If you’re eager to begin investing, understanding the stock market might seem overwhelming. And, if you wish to align your investments with your values, it can become even more complex. This post will provide straightforward steps to kickstart your sustainable investing journey including choosing where to invest, making your pension more eco-friendly, and finding sustainable funds.
WHERE SHOULD YOU START YOU INVESTING?
When you decide to dive into the world of investing, you need to select an investing platform. These online platforms provide easy access to various investment options, such as funds, stocks, and commodities.
OPTION 1 TO START INVESTING: ROBO ADVISORS
Different providers offer a variety of investments. If you’re new to investing, robo-advisors are user-friendly digital platforms that offer ready-made investment options, often with a sustainable or ESG focus.
These platforms distribute your money across various companies and business types, reducing risk and promoting diversification. Some robo-advisors exclusively offer sustainable investment packages.
OPTION 2 TO START INVESTING: ONLINE BROKER
If you prefer to build a diverse portfolio from a broader range of investments, an online broker is your best choice. With an online broker, you can invest in a wide range of investment funds, individual stocks, bonds, and commodities.
Boring Money is a helpful resource for selecting where to invest and comparing costs. For robo-advisors, the fee covers both platform usage and the investment package. With online brokers, you pay for the platform usage separately from the investments you buy.
As a DIY investor, aim to keep your investment costs at or below 1% of your portfolio’s total value.
Boring Money lets you specify whether you want your investments to be green or ethical, and whether you want to use a Stocks and Shares ISA or SIPP.
SHOULD YOU START INVESTING THROUGH YOUR BANK?
Many banks and building societies offer investment services, which can be convenient since all your finances are in one place. However, it’s essential to consider the environmental impact of your bank. Some banks, like Barclays and HSBC, are major funders of fossil fuel projects.
Reviewing your bank’s ethical practices is crucial to align your money with your values, as they use your deposits to fund various projects and businesses.
You may not agree with what they fund.
WHAT ARE YOU INVESTING IN?
Once you have chosen where you are investing, opened an account and put some money in, the question is what to invest in?
INVEST IN PENSIONS
The UK’s pension industry is valued at £3.2 trillion. If you have a workplace pension, it’s an easy way to start your sustainable investing journey by examining where your pension is invested. Many people default to the standard investment option, only to discover their money is often invested in industries like fossil fuels, arms, and tobacco.
You can change this by following these simple steps:
- Log in to your pension provider’s website.
- Review your investments, often in the default option.
- Switch to a sustainable or ESG investment option. If there isn’t one available, contact your provider and request one.
If you’re not sure where your pension is, you can use the “find a lost pension” website to locate it.
INVESTMENT FUNDS
An investment fund is a pool of money contributed by investors to purchase various assets. These funds can encompass a wide range of businesses, from the entire UK stock market to specific sectors like clean energy.
There are two main types of funds:
- Passive funds: These are computer-managed funds that track an index and have lower costs.
- Active funds: These are managed by individuals or teams who make investment decisions on your behalf. Active funds often come with higher fees. Most sustainable funds fall into this category.
The market for sustainable/ESG funds has grown significantly in recent years. While assessing these investments can be complex, the industry is continually evolving and improving.
RESOURCES TO GET STARTED INVESTING IN FUNDS
1. Fund Ecomarket, soon to be relaunched as Socially Responsible Investment Services allows you to put in a number of criteria to find funds that meet what you are looking for. It is not a place to buy funds. Once you identify what you want, have a look if you can buy it with your online broker.
With approximately 132,000 funds in the so called ‘fund universe’ an online broker will not stock them all. But if there is a fund you want and it is available do call your broker and ask them to pop it on their platform. I did this and it works!
2. The Big Exchange is an investing platform set up The Big Issue. It lists only ethical and impact investments. Each is given a gold, silver or bronze medal rating. You can also choose fossil free investing and female led funds. 50% of their customers are women.
3. Monevator’s list of passive funds. Monevator focuses on ‘armchair’ investing in passive funds. The site lists the lowest cost funds in various categories. They generally have an ESG option in each.
ALL THAT’S LEFT TO DO IS START INVESTING!
Now, all that’s left is to start investing! Sustainable investing is a personal choice for those who want to generate financial returns while making a positive impact on our planet.
Once you clarify your goals, making investment decisions that align with your values becomes much simpler.
If you found this post helpful, you might also enjoy reading these related articles on our blog:
Do You Want to Use Your Money For Good? Sustainable Investing Can Help Your Wallet And The Planet
Female Investing: The Gender Gap And How To Bridge It
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