More investors are examining where their money is actually going and which industries it’s supporting. In particular, many people want to know that they’re investing in greener, more sustainable funds. Making investment choices can feel daunting, so we look at some easy ways to get going if you’d like 2021 to be the year of ethical investing.
1. Determine what ‘ethical investing’ means to you
What socially responsible investing is in practice depends on your own personal values and priorities, so it’s worth examining what these are, including which industries you definitely do not want to support.
For some people, this means sticking to investments that are climate-friendly. This may mean avoiding stocks in fossil fuels or banks that invest in high-emission industries or not contributing to the meat and dairy sector. Others may feel strongly about not investing in tobacco, gambling, alcohol or animal testing. It all comes down to what’s important to you so make a list to help guide your choices.
2. Find out where your money is currently invested
Now you need to find out what your superannuation and any other investments, including your bank, is actually investing in, which can require a little digging.
Unfortunately, super funds have not always been totally transparent about their investments. The good news is that as of December 31, 2020 it will be easier to find out. From this date, large super funds will be required to make information about their investment holdings, known as Portfolio Holdings Disclosures (PHD), known on their website within 90 days of the end of each quarter.
If you have managed funds, you can obtain a Product Disclosure Statement (PDS) that outlines which sectors the fund has investments in. Look on the website or talk to your financial advisor.
Similarly, find out what your bank’s investing policies are. If they aren’t freely available – start with the bank’s website – call and ask! Even the act of requesting such information can help shift a bank’s mindset toward understanding this is increasingly important to consumers.
3. Explore your options
Increasingly, more fund managers are offering what are known as ‘Socially Responsible Investing’ (SRI) options, and there is a lot of information available on how to change your investments to better options if you’re not happy. You could choose to buy shares or funds yourself or look for a ready-made portfolio or superannuation fund with a clear focus on ethical investing.
4. Talk to your financial advisor
Before making any major changes to your investment structure you should always talk to your financial advisor first. They can save you a lot of time by explaining to you where your money is currently invested and then comparing the market to make suggestions of other options that may better fit your changing needs.
5. Put a plan in place
Once you’ve decided what your investing goals are, decide with your financial advisor how to make those changes in 2021. This may mean switching your super fund, changing banks or starting a new investment portfolio that caters to your top priorities.
Rest assured that making these changes can actually be quite simple once you know what your goals are. Just be sure to keep up with your annual review with your financial advisor, so that your investment structure changes along with your circumstances.
Call us anytime on (02) 8268 2900 for an obligation-free chat.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.
