria are eliminated from potential investments.

You must remember that selecting investments based on your personal ethical preferences is in no way indicative of how these investments will perform. However, world governments today are continually taking steps to improve human rights and social standards, as well as taking a stand on environmental issues, so forward-thinking investors may consider this when making selections on where to allocate funds.

Specialist financial advice on investing ethically

At Hearty Wealth Management, we are experts in ethical investments. If you’re looking for investment advice in Chester and want to ensure your nest egg grows – but not at the expense of people or the planet – we can help. Our advisors will make sure you meet your financial aims with a portfolio that represents your ethics. Feel free to get in touch with us today for specialist advice and support.

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