In Form – September 2013

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What does it mean to invest ethically? Actually, it involves a lot more than most people think and can offer various practical benefits for individual investors.

In order to truly understand your share portfolio and make the right decisions by knowing which way your investments should be heading at any particular time, it’s important to understand the drivers behind the businesses you’re investing in.

Who is on the management team and what is their track record, for instance? What types of products or services does the business offer and what is their target market? Which raw materials or talent sets do they require in order to succeed, and how do they go about sourcing these? How sustainable is the company and how does it treat its people and its local communities?

These are the same questions that should be asked when an investor is putting together an ethical investment plan. Investing ethically, in a nutshell, is all about understanding exactly what it is that your money is funding, then ensuring the funded businesses will not have a negative impact on society and on the environment.

There is no absolute rule as to what is and is not an ethical investment. It very much depends on individual beliefs – which could be to do with religious belief, political leanings, environmental concerns or any one of many other variables – as well as the effects of location and time. A person living in a small town that is receiving much-needed mining income, for example, will have a different opinion to the city-dwelling environmentalist. During a time of war or civil unrest, people in certain territories around the globe will think differently about businesses involved in weapons manufacture. And while some feel uneasy about companies involved in alcohol marketing and production, others admire the quality of their brands and products and their promotion of responsible drinking.

In other words, ethical investment allows individuals to put their money behind businesses that match their own belief systems. It doesn’t necessarily mean the chosen organisations will outperform ones that are considered non-ethical. But it does mean greater satisfaction with, and likely more personal interest in, the set of businesses within the portfolio.

In order to balance social responsibility with investment returns, an investor must look into the business’s sustainability and HR record. They must get to know the products and services and find out what the business does to make these offerings a reality. In other words, they must develop a far more intimate understanding of the organisation than they would if they simply purchased shares thanks to a company’s growth record. Such a thorough investigation is a powerful exercise and one that is likely to pay dividends, in more ways than one, during the lifetime of the investment.

An investor may also choose to look into various funds that make it their business to buy shares only in ethical organisations, although you’ll want to check carefully to make sure your philosophies match up. Such funds may have investment policies that involve strict and pure approaches to ethical investing, while other may simply have loose guidelines that exclude certain types of organisations.

If the many positives of ethical investing are of interest, bring up the topic during your next meeting with your financial adviser. They can help you to understand your current levels of ethically correct investment exposure and recommend strategies and choices for those that would like a greater comprehension of what exactly their money is supporting.





Around this time of year people are receiving their tax return payments.  There are endless stories about how you should responsibly invest this annual bonus – pay down your credit card debt, send it into your mortgage, top up your super etc – but there are also several other creative and beneficial uses for the extra cash.

1 Pay for a course or conference

There are always pieces of knowledge or specific skills or talents that will make you more valuable to your employer or clients. Consider investigating courses or conferences to improve your performance in these areas. It could result in a promotion or in your work being of greater value, meaning it could be the gift that keeps on giving financially.

2 Create a more energy efficient home

As energy and water prices continue to rise, it makes good financial sense to change your home’s energy usage patterns. Speak with an expert to figure out how much you could save over time by installing solar power, water savers, better insulation, double glazing etc. It could also add value to your home.

3 Buy the body  you’ve always wanted

We’re not talking about cosmetic surgery, but rather about your health. Whatever has been concerning you recently, whether it’s a medical check-up you’ve been putting off, a trip to the dentist that should have happened several years ago, a need for a relaxing massage or just general weight loss, use the money to see a specialist, join a gym, book a few personal training sessions or get whatever treatment is needed to guarantee a long, happy, healthy life.

4 Invest in your children or grandchildren

Rather than blowing it all on a flat screen TV, why not start an education fund for your children, or for their kids? There are several tax effective ways to do this, including via an investment bond.

5 Buy something that will save you money

If you truly can’t resist the urge to buy yourself a new toy, have a very careful think about what it should be. Where do you spend money and how could a gadget save you that money? If you go to the coffee shop every day, for instance, perhaps a coffee machine for home could save that expense. If you pay a landscaper then some power tools for the garden could save you that expense. And if you go to the movies regularly, there are devices that connect to your TV where you download movies at a lesser cost, which could pay off fairly quickly.

If you’ve got a tax return on its way, be sure to have a chat with your financial adviser about responsible and creative ways to make it work for you.


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