Investing For Your Future Monthly Message
Barbara O’Neill, Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension
The world that we live in today was shaped by the investment decisions of previous generations and investment decisions today will affect those living in the future. This is the underlying premise of socially responsible investing (SRI). Instead of selecting investments simply to make money, investors in socially responsible mutual funds want to make money, but not at the expense of the planet or it’s people.
To help put this philosophy into practice, many investors select socially responsible mutual funds. These funds first define what “socially responsible” means with respect to fund portfolio investment decisions and then they assemble a portfolio that meets their stated criteria. Typically, this involves screening out the stocks of companies involved in the production of alcohol, gambling products and services, tobacco products, civilian firearms, military weapons, and nuclear power. Other common screening criteria for stocks in a SRI fund portfolio are a company’s record with respect to environmental pollution, worker safety, corporate philanthropy, equal opportunity, and business relationships with other countries.
It has been said that socially responsible investing is a way for investors to align their money with their values. Increasingly, socially responsible mutual funds and, indirectly, their investors are also putting direct pressure on corporations to behave more responsibly and change the way that they do business. An example is the influence of one large socially responsible mutual fund on a major computer company to closely monitor working conditions within its supply chain.
On average, socially responsible mutual funds have generally performed on par with comparable mutual funds that do not share their unique investment philosophy. Thus, it is possible to “do well by doing good.” Do you have an inclination toward socially responsible investing? Review each of the following statements and check those that you agree with to see whether this type of investing is consistent with your values and ideals. When you are done, tally up your checked responses. If you’ve checked three or more items, socially responsible investing may be something you’d like to consider for the twin benefits of making money and feeling good (ethically and morally) about your investments.
Is Socially Responsible Investing for You?
____ 1. I would prefer to invest in a company with lower earnings than to invest in a firm that makes business decisions I consider unethical.
____ 2. I would never want to invest in a company that employs children in Third World countries.
____ 3. I would never want to invest in a company that sells or manufactures firearms.
____ 4. I would never want to invest in a company that sells or manufactures alcoholic beverages.
____ 5. I would never want to invest in a company that sells or manufactures tobacco products.
____ 6. I would never want to invest in a company involved in the casino or gambling industry.
____ 7. I would never want invest in a company that does business with oppressive foreign regimes.
____ 8. I will only invest in companies that treat their employees fairly.
____ 9. I will only invest in companies that don’t use animals for testing.
_____10. I will only invest in companies that make regular charitable donations.
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