I had a question from a reader about my ethical stance to investing and thought it was such a great question I would focus on it for this post. This will focus on my personal experience, with the next one focusing on the background to ethical investing and some things to think about.
What does it mean to be ethical and to be striving for financial independence? How can I get the best returns for my money whilst not investing in things that I don’t believe in? How can I be working toward a better life for my children if on the other hand my money is supporting companies who are destroying the planet our kids will inherit?
In terms of my own experience, when I was growing up my mum always invested ethically as a family. Well, my family had such huge issues with supporting companies that didn’t align with our values that we didn’t invest at all. Instead our money went into Credit Unions, until Triodos Bank opened in the UK in 1995. With changes to a) my ability to make my own adult decisions and b) the massive increase in ethical investment options, I’ve certainly moved on from that approach.
The ethics of investing – and daily life – are very much part of the road to FIRE for me. Being intentional with money is the first step on the path. What do I want? How does that translate into the decision I am going to make about spending money on this?
Regular daily practice of FIRE, and of ethical living, is about buying less – not about ‘doing without’ but recognising how little most of us really need to add to the things we have to live comfortable, fulfilling lives. There is a link to the zero waste movement (which was again something we did as kids, but was more due to a ‘being broke’ movement). Buying things to use briefly then throw away should be inconceivable, but it’s shockingly common place. Planning meals means we create less waste, as does actively packing leftovers for lunches at work, keeping small vegetable leftovers in the freezer to make soup, and (trying at least) to grow our own. Hand-me-downs, buying second hand, and borrowing things like tools or occasional sports gear from mates or co-ops, all mean fewer things to buy.
In the ever-inspiring Your Money Or Your Life, the authors encourage you to question yourself before every purchase not just whether you need something but whether you can take care of it, get value from it, and lovingly pass it on once you have finished with it. These remain great questions, and are easy to ask. If I do need to buy something, how do I plan to dispose of it? What will the impact of that be on the environment, and on me and my time?
In terms of investing, I do invest in ETFs but the solutions here feel imperfect. I have the majority of the UK funds in my ISA in this fund which is available on Fidelity in the UK and is listed as an ethical fund though a quick glance at the top holdings reveals some of the challenges in ethical investing (come back for the next blog post for more on this). I hold my emergency fund in Triodos Bank, which doesn’t have a significant range of products but is best for me for savings (rather than investment).
As ever, I should think it’s abundantly clear but the caveat here is that I am not a financial advisor and share this personal information as food for thought only.
There are so many other aspects to living well whilst living ethically that it’s a topic I hope to come back to. How do you manage these concerns in your FIRE journey? Would love to hear from you!