Putting your money where your morals are

Simoney Kyriakou is an award winning finance journalist who has been writing on personal finance since the late 1990s

When I first became a financial journalist, a few folk questioned the morality of my career choice.

Not because journalists are all liars (we’re not – there are laws against that), but because I was writing about the stock market and, in their view, investing was gambling. Being strict Christians, they were completely against doing anything ‘reckless’ with their money.

I tried to explain the difference between equity investing – buying shares in an established, listed company or units in a well-researched, well-managed investment fund in order to meet a long-term goal – and betting £10 on PotLuck to place at Cheltenham.

But while doing so I realised they had money in the bank, in cash savings. I pointed out banks do not sit on your money and wait for you to take it out again. No: banks invest your money back into the stock market – that’s one of the ways they make money to operate.

The same goes for pensions: you pay into a pension fund, but the money doesn’t sit in a Scrooge McDuck-style vault underground – it gets reinvested into stocks and bonds and other assets.

Realising this means you can take more control over where your money ends up, and you can choose to invest alongside your morals and values.

You have a choice to move banks if a certain bank is putting money to work in countries with appalling human rights records, or into sectors such as tobacco or fossil fuels.

If you have a workplace pension, you have voice about where the trustees place your money. Are there funds available that have a strategic environmental, social and governance (ESG) investment process? Are your trustees taking ESG seriously? If not, write to them!

The same applies to Isas, personal pensions – in fact, any investment plan. If you want your money to do good while it’s accumulating, then speak with an adviser about how to select an investment strategy that incorporates funds with a strong focus on clean energy companies, for example.

Maybe you have a strong aversion to companies that produce alcohol or pornography, for example. This is where an adviser can help you, by carrying out a fact-find to help pinpoint the right portfolio that screens out such stocks.

You can align your faith and your finances. It’s been done before. For example, the Church of England has an ethical investment advisory group, which creates policies for a distinctly Christian approach to investment, embracing screening, active stewardship, and alignment with the Church’s teaching and values.

Investing to meet your long-term goals does not have to conflict with your faith, your values or your ethics. Nor does it mean you have to sacrifice returns. What it does mean is being open with your adviser about what’s important to you.