Socially Responsible Investing: Investing in Your Values

BILLSHARK believes that the wrong way to get rich is to take your money and stuff it under the mattress. The right way to get rich is to invest it.

Of course, your investments should be diversified; that is, having a mix of investments in small-cap and large-cap stocks, index or bond funds, real estate, international investments, and cash.

The best way to do this is to start with your age. The accepted rule of thumb is to subtract your age from 100 and put that percentage into stocks, and the remainder into bonds and other investments. For example, if you’re 30 years old, put 70 percent into stocks, and 30 percent into bonds.

And if you’re going to invest in stocks, you might want to consider what many millennials and younger age groups are increasingly turning to: socially responsible investing (SRI). This trending concept allows you to grow your assets while investing in causes and companies you care about.

What is socially responsible investing?

SRI in general tends to place the investor’s ethical values on an equal footing with their return on the investments (ROI). A subset of SRI also takes into account a firm’s environmental, social, and corporate governance policies and practices—also known as ESG—when deciding where to invest.

Depending on your personal values, for example, you might want to avoid investing in such stocks as tobacco, alcohol, firearms, fossil fuels, defense contractors, and so on. This is known as “negative screening,” or excluding companies with practices or products you don’t agree with.

On the other hand, rather than avoiding certain stocks, you might take a more positive approach and seek out those that align with your particular interests, such as green energy, female or minority empowerment, or social justice causes.

Typical considerations involving SRI include:

  • environmental/sustainable practices
  • labor practices
  • the presence of a corporate social responsibility (CSR) policy
  • donations to social causes
  • volunteer participation

With the recent explosion of interest in SRI, there are currently 395 mutual funds identified by investment research firm Morningstar as socially conscious.

Three types of values-based investing

As SRI becomes more popular and more complex, the various ways to invest are increasing, and the options can be confusing. In general, however, there are three main investment strategies that come under the heading of values-based investing.


SRI is a broad category of investment considerations based on personal values. As a rule, it is guided by the negative screening process discussed above.


ESG investing involves the more positive approach, while also taking into account the firm’s stock performance and risk assessment.


Like ESG investing, impact investing also involves actively seeking out firms that align with the investor’s values, but it goes further in considering the positive contributions the company makes to the world at large.

What about the ROI?

Values-based investing is all well and good, you might be saying, but what type of returns can you expect with these types of stocks?

Although the buzz on Wall Street claims that SRI investments don’t perform as well as traditional stocks, studies on SRI stocks shows they generally track favorably with the S&P 500. In some cases, they have performed even better.

As we said earlier, diversification is critical in any successful portfolio, so rest assured that you can not only find SRI- and ESG-type stocks individually, but also bundled in the more traditional mutual funds, index funds, and exchange-traded funds (ETFs), as well as bonds called “green” or “climate” bonds. The latter two are used to fund a variety climate change and environmental projects.

How to invest in SRI

If you want your money to work for the causes you believe in, there are three steps to take:

  1. Decide what objectives you’d like to support.
  2. Decide whether you’re more interested in positive screening or negative screening.
  3. Search for investment firms that support the approach you want to take, and be sure to do your homework, just as you would with traditional stocks. For example, consider the expense ratios (how much it costs to operate and manage the fund), not just past performance.

Wondering how much BILLSHARK can save you on your bills? Check out our quick calculator to see how much you’re overpaying every month!

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