Let's get ethical, investors

Who else is lurrvving the ethical investing trend? 

Money is power, after all. So what's not to love about putting your money against more things that are good for the world. 

But maybe you've been wondering what it actually means though, right? 

Not to get all doom and gloom on yer, but there's a little more to it. Ready to look behind the curtain and take a peak at what defines ethical (and what companies are in the ethical list)?

I run through a few funds to show you what's in them.

Tune in... to sort of what Olivia Newton John would say, "Let's get eth-i-cal, eth-i-cal".

xo
Simone

P.S. If you want to continue learning after this, watch the free investing training found at https://go.mswealthy.com/registration

P.P.S We would love it if you could drop a review on iTunes - this helps massively to spread the love and help more women around money and wealth creation.

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Prefer to read the transcript?

My name is Simone Mercer-Huggins. I am an investor and trader, and so far I've built over seven figures from the ground up. And now this community is doing the same. The Ms. Wealthy movement is here to share tools, resources, strategies, and support on all things, financial freedom tune in for everything, money investing, mindset trading and everything in between. If you want to be a powerful player in the wealth creation game, you're in the right place. So welcome to the kiss, my money.

Okay. Okay. Okay. So most of you are probably going to agree with me when I say I love that I'm seeing a trend towards ethical investing, and there has been a serious uptake in the ethical industry. There's been serious backing behind ethical investing, and it's growing more and more that both the industry, the interest, and therefore the products and what are actually available to people because of that demand, which is an amazing thing.

And then in turn, what happens is companies, uh, then have, you know, had that pressure societaly from the bigger collective to make that business more ethically minded. And that is obviously a great thing for everyone. So I want to talk about what this actually means for you and maybe shed some light on it too, because some people maybe don't know what it is, don't know how to do it. And maybe even what it means. I'm also going to cover briefly what it means on returns, meaning how the returns actually compare to, you know, let's just say normal quote, unquote, normal investing. Uh, so you can understand what it means from the whole perspective. Now, obviously when we spend our money in alignment with our values and what is meaningful to us, that is true power. That is literally the ultimate of, you know, expression, right.

We get to spend our money, how we see fit. And, and let's be honest, money is power. When we have money, we get to make decisions. We get to control outcomes, we have choice, and that is ultimately power. And so we also get to make decisions around our money and put the power where we want to see it, meaning in companies that, uh, better for the environment that a better socially, that just provide a better fairness essentially. But I want to actually talk about what that means, because this can be really vague. So you might've heard the term ethical and then you might have also heard of a couple of other things. One is called E S G and that's downs for three things, environmental, social, and governments and environmentalist, things like climate change, like, um, pollution waste and environmental opportunities as well. Social is stuff like human capital, like slave labor, um, things like social opportunities.

So how is it good for the collective? You know, for example, the community and then governance is stuff like remuneration. So how board members, for example, uh, receiving payments and receiving profits. So you might've seen, for example, Jeff Bezos of Amazon receives millions and millions and millions of dollars while that factory workers are paid minimum wage. And so that's where we start to see the government's factor come in. So when it comes to those three things, environmental, social, and governments, some of those things might be important to you. Maybe all of them are important to them. Some of them might not be, and then other people are like, well, the thing that's important to me is for example, fossil fuels or impacting the environment, or some people have specific things around guns. Like I don't want to invest in companies that have gotten production or support politicians that, um, really push gun agendas, for example, because when we talk about money being, you know, something that's really powerful, there are absolutely politicians that align with companies and you might be maybe you're someone that doesn't care about politics.

I'm one of those people I don't get in the detail around politics. Yes, I vote and all that sort of stuff. However, I don't get all up in the details of politics because I find a lot of it to just be a ridiculous game. However, policy, meaning what politicians create in terms of what governs our society is important. And so if there are major things like gun policy, not that we have it in Australia, but I know that there is a big debate in the U S obviously and other things like environmental policy, whether the politician believes in climate change or completely tries to discredit it. So things like that, companies do support politicians. And certainly politicians try to get support, you know, mainly through money, um, from or align with, uh, companies. And there's been a lot of investigations with like top board members of companies, um, you know, funneling money to a politician's party and putting it on the books of the company when that's illegal, stuff like that.

So that absolutely goes on. So we definitely can't deny that factor for sure. But really that topic is just one of many that need to be considered about what ethical actually means to you, because it's going to mean something different to you than it is to me than it is to someone else. So gun control might not be something that you care about. Maybe gambling is something that you care about. Nuclear power, fossil fuels, tobacco, um, weapons, adult entertainment. Some of these things are classified in ethical funds. Now, for example, ethical entertainment, ethical statement, I don't have to take payment is not something that I see as an ethical issue. I don't want to avoid doing that. Um, like specifically, that's not something I seek out to avoid investing in because I believe in free choice, but things like, um, gambling, I see it cripples communities, uh, for people that don't understand money management and the psychology behind it.

