How can I invest in eco-friendly stocks and shares?
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I have been putting money into savings accounts over many years and the amount has built up to around £150,000. I am very aware that the interest I’m getting on my savings isn’t keeping pace with inflation, so I am losing money in real terms. I think it’s time to buy stocks and shares but I don’t want to have shares in companies that have a harmful ecological impact on the planet, such as oil companies and tobacco producers. Can I specify what sort of company I want to invest in – and still get good growth on my investment?
Matthew Beck of Smith & Pinching responds:
You are correct that an investment portfolio has the potential to outperform the returns you get on a savings account, although there is always a risk that values may fall below the price you paid for your investments. However, you can manage the degree of risk that you take with your portfolio. Assessing your investment risk profile is a critical part of the process we undertake when we advise you about what investments might be suitable for you.
In fact, the advice process starts at a much earlier stage: our first priority is to look at your financial circumstances and what you want to achieve. The outcome of the advice process is a financial plan that is tailored to every aspect of your financial identity – including your attitude to investment risk and your investment preferences. Your investment strategy can certainly be tailored to your individual preferences.
Ethical investing has seen a huge surge in interest in the last couple of years and seems to have become even more popular during the pandemic. Ethical investing strategies take account not just of environmental factors but also other factors such as workers’ conditions and the way the business is run. These ethical investment assets are known in the financial sector as ESG investments (Environmental, Social and Governance).
The good news is that ESG investments can match or potentially exceed the performance of less ethical investments. There are ESG investments at different levels of investment risk and so an ESG portfolio can be tailored to be suitable for almost any investor. It is also possible to hold a managed portfolio of ESG investments that is tailored to a specific level of investment risk: at Smith & Pinching we have an ethical investment range that has been running for over nine years, so we know this responsible investing market very well.
Do get advice, ideally from a Chartered Financial Planner, to ensure that your investment portfolio meets all your needs and preferences.
Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.
For more information please visit www.smith-pinching.co.uk