Introduction to Socially Responsible Investing

Socially responsible investing is an investment method that is used to increase both your wealth and invest in companies that are socially responsible. The practice of socially responsible investing has been around for some time now. This type of investment requires that you make all of your trading decisions taking into consideration idealistic views. If you do not personally believe in the cause that you are investing on an ethical level, you will not choose to invest with them. Some investors do not care what company they invest in as long as they are making money. For the socially responsible investor, this is not the only test that your investment has to pass. If you give your money to a company that engages in something that is socially irresponsible, you are essentially helping further that cause. In order to make a difference, you have to avoid investing in companies that act in this way.

Environmental Factors

One aspect of socially responsible investing involves environmental factors. In today's world, there is a growing number of people that are concerned with the condition of the environment. Because of this, there are many more investors that want to focus on companies that treat the environment well. There are many "green" companies to invest in. Companies that are working on alternative forms of energy are one example of this type of company. You could also choose to invest in the most environmentally friendly company in a particular industry, even if they are not considered a "green" company.

Human Rights

Another aspect of socially responsible investing deals with human rights. There are specific companies that utilize sweat shops, child labor and other forms of labor that are not in the best interest of the human condition. Many of these companies have come under fire with investors. As a result, socially responsible investors have stayed away from them.

War Stocks

Many people also have a problem investing in war stocks. These are stocks that are provided by companies that make products for war. Companies that build weapons are some of the biggest companies in the world and they can be very profitable investments. However, if you are a socially responsible investor, you are going to stay away from investing in these types of companies because of your fundamental beliefs.

Mutual Funds

There are a number of mutual funds out there that have socially responsible investing as one of their main objectives. With a mutual fund, the fund manager can specifically choose which companies they want to invest in with the funds from investors. This provides you with a diversified portfolio of socially responsible companies to invest in.

Separately Managed Accounts

Another tool you can use to invest in socially responsible companies is a separately managed account. These accounts are offered by many financial brokerages and they offer you a way to benefit from professional money management. Many of these types of accounts are focusing on socially responsible investing today.

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