Each week across the ACM network Ali and Gaby Rosenberg offer quick tips for big wins in understanding your money. The sisters are co-founders of the Blossom micro-investing app.
Ethical investing is a phrase thrown around a lot, especially when someone's promoting a particular financial product or institution.
But what does it really mean? And why does it matter?
There can be many interpretations but, put simply, ethical investing means using your beliefs or values to drive your approach to investing, which can be pretty satisfying as a filter for decision-making.
It means you get to put your money behind what matters most to you. An ethical investing approach generally falls into one of these four categories:
Investing with Environmental, Social and Governance (ESG) in mind means considering the environmental and social impacts of an organisation and the way it's managed.
Sustainability and transparency in the way a company operates are super important with an ESG focus.
Investors here are looking for social or environmental benefits as well as financial returns. For example, a fast-growing solar panel manufacturing company might be a worthwhile choice for an impact investor.
This is a specific approach where investors only look for organisations that practice or follow their religious values.
If an investment doesn't match their belief system, a faith-based investor avoids them altogether - regardless of whether they could make a lot of money.
Socially responsible investing
This approach takes a long-term view, and avoids the more controversial industries like gambling, firearms, tobacco, alcohol, fast food and fossil fuels.
Because ethical investing uses criteria different from just financial performance, it's a great way to feel good about your investments because they represent what you stand for, not just a means to make money (although that's good too!).
As we've covered before, working out what you really care about, and putting your hard-earned cash behind these things can contribute to a sense of wellbeing.
So, if you're looking for rewards beyond the financial, ethical investing is a nice place to start.
- Sisters Ali & Gaby Rosenberg are the co-founders of Blossom App.
- Nothing in this article should be construed as being personal financial advice. It is general in nature only and has not taken into account your particular circumstances, objectives, financial situation or needs. You should consider whether the information, strategies and investments are appropriate and suitable for you or seek personal advice from a licensed financial planner before making an investment decision. Past performance does not indicate future performance. BlossomApp Pty Ltd (ABN 74 644 216 151) is a C.A.R. (No. 001284228) of Gleneagle Asset Management Ltd (AFSL 226199).
- ACM co-owner Alex Waislitz has a stake in a company that provides services to Blossom. ACM is the publisher of this masthead.