As investors, we usually focus on what investments are good for our bottom line—like, say, steady dividend-paying stocks.
But what investing in companies we can also feel good about?
Socially responsible mutual funds typically use social screens to help select investments. They often look for companies with positive attributes, like those with a good environmental track record. Some also avoid certain industries, like those that make alcoholic drinks, weapons, or cigarettes.
Putting an ethical bent on your investments is a fine thing to do—if done wisely, says Ann Logue, author of Socially Responsible Investing for Dummies. Start by identifying the issues that matter to you, like the environment, good corporate governance, religious beliefs or other values. (Click here for a list of funds.) Then follow these tips:
- You probably aren’t going to find a fund that exactly matches your beliefs. “The perfect job, the perfect boyfriend, the perfect investment—they just don’t exist,” says Logue.
- Know what you’re buying. Take a good look under the hood. Some socially responsible investors were surprised, for example, to discover their fund held BP after the recent oil spill.
The right stuff: Do you care whether your investments are “good”?
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