It's I find it to be one of the worst things. Obviously things like fossil fuels. I don't believe him. However, it's also important to know that every, every decision we make still has an impact. So any form of, um, energy extraction, uh, requires a lot of infrastructure and that has an impact on the environment. So we have to look at all of our decisions collectively. I think that's super important about when you actually decide what is important to you in where your dollars go, because there's investing dollars. And then there's also like decisions that you make. For example, if you don't believe in investing in any oil production, like major corporations, like BP, that extract oil from the ground and have oil leaks that damage our ecosystems and, you know, cause massive havoc on their environment and the oceans. And yet, if you still drive a car that uses oil, then you're still supporting that decision.

Right now that's not as 100%, not a judgment, but it is something to consider of where you're putting your investment dollars and the decision you're making. If you're still buying oil to put in your car, then that's still is an issue. And it's important to note too, that I kind of touched on this, that every decision we make has an impact. So for example, there has been a massive uptake in organic skincare rather than chemicals and people using avocado in skincare. And so of course, if there's a demand and a social pressure, then companies will follow suit. So companies like the major ones like Proctor and gamble and Unilever, then go out and plow thousands and thousands of acres in the resilient of rainforest to plant avocado trees, to keep up with the demand for both what we eat and in skincare. And that changes the ecosystem, it displaces animals, it completely damages the, um, the ground and it essentially up the area and they're plowing, plowing like through natural trees to plant something that is introduced and isn't actually meant to be there.

So that's not to be all doom and gloom, but I do want to highlight to you that everything does have a cause and effect every decision we make has an impact. And it's just about being mindful of that so that you can go into any conversations with other people are around the decisions they make too. Because what I don't love to see is when people are getting on the ethical bandwagon and then judging other people for making quote unquote wrong decisions or harmful decisions, when actually every decision we make has an impact, right? It's called the footprint and it's, it's a true thing. And actually, you know, people talk about flying and how other people don't fly because they don't want the, the environmental impact of that. However, and I hate to break it to everyone. Having a child is actually the biggest thing by like times thousands and thousands and thousands.

Like you could catch a couple of planes a year and use petrol in your car and eat me and all of the things that impact the environment. And yet still having a child is the biggest by far outweighs everything on everything you can do by like thousands now is not to say that having a child is bad or that you are up the environment by having kids, please do not mince my words. That is not what I'm saying, but I want to highlight to you that everything has an impact. And hopefully we can all be a little bit more accepting of everyone else's decisions, knowing, um, that, that is the case, right? I certainly intend on having a child. Um, and it's, it's absolutely, it's not anything wrong with it. It's just understanding that that is what occurs. So, okay. Back to back to actually what ethical means to you.

So being clear on that is important because different funds will focus on different things. And I'm going to go through a couple to show you to demonstrate. So there are most of the fun providers, uh, have ethical options now already, and they're creating more variations to focus on specific areas. But for example, if I look at like beta shares or Vanguard or fidelity and pulling up some of their ethical options, I want to actually highlight to you what their top portfolio holdings are. So if you don't know what a fund is, it's, I'm referencing either an index fund or an ETF, the kind of brothers and sisters essentially very cut from a similar cloth, but they just act differently. And they essentially hold a collection of companies. Some of them hold like a hundred. Some of them hold thousands, you can get different sectors, you can get countries.

And in this case, we're looking at, if I look at a space like an international ethical fund, but it's important to note what their top holdings are. And every fund will tell you this information. They will tell you their top holdings in terms of the company at the time. Now this will change. Obviously that's the whole point of owning a fund. This will change every three to six months, depending on when the review happens of their performance and what is considered. And so it will change. But if we look at currently, uh, then I want to highlight to you some of the top companies, one of them is apple. One of them is video co-op, which is a technology company. One of them is visa, home Depot, PayPal, MasterCard, Adobe Toyota. So there's a lot of tech companies, and this is going to be, if we actually compared this to, uh, this, a standard fund that isn't an ethical focus, you will see a very, very, very, very similar top holding.

So this fund that I'm looking at has thousands. So I could look at every single company, but if I just look at the top holdings, because they are the ones that, from a weight perspective, you know, they make up, let's say 20 to 30%. If we look at the top 30 companies, they probably make up that like 70% and the remaining 30% is the rest of the hundreds of companies in it. Okay. So the impact really is in the top holdings. So you might be someone that goes, well, hold on a minute, apple impact on the environment is horrendous because of their processes and infrastructure. They put in place around packaging, around batteries, around, you know, obtaining the metal that they use in all of their computers and phones in the way that they don't properly manage the waste disposal of people, the scouting, old technology and computers.

