Socially Responsible Investing?
September 12, 2005 8:33 PM Subscribe
Tips or suggestions on socially responsible funds/investing?
Is it possible to approxmate the returns from standard funds? Web links? By socially responsible I mean companies that strive to do the right thing by the environemnt and their employees, not necessarily companies that don't invest in alcohol and such. I'm looking for funds, not investing companies as I have the mechanisms in place to invest already. Age: 25. I'm currently invested in American Fund's growth and income funds. My funds are limited, so that is an issue.
Is it possible to approxmate the returns from standard funds? Web links? By socially responsible I mean companies that strive to do the right thing by the environemnt and their employees, not necessarily companies that don't invest in alcohol and such. I'm looking for funds, not investing companies as I have the mechanisms in place to invest already. Age: 25. I'm currently invested in American Fund's growth and income funds. My funds are limited, so that is an issue.
Try this thread and this thread. I think the short answer is that you can find plenty of funds with broad socially-responsible objectives, but you may have trouble finding a fund that fits exactly your whims.
Also, regarding your comment about investing companies - an investment company usually manages a large number of funds (think Fidelity, Vanguard, etc). Sometimes you can buy directly from an investment company and sometimes you have to use a broker (Smith Barney, AmeriTrade, etc.).
And try to stick with index funds over actively managed (that's my personal opinion).
posted by mullacc at 9:48 PM on September 12, 2005
Also, regarding your comment about investing companies - an investment company usually manages a large number of funds (think Fidelity, Vanguard, etc). Sometimes you can buy directly from an investment company and sometimes you have to use a broker (Smith Barney, AmeriTrade, etc.).
And try to stick with index funds over actively managed (that's my personal opinion).
posted by mullacc at 9:48 PM on September 12, 2005
My advice: Don't try to mix business and altruism.
Business: Invest for return on your money, period.
(I recommend an index fund, as only a tiny percentage of actively managed mutual funds will ever outperform the stock market as a whole over time, and unless you are incredibly lucky, you won't pick them.) For good basic investor education, I highly recommend The Motley Fool (free registration required.)
Altruism: Support the causes that you believe in with your time, sweat, and cash. Quite often, your physical presence and energy will be the best "donation" you can make; if you worry about homelessness and hunger, well, soup kitchens need volunteers to cook and serve meals; if you worry about poverty and ignorance, adult literacy programs always need teachers (and training for wannabe teachers is free.)
posted by enrevanche at 3:37 AM on September 13, 2005
Business: Invest for return on your money, period.
(I recommend an index fund, as only a tiny percentage of actively managed mutual funds will ever outperform the stock market as a whole over time, and unless you are incredibly lucky, you won't pick them.) For good basic investor education, I highly recommend The Motley Fool (free registration required.)
Altruism: Support the causes that you believe in with your time, sweat, and cash. Quite often, your physical presence and energy will be the best "donation" you can make; if you worry about homelessness and hunger, well, soup kitchens need volunteers to cook and serve meals; if you worry about poverty and ignorance, adult literacy programs always need teachers (and training for wannabe teachers is free.)
posted by enrevanche at 3:37 AM on September 13, 2005
Don't try to mix business and altruism? I disagree very strongly; there are plenty of funds that explicitly skip over investments like, oh, say, blood diamonds. There's no reason why one can't spend a little time winnowing down the field so one's entire nest egg doesn't go towards supporting an industry one finds absolutely vile.
Why does it make sense to throw your sweat and petty cash at "good" organizations but put the lump of your investment straight into the coffers of "bad" ones?
posted by bcwinters at 7:04 AM on September 13, 2005 [1 favorite]
Why does it make sense to throw your sweat and petty cash at "good" organizations but put the lump of your investment straight into the coffers of "bad" ones?
posted by bcwinters at 7:04 AM on September 13, 2005 [1 favorite]
enrevanche, I disagree. The idea for investing solely for return, then using the proceeds to fund your altruism has been knocking about the ethical investment market for a while. Unless you can be sure where your money is going, it could be working against you. It was, after all, ethical choice in investing that brought an end to the slave trade in the UK.
If, for instance, you've dedicated your life to the anti-Kitten Shredding movement, and invest heavily in BigFundCo. Wouldn't it set you back some to find out that BigFundCo were getting huge returns from Consolidated MeowShred Inc?
posted by scruss at 7:10 AM on September 13, 2005
If, for instance, you've dedicated your life to the anti-Kitten Shredding movement, and invest heavily in BigFundCo. Wouldn't it set you back some to find out that BigFundCo were getting huge returns from Consolidated MeowShred Inc?
posted by scruss at 7:10 AM on September 13, 2005
The idea for investing solely for return, then using the proceeds to fund your altruism has been knocking about the ethical investment market for a while.
