Socially Responsible Investing

Socially responsible investing, or SRI, allows us to affirm our values while pursuing financial goals. These values may include promoting the well-being of humans, animals, and the environment. SRI mutual funds actively seek to invest in firms and companies whose policies and practices support these values, whether these companies offer equal opportunity rights for women and minorities, or support sustainable business activities such as renewable energy and recycled products, and who are also believed to have a successful financial future. SRI encourages companies to make the world a better place.

Investing in “good” companies is an excellent goal; however, keep in mind that no one is really perfect. Last year, Forbes magazine created a “Social Scorecard” which graded American corporations on diversity, community, human rights, and the environment. None of the corporations avoided earning at least one C, D, or F grade. While Home Depot received an A for the environment, as it buys nearly all its lumber from sustainable forests in North America, it scored a D for diversity. Similarly, while WalMart earned a B for community, it scored an F for diversity and human rights. Therefore, when choosing to invest in “good” companies, focus on the values that matter most to you.

The different types of SRI mutual funds are money market funds, equity funds, fixed income funds, and balanced funds. A money market fund invests in short-term bonds. Equity funds invest in stocks. Fixed income funds invest in bonds issued by companies or the government. Balanced funds invest in stocks and bonds.

When choosing to invest in SRI mutual funds, be sure to do some comparison shopping. Consider mutual fund fees and expenses, as well as taxes. Also decide whether you plan on making investment decisions on your own or if you plan on working with a professional.

For more information on SRI mutual funds, please visit Keep in mind that investing in socially responsible mutual funds successfully involves some financial planning. Since a complete explanation of financial planning is beyond the scope of this article, please contact your local financial advisor for more information.

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