What Is The Most Ethical Way To Invest Your Money And Still Retain The Ability To Retire

Whether you choose to invest in a company directly by buying individual shares or through a fund will depend on a number of factors, including:

Your confidence and experience with investing
How long you intend to keep your money invested
The size of your investment portfolio
Your attitude to risk

What are the steps to invest ethically?

There are several things to consider whatever option you take, each with their pros and cons.

Here are five tips to help you get started:

1. Understand your values

Figure out what you want to invest in and what ethical measures are important to you.

Are you happy backing a company that operates in an industry you don't agree with? For example, would you feel comfortable investing in an oil company that is working on renewable energy?

Try to keep an open mind because in reality it is very difficult for a fund or company that ticks all the ethical and sustainable boxes.

Ask yourself whether you want to apply an ethical investment strategy across all your investments or just some areas.

2. Find out where your money is already invested

If you are already an investor, and chances are you will be if you have a pension, identify the ethical characteristics of each pot that you hold.

If they don't align with your values, figure out if you can change your investments or funds, or whether you need to look at changing your investment management provider.

3. Do your homework

You can choose to buy shares or funds yourself or use a ready-made portfolio, such as through Interactive Investor or Wealthify.

Some people prefer this option because it's less work, but you need to be happy with someone else making ethical choices for you.

Find out more about ready-made stocks & shares ISAs.

Identify those holdings, funds, providers and professional services that offer to deliver on your ethical choices while meeting your broader financial objectives.

4. Know where you can invest

There are many ways to invest ethically while sheltering your investment from the taxman, including a stocks and shares ISA and your pension.

You can use a self-invested pension (SIPP) or personal pension to save for your future while investing in everyone else's future.

5. Create a plan and stick to it

Think about how ethical investing will form part of a broader financial plan.

Ask yourself:

How much you want to make? Be realistic here – read our guide to investing
What do you want to use the money for? Retirement or a big purchase?
What's your timescale? If you are happy to leave your money for a decade or more, you could perhaps take more investment risk because you have more time to ride out any downturns in the price of your assets
What's your capacity for loss? In other words, how would you feel if your investments fell in value?

Once you know how you want to invest and where you can, implement that plan.

Independent financial advisers can look at your situation holistically and offer you financial advice tailored to your individual circumstances and values.