I was so upset the other night that I could hardly sleep. I saw Netflix’s advertisement for a new movie called Cuties. The written description, image, and trailer displayed inexcusable examples of the sexualization of 11-year-old girls. I was not the only one appalled. Because of complaints, Netflix issued an apology and removed the most egregious aspects, which were the provocative image and description Netflix used to advertise the movie. However, the movie is still set to air… and my blood is still boiling.
(By the way, I am well aware of the supposed “good intentions” behind the film. I still hold the opinion that actual young girls do not need to be exploited to get the director’s point across. 11 to 14-year-old actresses do not have the ability to consent to being portrayed in that nature, nor should they be.)
As an investor, one of my first thoughts was, “Oh, I hope Netflix isn’t in my portfolio.”
Why would I think that?
Because deep down at my core, I want to invest in things I believe in. At that moment, in my mind, investing in Netflix was tantamount to supporting that film.
(Note: I am NOT suggesting you must have the same strong feelings about this particular matter. With a lil’ baby on the way, I find myself hypersensitive to issues surrounding children! We all have unique causes we hold close to our hearts.)
Why Investing In What You Believe In Is NOT Easy
Generally, I support a diversified portfolio including globally diversified mutual funds, ETFs, and large cap stocks. These are usually big, popular companies. Being a big company generally means that you must be widely accepted and supported by the public. However, sometimes these companies take social stances or financially support causes that I do… or don’t… agree with.
- It is difficult to maintain a diversified, well-performing portfolio if all the companies you invest in must only support (or not support) the same things you do.
- Becoming an informed investor isn’t easy. It can be challenging to gather accurate information. Sometimes companies are open and honest about the causes they support, and other times it takes more digging than we’re willing to do to find this information.
How to Balance the Desire to Invest In What You Believe In with the Need for Diversification and Returns
- Make a list of the industries you’re passionate about. Perhaps you strongly feel you can’t support the tobacco industry but also strongly desire to support clean energy. I suggest you start by focusing on the things most important to you.
- Create a list of any deal-breaking causes or social issues. You’ll need to decide if these causes are significant enough to you that you’d refrain from investing in a company whose positions are against your beliefs. You may not have any! But maybe there are issues you absolutely feel you cannot associate with. For example, an issue like a company using child labor may sway you to avoid their stock.
- Consider if your support of industries and causes can be accomplished through means other than investing. You can’t solve all the world’s problems on your own through investing. Just because you want to support cancer research does not mean you have to invest in a research company. You can also donate your time or money to charitable organizations you are passionate about. Does it fulfill your conscience’s need to live a life aligned with your values? Depending upon your answer, you may or may not decide to use your investment portfolio to further the causes.
OK, you thought through the first 3 steps. If your values feel supported, you are done! No need to read further. Your portfolio does not need to get involved in the battle. No shame in that.
If supporting charities isn’t enough and you want your portfolio to do some talking for you, read on.
- Consider investing with Separately Managed Accounts (SMA) and ETFs. Unlike a mutual fund, you can see which companies you hold at all times. They are more customizable if there is a company your conscience doesn’t allow you to hold.
This should still allow for reasonable diversification and competitive returns!
- Arm yourself with good resources. Institutions like the Biblically Responsible Investment Institute can provide you filters for companies that operate in certain industries. Categories include abortion, bioethics, human rights, marijuana, pornography, etc.
- Ask your advisor about Environmental, Social, and Corporate Governance (ESG) or Socially Responsible Investing (SRI) funds. They can give their professional opinion on whether these funds are suitable for your situation. These funds aren’t for everyone. For some investors, they are too exclusionary and may not provide competitive enough returns.
You hired your advisor to answer your questions and build a portfolio that best serves your needs. If conscientious investing is one of those needs, not telling her is a disservice to yourself.
This blog might have been kind of a mess. That’s what happens when you write a blog the day after not sleeping well!
The main point is, there are ways to invest in companies whose values and services you support and avoid the companies you don’t, BUT your portfolio does not need to be your primary form of expression.
Develop a strong set of values and decide how you will fight for those values. Your portfolio may need to join the fight, or it might be able to sit out. I can’t answer that for you. I am personally still thinking through my own stance on this.Develop a strong set of values and decide how you will fight for those values. Your portfolio may need to join the fight, or it might be able to sit out. I can’t answer that for you. Click To Tweet
Don’t adjust your portfolio flippantly. Educate yourself, talk to a professional, and make the well-thought-out decisions that are best for you. Read my blog for more!