Your savings have a lot of power. You probably know it has the power to purchase a home, send the kids to college and protect you through retirement. But did you know it can discourage price gauging, curtail corporate corruption and protect the environment at the same time?
Ethical investments apply to everyone: short-term and long-term investors, small-timers and heavy hitters, even those who aren't in a position to put money away at all. Here are a few tips on how to use your spending power for good.
Get InformedWhen you make an investment, or even a purchase, you're lending your support to a cause. And if you're not informed about the recipients of your cash, you might find you're funding questionable causes and business practices. The best way to fight back, of course, is to stay in the know.
If you have a broker, ask questions. Check with the Better Business Bureau before making a major purchase or buying stock in a company, and check out the websites of companies with which you do business. Publicly traded companies are required to publish an Annual Report -- most of them are accessible online -- and there are multitudes of websites like sri-advisor.com that compile news on ethical business practices. If that sounds like too much work, let someone else do it for you. Many financial service firms have a blanket code of ethics that guide the decisions they make with your money.
SRIs They're called SRIs and they're on the rise. It seems the word is out on Socially Responsible Investments -- investments that take into account the social and environmental impact of businesses, as well as the financial ones. All SRIs screen certain unethical corporate behaviors, but if you like, you can choose to guide your investment power to causes that are important to you.
It may seem like a small step, but when investors are socially conscious, corporations take notice -- and make changes. Nike, Wal-Mart and Disney have all made major changes as a result of shareholder activism. And don't think you have to sacrifice financial gain for the common good. SRIs perform as well as investments that are blind to ethical factors. In fact, many socially responsible stocks have been known to outperform the market.
IRAsIf you can, exercise choice in the retirement investments available through your employer. Sometime this isn't possible, because the mutual fund containing your IRA is entirely dictated by the employer, but often you'll be given a choice from among pre-selected options. With a little research, you can make an investment that pays off later -- ethically and financially.
Get Rich
It may be simpler than you think
Everyday investmentsEven if you're not thinking about HSAs and mutual funds, your investments count. Buying a car, choosing a hair salon and selecting your cell phone carrier are all important investments that tell businesses that their practices are tolerable and prices are fair. Each and every purchase you make is an exercise of your consumer voice. If you think that mp3 player is over-priced or you know a supplier is environmentally irresponsible, keep your wallet shut.
It may seem like a lot of work -- we hardly have time to make the purchases we do make -- but it doesn't have to be. Some people choose organic diets and carefully deliberated investments. Others read the labels on their tuna and mention SRIs to their broker. Decide what's important to you in the future of this world, and take a stand on the issues that matter to you. You have a lot more power than you think. But only if you use it!
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