Improve the World with Your Investments

Physician's Money Digest, October15 2003, Volume 10, Issue 19

Investing is all about makingmoney—or is it? When consideringyour investment options, the firstthing that comes to mind is usually howmuch of a return you will receive on youroriginal assets. But did you ever thinkthat you could use your investment dollarsto truly make a difference?

Whether you're a friend of the environmentor have deep religious convictions,you can actually match your socialand ethical concerns with investmentsthat are in harmony with your personalbeliefs. When you decide to put yourmoney into investments that correspondwith your own set of values, you areengaging in what's known as sociallyresponsible investing. It may sound a littleodd at first, but this practice is a legitimate—and widely accepted—investmentstrategy.

Most socially responsible investorslook for companies that reflect their ownbeliefs (eg, strong community involvementor extraordinary environmentalpractices). Finding these companies mayseem like an overwhelming task, consideringthe number of firms in businesstoday. However, you can always enlistthe help of a financial consultant.

Available Opportunities

In addition to specific stocks, you canalso select from a variety of mutualfunds that are considered within thecategory of socially responsible. Manymutual funds—including stock funds,bond funds, and international funds—select securities based not only onsound fundamentals, but also accordingto the social and ethical values of thefund and its shareholders.Finding a private money managerwhose investment criteria match yoursocial concerns is another opportunityfor you to really feel a sense of personalresponsibility with your money. Financialservice firms typically offer the option ofhaving some of your investment fundssupervised by portfolio managers outsidethe firm. These managers can beselected on the basis of very specificguidelines. You can usually place bothsocial restrictions and company restrictionsin your individual portfolio.

Under the Microscope

By now you may be thinking thissounds like a good idea. Sure, you'd liketo know that your investment decisionsare actually making a difference. But atthe same time, you may be wonderinghow these types of investments comparewith others that don't take into considerationa social or ethical component. Togive you an idea of how they compare,let's take the example of the Domini 400SRI, a market index of 400 securitiesscreened according to social and environmentalcriteria.

Measuring this socially responsibleindex against the market's bellwether,the S&P 500, you'll find that returns forthe Domini exceeded those for the S&P500 for 5 straight years, beginning in1992. While both indexes have sufferedannual losses each year since 1997, theDomini still came out ahead of the S&P500 every year except 1999 (keep in mindpast performance is no guarantee offuture results, and you cannot investdirectly in an index). If you think sociallyresponsible investing might be the rightpath for you, get in touch with a financialconsultant to discuss your options.

Joseph F. Lagowski is vice president,investments, and a financialconsultant with AG Edwards inHillsborough, NJ. He welcomesquestions or comments at 800-288-0901 or www.agedwards.com/fc/joseph.lagowski. This article was providedby AG Edwards & Sons, Inc, member SIPC.