Exactly. In an era of where corporations disturbingly have more and more power over sovereign nations the only power the individual has left is where to spend and invest. It's high time we brought back shame in this country. Reagan turned it into a four letter word. Far too many corporations are responsible for way to much misery in this world and it's time we stopped rewarding them for it.
posted by any major dude at 8:26 AM on September 13, 2005 [1 favorite]
Exactly. In an era of where corporations disturbingly have more and more power over sovereign nations the only power the individual has left is where to spend and invest. It's high time we brought back shame in this country. Reagan turned it into a four letter word. Far too many corporations are responsible for way to much misery in this world and it's time we stopped rewarding them for it.
posted by any major dude at 8:26 AM on September 13, 2005 [1 favorite]
This is a tough issue, but I basically agree with enrevanche, with some qualifications.
Is it possible to invest in only companies that you consider socially responsible? Yes - by buying stock in those companies and those companies alone. Find company X, Y and Z and buy stock in them.
However, pissfactory explicitly states that s/he has limited funds and will only consider investing in funds. This is where it gets tricky:
1) As mullacc observed, it will be very difficult to find a "socially responsible" fund that exactly fits your political preferences. Most funds own hundreds of stocks, and its well-nigh impossible to ensure that every company passes your litmus test.
2) Beyond this, you should recognize that your choice to invest in a "socially responsible" fund may have unintended economic consequences. During the dot-com boom, large-cap socially-responsible funds tended to overinvest in technology stocks (once you eliminate oil and tobacco companies from the S&P 500, thats what you're left with), meaning that socially conscious investors were disproportionately exposed to the crash. The conventional wisdom is that you should try to be as divesified as possible in your investments. Limiting yourself to socially responsible companies or industries means that you are less diversified.
3) Socially responsible companies are not necessarily good companies in a business sense. This means that your goal of supporting causes or companies that you think are good, may often conflict with your goal of generating a good return on your investment. Which is more important to you? Could you do better (in both sense of the word) by setting some of your money aside to generate a good return for you, and donating the rest to a worthy case? Or volunteering some time?
posted by googly at 9:15 AM on September 13, 2005
Is it possible to invest in only companies that you consider socially responsible? Yes - by buying stock in those companies and those companies alone. Find company X, Y and Z and buy stock in them.
However, pissfactory explicitly states that s/he has limited funds and will only consider investing in funds. This is where it gets tricky:
1) As mullacc observed, it will be very difficult to find a "socially responsible" fund that exactly fits your political preferences. Most funds own hundreds of stocks, and its well-nigh impossible to ensure that every company passes your litmus test.
2) Beyond this, you should recognize that your choice to invest in a "socially responsible" fund may have unintended economic consequences. During the dot-com boom, large-cap socially-responsible funds tended to overinvest in technology stocks (once you eliminate oil and tobacco companies from the S&P 500, thats what you're left with), meaning that socially conscious investors were disproportionately exposed to the crash. The conventional wisdom is that you should try to be as divesified as possible in your investments. Limiting yourself to socially responsible companies or industries means that you are less diversified.
3) Socially responsible companies are not necessarily good companies in a business sense. This means that your goal of supporting causes or companies that you think are good, may often conflict with your goal of generating a good return on your investment. Which is more important to you? Could you do better (in both sense of the word) by setting some of your money aside to generate a good return for you, and donating the rest to a worthy case? Or volunteering some time?
posted by googly at 9:15 AM on September 13, 2005
I have to agree with not mixing your investments with altruism. As I understand it, most of these investements are in the form of stock purchases and sales. While I have no intention of ever investing in blood diamonds, if I were to buy their stock one day, and in turn due to my purchase the value of the stock was to rise, I ask what harm would that cause? Who cares if the value of blood diamonds stock goes up? Yeah I know, CEOs and other higher ups get paid more 'cause they're sometimes paid in stock. Yeah I know, every few years (maybe!) the company can sell more stock and get that money to invest in more blood diamonds. Really though, I don't see this as a big ethical problem.
Pick a stock, any random stock. Buy some of their shares and help to increase the value of their share price. CEOs, higher ups, and employees of that company benefit as they all have options. I'll bet a good percentage of those who benefit go home and beat their wives, go home and buy a Hummer, go home and hit their dogs. No matter what you do, you're supporting people and causes you really wish you were not supporting, there isn't any way arond it.
posted by pwb503 at 10:27 AM on September 13, 2005
Pick a stock, any random stock. Buy some of their shares and help to increase the value of their share price. CEOs, higher ups, and employees of that company benefit as they all have options. I'll bet a good percentage of those who benefit go home and beat their wives, go home and buy a Hummer, go home and hit their dogs. No matter what you do, you're supporting people and causes you really wish you were not supporting, there isn't any way arond it.
posted by pwb503 at 10:27 AM on September 13, 2005
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really.
posted by eustatic at 9:34 PM on September 12, 2005