How to Make Your Retirement Investments Reflect Your Values (Review)

If you could take a deeper look at the investments being purchased with your retirement funds, do you think you’d be comfortable with what you found?

For many people, saving for retirement means little more than contributing to a 401(k) or an individual retirement account (IRA) on autopilot. Many of us choose target-date mutual funds and call it a day.

But there’s more to investing than just dollars and rates of return. If you’d like to ensure that your retirement investments aren’t supporting activities that are counter to your values, you need to do your due diligence and research your investment choices.

Let’s take a look at the steps you can take right now to ensure your retirement investments are aligned with your values, providing value to your communities.

Understanding Socially Responsible Investing

First of all, take a moment to think about what causes and values you would want your money to support. This includes understanding the connection between your values—for example, environmental activism, social justice or religious beliefs—and what sort of companies your retirement funds are being invested in.

After that, learn about socially responsible investing (SRI) and how it can help you ensure your dollars aren’t supporting companies that don’t align with your values. Depending on their profile, SRI mutual funds would avoid investing in tobacco companies, gun manufacturers or the fossil fuel industry. Ave Maria mutual funds use criteria to screen out companies that promote or support activities contrary to the teachings of the Catholic Church.

SRI has secured a prominent place in investing. Over $12 trillion is invested in SRI assets in the United States, according to the U.S. SIF Foundation’s 2018 biennial report “U.S. Sustainable, Responsible and Impact Investing Trends.” SRI assets have grown at nearly 40% year-over-year since 2016.

And SRI means not only avoiding investments in certain companies, but also actively seeking to invest in companies that actively promote certain values. That’s where ESG ratings come in.