And that obviously that is an environmental vent, environmental impact. Yes. And then there are other companies through that. You might go, well, Toyota, hold on a minute, like we're not talking about Tesla here. That focused purely on, um, cars that have a minimal impact in the environment. We're talking about Toyota who run petrol and diesel cars and the production of which is insane, the infrastructure and the production of that much metal crazy. Right? So then you might go, well, if this is considered an ethical fund, what do I invest in? And this comes back to, what do you consider it ethical? So some funds, like I said, well, focus on the major stuff and exclude other things. So some of them exclude things like alcohol. Well, personally, I enjoy wine. So that's not something that I'm going to avoid investing in. I don't see it as an ethical issue or an environmental issue.

So this is why it's really important to understand what it means to you, right? Because really in everything there's, there's always an issue. Healthcare has a bunch of issues in terms of testing on animals and the what actually happens. And you might go, well, obviously an ethical fund wouldn't include companies that test on animals. Here's the thing. Government regulation dictates in some countries that, uh, in testing on animals is allowed to a certain degree, like a certain number of animals or certain animals. And if it's considered as like allowed in some cases or not an issue, then sometimes it'll therefore be included as fine to be in that top holding. So let me pull up one more, just to paint a little bit more, a bigger picture for you to see. So that one I was looking at before was the international ethical fund from beta shares.

This one is a Vanguard fund, an ethical Vanguard fund. It's an international, um, ethically conscious, it's called it's an ETF. And you know that I love Vanguard if you've been here for a while. They're amazing. They're a fantastic fund provider. So they're ethical fund hosts companies like JP Morgan, Tesla alphabet, which is Google Facebook, Amazon, Microsoft, um, nestlé Procter and gamble. So companies like Nestle and Procter and gamble produce a lot of well food, um, uh, like medical, right? So skincare and stuff like that. A lot of these companies do have a history of testing on animals. Um, you could say that Facebook is questionable with, um, the ethics around data breaches. You could say that Amazon is questioner or around how they treat their staff. And yet these top holdings are considered ethical, conscious and in Vanguard's fund. So it's important to know, and actually look at what you're investing in.

Now, I go through this in so much more detail inside investing bootcamp, so that you're like super clear about where your money is being put. If this, this is something that's really important to you. And I mean, even if it's not, you want to know exactly what a fund holds anyway. So this is, this process is exactly the same, whether it's an ethical fund. No, not. Um, but I heard this has shed some light on you understanding what this means and coming to a decision around putting them, you know, the money against things that are valuable and aligned with you. The other thing, the final thing I want to know is something that's becoming more and more popular is something called B Corp. And this is an organization that is, it's essentially a standard of social and environmental performance on a company. So companies can obtain B Corp certification.

And that essentially says, therefore, that they are that toe to the top, like considered the top pillars, um, like ethical, right? Honestly right now, big companies. There's, there's not that many of them there's I think maybe there's a few hundred to 3000 maybe, but in terms of that, being that many in the world is not that many. And then of those companies that are actually listed on the stock exchange, there's about 10, 10 to maybe 20 pushing it currently. So that's actually not that many and certainly not enough for you to have in an entire portfolio, if you wanted to start like pick individual companies. Because just because a company is ethical, doesn't mean that they are a great company to invest in, in terms of being in your portfolio and obtaining a return for you. Right. And that's probably the biggest in franchise operator.

You have to match ethical investing with an actual company that performs for you otherwise, what is the point? We want to put it against companies that actually, you know, drive a profit and then therefore employ more people, et cetera, et cetera. Okay. That's about it. I wanted to cover this off because so many people are asking about this. And obviously, as I said, the trend is increasing, which is incredible, but it's really important to know the ins and outs of what this actually means for you and your dollars. And so you can have more informed conversations with people around you as well. All right, beautiful. I hope this has been useful. If you want to know more about starting to invest, then head to Ms. wellthy.com and you can check out my free investing webinar. It's a free investing class. You can sign up to it, you get instant access to watch it.

And you'll learn a lot of understanding the fundamentals around investing. If you kind of already know, you've watched that before then come and join investing bootcamp. That is my signature program. That is where we do all of this steps around getting control of your finances, getting you money, sorting, sorted the financial foundations that are so important for wealth creation. And then we get you invested in building a portfolio and we get you to your first hundred K and then beyond because the first hundred K I found to be the hardest, it's what most people certainly say. And after that, like from that, then you're well on your way to create, you know, 500 K and a million and beyond for you to fully relax, become work optional and become financially free. So you can check out investing bootcamp. If you had to, again, Ms. wellthy.com or you can type directly into investing babe.com. You get access there. All right. I love you. I'll see you soon. If you are not part of the Ms. Wealthy movement yet, make sure you head over to Instagram and hang out with me. There I am at Ms. Wealthy official. And if you need anything else, head to Ms. wealthy.com, you can get all the info that you need. Find us on Facebook as well. And I'd also love if you can drop a review on iTunes, it supports us massively, and it means the freaking world.