This week, we’re talking about socially responsible investing, as well as it’s related cousin, ESG investing. Socially responsible and ESG investing mean a lot of different things to different people, but at its core, socially responsible investing is about determining your most important values, deciding if those values should dictate your investment decisions, and if so, how you can invest your money in a way that is consistent with your most important values. 

A better way to describe this concept then, is values-based investing.

Today, I want to explain what it means to invest your money and why that matters when determining if a values-based approach is worth considering. 

It doesn’t matter if you own individual stocks or companies, mutual funds, or index funds, when you invest in the stock market, you own tiny little slices of those companies you invest in. If you invest in mutual funds and index funds, you likely own thousands of different companies. When these companies are profitable and successful, you get paid as an owner through dividends and an increase in the value of your stock price which represents your ownership stake in the company. 

Now, in all likelihood, your largest holding probably represents no more than a teeny tiny fraction of a percent of ownership in that business, but you are directly benefiting and participating in the profits of every business you invest in. If those profits were derived from business practices that are abhorrent to you, you may not be so keen to reap the rewards as an owner. 

So if there are particular industries or types of businesses that you would boycott, consider restricting those same companies in your investment portfolio. 

That’s it for today. Thanks for listening! Tomorrow, I’m going to share with you some common SRI and ESG screens so you can think about what areas, if any, you want to restrict or more thoughtfully support. 

Before you continue on with your day, please take a moment to leave a review for the One Minute Retirement Tip in Amazon. If you’re getting any value from these tips, it’s a great way to share the love. And thank you to those of you who have already taken the time to write a review.

My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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