2 minutes reading time (369 words)

Good Money Week: could your investments make a difference?

ethical investingBig business can’t seem to shake its reputation for ruthlessness or even downright evil. Whenever I think about the City or the stock market, an image of Michael Douglas as Gordon Gekko still pops into my head (‘if you need a friend, get a dog!’).

The reality is somewhat different. There are many firms which try to do business ethically and several investment funds which apply rigorous standards to their research before they buy any shares. In fact there’s a whole sector of ethical funds which avoid questionable companies such as tobacco and weapon manufacturers and instead concentrate on clean and green firms to make money. It’s not just for professionals - they are all open to the average investor with a £100 a month savings plan.

In theory, this is a marvellous idea. But I’ve written articles about ethical funds over the years and I’ve noticed that they haven’t always made as good returns as the unprincipled ones. Sadly, sin wins. I wonder though if this could change.

With the reach of the internet ever expanding, firms now really can’t take any risks with unscrupulous behaviour. Look at the terrible dent to reputation suffered by Volkswagen when it was caught fiddling emissions tests on its vehicles. Its compensation bill was massive too. And who wants to buy clothes from shops which use sweatshops in India? Having your questionable working practices spotlighted in the media is not good for business.

Good Money Week is all about promoting awareness of ethical investment and it’s worth checking out this short video here. This year, there’s a big push on getting women to invest. Interestingly, while we're often hesitant to commit our money to investment, there is research which suggests we are better investors than men. This comes down to being (in general) more risk-adverse and looking more to the (sustainable) long term than to short-term profit.

Obviously the website is a big plug for the firms which run ethical banks and funds but the sentiment is sound. Who knows? If women did invest more, we’d have a bigger voice on where that money went and maybe we really could change the world.

For the SMM beginner’s guide to investing, see here.

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Sunday, 21 April 2019