Getting your investment portfolio to align with your values is no mean feat. It takes time, research, and a fair bit of trial and error. However, the benefits are worth it in the long run.
An ethical investment portfolio gives you peace of mind knowing that your hard-earned cash isn’t funding companies you disagree with on moral grounds. At the same time, a well-structured ethical fund provides excellent returns on your investments.
With so many options, choosing an ethical fund as part of your portfolio can be tricky. Many investors find themselves asking which funds are best for them or if they should consider starting their own ethical investment fund instead.
Below we’ll explore how you can build a portfolio based on sustainability with an emphasis on humanity.
Know Your Priorities
Before you start shopping for green ETFs, it’s important to understand your priorities. Investors should first assess their risk tolerance, then their financial goals, and finally, their investment time horizon.
For example, if you’re saving for a child’s education, you may want to steer clear of more high-risk funds.
Knowing your financial priorities will help you narrow down the types of sustainable ETFs that might be right for you.
Establish Your Investment Goals
Now that you’ve considered your priorities, it’s time to consider your investment goals. This will help you refine your search for sustainable ETFs that are right for you.
If you’re investing for retirement, you’ll likely want to steer clear of high-risk funds. On the other hand, if you’re planning to use your money for a home purchase in the next five years, you can take on more risk.
Find Transparent Investments
Sustainable investing involves environmentally friendly, socially responsible, and ethically-minded companies—but the term is a bit murky. Some ETFs are more transparent than others, so it’s crucial to pick funds that are clear about their sustainability strategy.
You’ll want to find out how each fund defines sustainability, if the fund invests with humanity in mind, and what it means for your portfolio.
Talk to an Investment Broker
If you still can’t decide which sustainable ETFs are right for you, it might be a good idea to talk to a financial advisor or investment broker to get some guidance. These professionals are trained to help you sift through all the options and find the best fit for your portfolio.
The first thing you’ll want to do is establish your risk tolerance. Next, you’ll want to figure out your goals and put them in writing.
With these things in mind, the investment advisor can help you navigate the ETF selection process. They can help you narrow down the selection of sustainable ETFs by asking a few questions about your values and how each fund operates.
It cannot be easy to find a fund that completely focuses on various sustainability factors, including environmental, social, and governance (ESG) factors, for the betterment of humanity.
But with the help of this guide, you can find funds that meet your investment and social and environmental sustainability goals.