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These 6 points help you to harmonise money and values

Is investing money also an affair of the heart? How you can express your values with your money and how to go about it.

Only recently, studies (2018) showed that 88% of respondents in Switzerland try to reconcile personal values with their spending decisions. UK investors lag behind: only 52% want to make the world a better place.

But only 20% in the UK and 35% in Switzerland stated that they also had sustainable investments in their portfolio.

​​​​​​​The reasons?

Unclear terminology and difficulty in measuring impact.

Nevertheless, from 2017 to 2018, the sustainable investment volume has increased by 59%. When asking women about sustainable investing, we receive many practical questions: How do I embark on it? What options are there?

This is reason enough to dedicate this article to a 6-point list - as a food for thought for bringing your values in line with your money.

01

What is important to me?

Get clarity about your priorities, e.g. through questions about environmental protection, health, sustainable energies, consumer behaviour etc. - but also: What future developments do I want to be involved in?

Making your money work can also mean actively investing in new, innovative solutions for the future. These include megatrends such as population growth, urbanization, resource scarcity, automation, health, transport, etc. The UN's 17 sustainability goals and overviews of global megatrends can serve as inspiration.

Such a discussion can also take place as a family, with a partner or as an exchange with friends.

02

What is not possible and where do I draw the red line?

Defining what you don't want at all and then using this as a filter can help to sharpen the strategy and make it easier to select products, e.g. you can directly exclude certain industries, companies or practices. The three most popular exclusion criteria or private investors are violation of human rights, poor working conditions and deterioration of the environment.

03

What goals do I have and what risks am I willing to take?

This includes fundamental questions about financial planning, but also points such as:

  • Should all my money be invested sustainably or only part of it?
  • What expectations do I have regarding return? Various studies have shown that sustainable investments do not have a yield disadvantage - but they should fit your personal situation.
  • How much risk am I willing to take? Investing sustainably can also reduce risks, e.g. because companies with bad practices are "filtered out". Studies show that real estate is the most common form of sustainable investment, with equities coming second.
  • Do I want a direct, measurable social impact in addition to returns, as is the case with impact investing, for example?
04

Will additional knowledge give me an advantage?

Depending on the subject area and objective, additional knowledge can reveal new possibilities and ways forward. These could be rankings of sustainable companies or other sustainability indices. You can find an overview in this index database. There you can filter indices by country or category. Further sources of knowledge with in-depth information are, for example, the Global Sustainable Investment Alliance. Specialised financial providers and banks also offer knowledge forums and reports.

05

What is my money doing today and can I achieve more impact with it?

A review of your actual situation and, if necessary, adjustments can already achieve a great deal without having to immediately look for new financial products, e.g.:

  • In Switzerland, how is my 3a pillar invested?
  • In the UK, how are my ISAs invested?
  • How does my pension fund invest the money and are there sustainable options?
  • What investments do I have today, and do they still match my values?
  • Do I have current donations to e.g. non-profit organizations and do they still fit?

How do I know what's in it?

Sustainable investment approaches:

  • Exclusions: One excludes what does not meet certain ESG criteria.
  • Best-In Class: Select the ones that best meet ESG criteria within a sector or industry.
  • Impact Investing: Social and economic objectives are combined as criteria.

In the meantime, there are also standards for financial providers, the Principles for Responsible Investing (PRI), which regulate various aspects of sustainable investments. No matter what you decide on, it is worth checking the bases on which the products are built, the price-performance ratio, the know-how of the supplier and how the recommendations are influenced. For example, only in-house or other products are recommended. If you don't want to create but donate, ZEWO, for example, has a list of criteria.

06

What are the options?

A list of ideas

  • Investment in specific industries, regions or even companies with corresponding products
  • Sustainable ETFs and funds
  • Develop a strategy and portfolio with specialists, e.g. with personal advice or a Robo-Advisor
  • Crowdfunding - for projects or initiatives, e.g. Funders, Kickstarter
  • Support social or innovative start-ups, e.g. as an angel investor or private lender
  • Donations to charitable organizations
  • Other possibilities such as social impact bonds

There is a huge range of possibilities. What and how depends on your personal situation and goals. What fascinates us about sustainable investments, apart from all the advantages, is the fact that you deal with the world and what is important to you.

This article has been produced in partnership with watson, a Swiss news platform. 

Here is the link to the original blog article in German.

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