“A goal without a plan is just a wish"
The first week of October was World Investor Week and the New Zealand theme for World Investor Week 2023 is ethical investing which aims to empower investors to make decisions aligned with their values. “A goal without a plan is just a wish” Having a well-thought-out plan is an important first step in your investing journey.
It means choosing to invest in companies or funds that have a positive impact on society and the environment, and avoiding those that cause harm or have negative effects.
There are different ways to invest ethically in New Zealand, such as:
KiwiSaver: You can choose a KiwiSaver fund that follows ethical principles and screens out harmful industries or activities, such as fossil fuels, weapons, tobacco, gambling, animal testing, etc. There are several KiwiSaver providers that offer ethical options,
Managed funds: You can also invest in managed funds that apply ethical criteria to their portfolio selection and management. These funds may use positive or negative screening, engagement, voting, or thematic investing to achieve their ethical objectives.
Index funds and exchange traded funds (ETFs): These are funds that track the performance of a market index, such as the NZX 50 or the S&P 500. Some index funds and ETFs are designed to exclude certain sectors or companies that do not meet ethical standards.
Individual companies: You can also invest directly in individual companies that have a positive social or environmental impact, such as renewable energy, health care, affordable housing, etc. However, this requires more research and due diligence on your part to ensure that the company is truly ethical and financially sound.
We can advise you on which ones.
Before you invest ethically in New Zealand, you should ask yourself some questions, such as:
What are your personal values and beliefs? What issues do you care about most?
What are your financial goals and risk appetite? How much can you afford to invest and for how long?
How do you define ethical investing? What criteria do you use to evaluate the ethics of a company or a fund?
How do you measure the impact of your investment? How do you track the performance and the outcomes of your investment?
Ethical investing in New Zealand is not only good for your conscience, but also for your wallet. Studies have shown that ethical investing can deliver competitive returns and lower volatility compared to conventional investing. Ethical investing can also help you diversify your portfolio and reduce your exposure to regulatory, reputational, or environmental risks.
If you want to learn more about ethical investing in New Zealand, you can visit mindfulmoney.nz.