The Ethical Investing Series Quick Links:
Part One: What Is Responsible Investing?
Part Two: The Values Added Approach
This is where the rubber meets the road!
In our final installment of the Ethical Investing series, we’re going to go over how you can hit the ground running to implement Ethical Investing in your financial plan.
If you’re just joining us, make sure you check out our Part 1 and Part 2 of this series on Ethical Investing for some helpful context. These pieces go over the foundational knowledge you need to start your ethical investing journey, as well as the thought process behind our personal approach here at Values Added.
Ready to get started? Let’s dive in!
Your First Step: Defining Your Goals
There are so many ways to approach investing ethically, and regardless of the path forward you choose, you need to ensure your plan works for you. This means defining two sets of goals:
- How you want your money to make an impact.
- What personal goals you are trying to achieve through investing.
Making an Impact
It can be useful to start at a high level when considering the impact you want to make with your resources and your life. Think about causes that you’re passionate about, problems that are critically important, or organizations you love to support. You might even opt to jot down your core values, and how they show up in your day-to-day.
Personal Goals
What does your portfolio need to do in order to help you live a life you love? Instead of focusing on returns, or growth, start by thinking about your lifestyle. Questions that could come up are:
- When do I want to retire?
- Do I want to become “work optional” in the near future?
- Do I like what I’m doing now in my life and in my career, and what does that mean for my future earning potential?
- Will I want to continue living here?
- Is travel in my future?
Identifying the big picture lifestyle goals you have – and a loose timeline for when you want to achieve them – can help you to determine investing and savings goals. That’s not to say your ethically-oriented portfolio needs to help you get from working a 9-5 to work optional overnight! Instead, think of these personal goals as guideposts for how much you need to consistently set aside to invest, and what your portfolio could or should look like from a risk perspective.
Remember: First Thing’s First
At Values Added, our #1 takeaway for individuals looking to DIY taking an ethical approach to their investments is to focus on progress, not perfection. Once you’ve developed a game plan for how you want to make an impact and what goals you have, it’s easy to get overwhelmed with the options. Start slowly by taking the first step toward your goal of ethical investing and a more impactful life. You can always add on to your plan further down the line, and make adjustments as your goals and lifestyle needs shift and change.
Making an Impact In Action
Let’s look at a case study where we reverse engineer a “right next step” game plan for someone based on their unique values.
Core values: Equal access to education and deep concern about climate change.
Lifestyle changes: You could spend your time volunteering for organizations that promote tutoring or hands-on learning assistance in your local area. You might also work with political groups to lobby for more racially equitable zoning and school funding laws that increase access to education across your region. Maybe you team up with other activists to promote political campaigns to lower carbon emissions in your city. You could also consider solar panels or other ways to reduce your personal carbon footprint to compliment structural solutions.
Financial/investing next steps: When it comes to investing, you might make donations from your Donor Advised Fund to 501c3 organizations that are doing good work in increasing education access to all communities in your area. You could also create an investment portfolio that prioritizes screening out companies who aren’t environmentally friendly, and prioritizes investing in companies that have eco-friendly initiatives you believe in.
Further down the line, you can look at exploring personalized indexing, shareholder activism, or other ways to increase your impact. Sometimes holding shares of big gas companies can help leverage change there, like when an activist investor led a (successful) to install three Exxon Board members to force the company to take climate change more seriously.
This example hopefully highlights that there are many different ways you can build an impactful and sustainable life – investing is just one of the tools in your toolbelt!
Can An Advice Team Help?
Many people have the calm disposition and the time to keep up with tax law changes and implementation necessary to self-manage general investments. If you do, there is no reason you can’t implement ethical investing on your own – and we encourage you to pursue that if it excites you! If you are planning to tackle this solo, we still want to hear from you, let us know how it’s going, and what questions you’re running into. If you’d like help, we can help you find it. Our team helps our clients create meaningful strategies that prioritize a lifestyle they love while making an impact – and we guide them through the setup and ongoing management of these various moving parts. And if we think another firm would be a better fit, we’ll let you know.