Take the 2-minute tour ×
Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It's 100% free, no registration required.

Here are my criteria:

  • I'm looking for a passive investment
  • Low risk/proven concept
  • I accept a low roi. If I can beat inflation, that's enough
  • I wish to put the money where they are actively doing good in the world. Ethical investment policies, like "we promise not to invest in arms or drugs" is not enogh.

Options I have considered is a share in a solar park and Kiva. I have not found any good options for solar-parks and Kiva has zero interest. That will result in me losing value, which is unacceptable.

share|improve this question
1  
Have you researched microlending? An impoverished family borrows a small amount to buy some piece of equipment that can get their business profitable, enough to survive and pay off the loan. –  JoeTaxpayer Apr 25 at 11:51
    
Yeah, kiva is an example of that, but I would like to have atleast a tiny ROI. –  Kristoffer Nolgren Apr 25 at 12:44
    
You will need to be very explicit on your concept of "good" in order for others to answer this question. Is it just arms and drugs that are excluded? Any others? –  Muro Apr 25 at 14:00
4  
Any answer to this would be highly dependent on what you consider "good". One person might say that it is good to invest in factories in poor countries to help improve the people's standard of living, while another would call for laws restricting building of new factories to save the environment. One might call for campaigning against abortion or homosexuality while another wants to campaign for these things. Etc. Of course I think the absolute best thing you could do with your money would be to give it to me. :-) –  Jay Apr 25 at 14:05
3  
@KristofferNolgren I'm not sure I understand your reservations about microlending. I began using a microlending service a few years ago, starting with $50. I loan out money, and within a few months, I get my $50 back (I've never had a default) and can loan it out again.To date, I've loaned out $750, just using that $50. Considering that my $50 has been able to "do $750 worth of good in the world" (so to speak), that's an extremely high ROI. Yes, I'm not getting interest, but my small investment is still able to provide some benefit. –  John Bensin Apr 25 at 14:41

4 Answers 4

up vote 4 down vote accepted

Vanguard has a Vanguard FTSE Social Index Fund. Their web page says "Some individuals choose investments based on social and personal beliefs. For this type of investor, we have offered Vanguard FTSE Social Index Fund since 2000. This low-cost fund seeks to track a benchmark of large- and mid-capitalization stocks that have been screened for certain social, human rights, and environmental criteria. In addition to stock market volatility, one of the fund’s other key risks is that this socially conscious approach may produce returns that diverge from those of the broad market."

It looks like it would meet the qualifications you require, plus Vanguard funds usually have very low fees.

share|improve this answer

Shariah compliant investments attempt to achieve your "ethical investing" ideals. Many countries around the world have a long list of shariah compliant investments and lots of journalists will go great lengths to reveal when a company is not really shariah compliant.

Standard & Poors (S&P), an American financial services company, hosts a Shariah compliant index too, but on the Toronto Stock Exchange in Canada due to the Islamaphobia rampant in the United States. But of course, international companies are indifferent to any single country's social problems, and in your new pastime as an international speculator you will get the same luxury too and exemption from the political spectrum.

S&P/TSX 60 information can be found here: http://web.tmxmoney.com/tmx_indices.php?section=tsx&index=%5ETXSI

Business sectors prohibited from the Shariah index include: Gambling, Pornography, Tobacco, amongst others.

In the United States, the concept has been renamed "B-Corporation" (a play on the federal term C-Corporation and S-Corporation), and has garnered enough of a movement that several states have created these as entities people can actually register them with the state, but these are not recognized as "B-Corporations" to the federal government.

Shariah compliant investments will be easier to find worldwide, due to the popularity of the associated religion.

share|improve this answer

One of the best things you can do for this purpose, while getting a modest ROI on a passive investment, is invest in a company that profitably does whatever you want to see more of.

For example, you could invest in a for-profit company that sells needed goods to low-income people at lower prices. Something like Wal-Mart, which is one of the most effective anti-poverty engines in the US. You might also say the same of something like Aldi (owner of Aldi stores and Trader Joe's), which is a discount store chain. This is true even though a company like Wal-Mart is seeking to make money first. Its customer base tends to skew heavily towards low-income consumers, and historically to rural and elderly consumers. When Wal-Mart is able to provide food, clothing, appliances and the like to poor people at a lower cost, it is making it marginally less painful to have a low income.

Peter Suderman can explain why Wal-Mart is a humanitarian enterprise:

  1. Walmart’s customer base is heavily concentrated in the bottom income quintile, which spends heavily on food.

  2. The bottom income quintile spends about 25 percent of income on food compared to just 3.5 percent for the top quintile.

  3. So the benefits of Walmart’s substantially lower prices to the lowest earning cohort are huge, especially on food.

As Suderman points out, this view of Wal-Mart dramatically lowering prices that low-income people pay for food was corroborated by an Obama adviser.

That's just one company. You can pick the industry and company that best suits your personal preferences.

Alternatively, you could invest in something like Whole Foods, a company with multiple missions to improve the planet and the community, in addition to the more typical mission of being a prosperous retail chain.

Of course, as a general proposition, a less than entirely altruistic, charity-inclined investment doesn't need to be targeted at those with low incomes or at saving the planet. You could invest in almost anything you think is good (yachts, yo-yos, violins, energy production, industrial inputs, music performances) and the company will take care of making more of that good thing. You didn't say whether your goal was to help the poor, the planet, arts, sciences, knowledge, community, or whatever.

What I understand you to be saying is you are willing to accept a lower ROI in exchange for some warm-fuzzies from your investment. That seems perfectly valid and reasonable to me, but it makes it much more subjective and particular to your tastes. So you'll need to pick something that's meaningful to you. If you're going to trade ROI for positive feelings, then you should pick whatever gives you your optimal blend of emotions and returns.

Alternatively, you could invest in something stable and predictable to beat inflation (some sort of index or fund) and then annually use some portion of those profits to simply give to the charity of your choice. Your investment and your charity do not necessarily need to be the same vehicle.

share|improve this answer
6  
"Wal-Mart is a humanitarian enterprise" - I know what each of these words mean, but I've seen them in this sequence before. And I believe that more small businesses were destroyed by this company than any other. I don't believe buying WMT stock is what OP had in mind. –  JoeTaxpayer Apr 25 at 15:28
1  
Politically incorrect, but true about Walmart. +1. –  Pete Belford Apr 25 at 15:59
1  
@JoeTaxpayer - All companies serve people. A company that distributes food and clothing to millions of people serves humanity. The fact that other businesses closed does not alter this equation. Charities displace each other, companies displace each other, romantic partners displace each other. If anything, the fact that so many businesses closed suggests that the replacement was superior in the eyes of a critical mass of consumers. I'm also not sure why we should consider the needs of businesses above the needs of consumers. –  NL7 Apr 25 at 16:00
1  
If a charity went to millions of low-income people and gave them a 5%- price-cut voucher good for all their groceries for the next decade, we'd call it an enormous act of charity. I don't see why we shouldn't also praise Wal-Mart's aggressive price cutting, especially since it is equivalent to something more like 25% price savings for food consumers. –  NL7 Apr 25 at 16:08
2  
I have heard this argument before, but what about Wal-Mart's place in creating low incomes in the first place? Not just employees and communities, but for their suppliers? –  MrChrister Apr 25 at 16:46

There isn't going to be one right answer, but LessWrong has some posts on effective altruism you might find helpful. They also link to a TED talk

share|improve this answer
    
Can you summarize the contents of those links, if possible, so that your answer is still useful even if those links go dead or change? –  John Bensin Apr 25 at 23:46

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.