If you’re a woman who brings in more money than you need to live off, then you should consider investing. Saving your money is obviously an important part of wealth management but I would argue that investing is equally important for women today who want to get financially stronger.
Women battle against unfair advantages in the workplace and the wider world. But by investing wisely we can gain the upper hand financially. However, as well as our finances, we also need to think about the world we are leaving behind for our children. For this reason, it is more important than ever to consider the ethical implications of our investments. If you want to start making greener investments as a woman, seek advice from an experienced financial planner.
What is ethical investing and why should you invest ethically as a woman?
Climate change could drastically change life on earth within the next 30 years. If we want to build a better world for our children, as women we must try to refocus where our money is going. The most profitable investments are not always the best for the future of this planet and big corporations with no care for environmental damage will not get the message unless we change the way we invest. Obviously, we are trying to make a profit whenever we invest in anything. However to invest ethically you must consider the greater environmental consequences of your investments.
If protecting the environment is part of your personal code of ethics, then you should try to avoid investing in companies that are purely concerned with profit. It is often the bigger companies that do not care about the environmental consequences. For example, a study from Climate Accountability Institute in the US found that 20 companies are responsible for 1/3 of all greenhouse gas emissions in the modern era. As well as greenhouse gas emissions you should investigate how efficient a business is at dealing with their waste. Waste management is important for ethical investing. Therefore, I would recommend that you avoid investing in companies such as Coca Cola, PepsiCo and Nestle, since these companies are known for having the worst waste records.
Ethical investing means you can invest guilt-free but it will also make you a financially stronger woman, as annual cash flow to sustainable funds has increased tenfold since 2018. According to the Morgan Stanley Institute for Sustainable Investing, in 2020, sustainable funds in the US outperformed their traditional counterparts by a median of 4.3%.
The future of ethical investing
The future of ethical investing is looking very promising. It’s becoming more and more mainstream so if you want to maximise your profits from ethical investing the best time to start is now. Over $500 billion flowed into ESG-integrated funds in 2021 (ESG=environmental, social, governance). A staggering 55% increase to ESG-integrated assets. Additionally, a study from 2021 shows that 85% of investors are looking to start making greener investments, as they view climate change as the greatest long-term threat to our planet.
Do you have enough space for your new family?
You definitely want to be thinking about space and if you have enough of it to raise a child. Moving house is not something you want to be doing with a newborn if you value your sanity. So any concerns about space and your home should be addressed before the baby arrives. If you think that you will need more space, address this as soon as possible and set your mortgage as priority in your finance plan. Ideally you’ll want to be living in the same place for at least the first ten years of the child’s life so it can be great to see a mortgage advisor for specialist advice. A mortgage is likely to be the biggest financial commitment you will ever make. So get it right the first time with expert mortgage advice from Evolution Financial Planning.
How to get started on your ethical investment journey
First off, don’t be intimidated by all the jargon. You might see terms like socially responsible investing, ESG (economic, social, governance), impact investing and sustainable investing. ‘Ethical investment’ is just a convenient umbrella term to describe all of these.
Then you must define your own code of ethics so that you can choose investments that align with your values and that you feel good about. You also need to decide if you are going to make your portfolio greener one step at a time. Or, if you are ready to completely disregard any asset that does not completely comply with your ethical views.
Another important consideration is whether you are going to individually pick all your own investments or if you would rather invest in a fund. This will depend on what stage you are at in your ethical investment journey. If you are a beginner, you might find it easiest to invest in a fund that is compatible with your ethics for the most part. Rather than trying to individually pick each asset in your portfolio yourself. However this comes with the downside that you will rarely ever find an investment fund that is 100% compatible with your personal code of ethics. .
How you could benefit from investing with an experienced financial planner
In this article I have discussed the greater need for women to come together and make better financial decisions for the future of this planet. How we need to redirect the flow of income so that we can leave a better world behind for our children. But I have also shown you that ethical investing is not only advantageous to the planet, it also has a lot of potential to make you a financially stronger woman.
I encourage you to start making greener investments as soon as you can. I know it can be overwhelming as a beginner. But with solid financial advice from an experienced financial planner, you can rest easy knowing that your portfolio is in safe hands.
To continue your ethical investment journey, take a look at our FREE Ethical Investment guide and if you’d like some ethical investment advice please do get in touch. We would be delighted to hear from you.
The value of investments and the income from them may go down. You may not get back the original amount invested.