When it comes to investing, the main focus is often on returns and risk. Many people overlook the moral side of investing, perhaps assuming that as long as an investment is ethically sound, it falls under the category of being a “good” investment.
However, one must also consider how investments might impact society as a whole. Are these investments helping or hurting others? Does this align with your personal values? To be a successful investor, you must take into account both the financial and moral implications of your actions.
To help you understand the morality of investing, we’ve put together this helpful guide.
What does morality have to do with investing?
Morally investing means considering how certain businesses affect the world around us. This side of investing examines how an investment could impact society for better or worse, as well as how it affects the environment.
This is different from the legality of an investment, as many things that are illegal to own are also unethical to invest in. The morality of investing also considers how an investment aligns with your personal values.
For example, if you are a vegan who believes that animals should be treated humanely, you may not feel comfortable investing in companies that make their money off of meat and animal products. On the other hand, if you are passionate about affordable housing, you might want to invest in companies that provide affordable housing.
Importance of Investing Morally
Ethical investing is much more than just doing good. Ethical investing may also be good for your financial bottom line. When people learn that you have committed your money to ethical investments, they may be more willing to support your business or donate to your favorite charity.
In addition, you may be able to achieve higher returns and lower risk by investing in companies that you believe make the world a better place. Ethical investments could also help you sleep better at night. At the end of the day, you will know that you did your best to do the right thing.
How to Assess Moral Investments
There is no standard method for assessing the morality of an investment, since there are many ways to do so. Some people use a simple scorecard, while others make a detailed checklist. Still others use a combination of these methods.
The best way to do so is to choose a method that works for you. What values do you stand for? Is your money going to make a positive difference in the world?
You may also consider the costs and benefits to employees and how the investment affects investors and owners. Make sure to periodically reassess your investment selections to make sure they still pass your morality test.
Many people think of the financial benefits first when making an investment. While it is a good way to build wealth and provide for a financially secure future, there are some risks involved as well. Many people see investing as a purely financial choice with no moral implications.
After all, what does ethics have to do with money? In fact, there is a strong moral element to investing. The decision you make about where your money goes has an impact on your values and principles which means you must carefully consider the information highlighted above before making a choice.