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In this podcast I will answer the question: How do I participate in Socially Responsible Investing and invest in-line with my values?
Our podcast can be found below. You can also see our video Video
Socially Responsible Investing (SRI) is any investment strategy which seeks to consider both financial return and social good. The three socially responsible investing strategies are: Screening, Shareholder Advocacy, and Community Investing. A portfolio with SRIs can be created using:
1. SRI Mutual Funds and/or SRI ETFs (Exchange Traded Funds)
2. Individual Stock
3. Asset Manager
Where to Invest
1. Charles Schwab, Vanguard, Fidelity
2. Directly with fund companies
3. With an SRI money manager
Asset Allocation
1. Consider the time frame for this investment money (the sooner you need money, the more conservative your portfolio should be)
2. Consider your risk tolerance (you do not want to be tempted to move out of stocks when they are low and start buying when they are high)
3. Develop an investment policy (target percentage in each asset class)
Investing
1. Evaluate options for each asset class of your investment policy
2. In addition to performance, consider any transaction fees, minimums, and expenses.
3. Evaluate the SRI aspect of each investment. Here is an SRI questionnaire – to help you think of some of the issues and your preferences with SRI. The big decision/trade off to consider is:
- Do you want just some basic screening (avoiding stocks with alcohol, tobacco, weapons)? In this case an SRI exchange traded fund may be the best option. The expense ration is very low and returns are very competitive. (Vanguard, iShares)
- Do you want more stringent screening (positive and negative), proxy voting and some corporate engagement? There are several mutual funds with competitive expenses and performances. (Parnassus, Portfolio 21, Neuberger Berman)
- Do you want a very active fund regarding ESG issues that files shareholder resolutions and has dedicated staff to work on these issues. (Calvert, Domini, Pax)
4. Select the investments that meet your needs the best. We are working on an easy investment table that will make selection easier. I will post a link when it’s ready.
Maintenance
We recommend rebalancing to match your investment policy two times each year and, as much as possible, only adjusting your policy when there are changes in your life and time horizon for your investment money.
I appreciate any feedback for our AIO Financial blog.