Retirement often brings with it an opportunity to reassess not only one’s lifestyle choices, but also one’s financial strategies. At the heart of these decisions is the concept of ethical investing.

Ethical investing, also known as socially responsible investing or sustainable investing, allows individuals to align their investment decisions with their personal values and societal goals. It involves integrating environmental, social, and governance (ESG) factors into investment decisions.

For some retirees, ethical investing may be a way to align their portfolios with their values. When implemented carefully and with professional guidance, it may also support certain long-term financial objectives.

Aligning investments with values

Ethical investing centers around the idea of creating a positive impact through investing in companies that prioritize sustainability or contribute positively to society, with the intention of balancing personal values and investment goals.

With growing consumer awareness and government regulations driving ESG-friendly practices, some companies that prioritize ESG factors have shown strong performance in certain market conditions, though results can vary and are not guaranteed.

For retirees, ethical investing can be used as a framework to pursue both values-based investing and long-term financial goals, though investment outcomes are not guaranteed.

Practical  steps for ethical investing

Implementing ethical investing involves several practical steps.

Defining ethical investing parameters

These parameters might include concerns such as environmental sustainability, human rights, fair trade, and ethical labor practices. It’s essential to define what ethical investing means to you and set clear parameters.

Researching potential investment strategies

Before investing, research the ESG practices of possible companies. Assess their environmental policies, labor practices, and governance structures against your established ethical investment parameters.

Selecting suitable investment vehicles

Numerous investment vehicles cater to ethical investors today. Work with a financial professional to choose investment vehicles that align with your risk tolerance, investment horizon, and ethical parameters.

Monitoring performance

Continually monitor investment performance and their compliance with ethical standards.

Ethical investing may allow retirees to align their values with their investment approach—potentially supporting causes they care about while pursuing financial goals for retirement.

Capital Planning’s six fundamental financial planning considerations are potential barriers investors may face when working toward their goals. We believe that it’s important to evaluate investor sentiment towards each consideration through a succinct questionnaire. This allows us to examine the potential effects of these considerations on an investor’s assets today and in the future.Click here to take your Financial Confidence Quiz