I am concerned about the future of life on this planet, humanity's future, pain, suffering, etc...

Naturally, I am also concerned about own family's financial well-being.

If I would want to invest in mutual funds, the dilemma is:

  • Should I invest in a fund which excludes 'bad' companies from the portfolio, possibly including oil, weapons, etc... which I don't want to support, and focuses for example on green energy and stuff like that? This way I am supporting causes with my money. The expected return of these funds are generally lower, that's the cost of this decision.

  • Or, should I invest in a fund which includes said evil companies, and does not differentiate based on what given companies do, but only based on stock performance? It could be argued that since I am buying stocks already on the market (not IPO), I am not supporting given company, or only to a very minimal extent (see related question). Then I could donate the surplus via charity to causes I believe in (like, for example, a foundation that deals with green energy research)

  • 1
    This is a great question but I'm not sure anyone can really provide an answer. It is likely to depend on the specifics of the individual companies you invest in and the effectiveness of your individual charitable giving. Also, it's not clear this is really a personal finance question so much as an ethics question.
    – BrenBarn
    Sep 22 '15 at 19:02
  • I think this boils down to a personal evaluation of net social good and how soiled you're willing to feel, with purely personal weighting of each factor, which means I regretfully have to vote to close. A question about how to get information to support this decision might be on topic.
    – keshlam
    Sep 22 '15 at 21:20

You question is very hard to answer as it is tough to put a value on how much bad your added investment in evil companies would cause and also how much value the charities add. However, there has been a bunch of really good work on socially responsible investing in general. This paper might be too technical for some but the conclusion section is very readable and clear.

The big worry about socially responsible investing from a financial standpoint is that it will lower returns in the long run. The paper above and others show fairly clearly that as long as you only exclude a few classes of stocks and still have a fairly broad base that the expected returns are similar. The main issue though is some socially responsible funds have much higher fees.

So the usual advice applies, do your research to make sure your investments are well diversified and have low fees. As long as the index is fairly broad you can consider the difference between the fees on the socially responsible index and investing in a more common index as the long run cost. Then you can balance that cost and having more money for charity against the benefits of not investing in evil companies.


I once had worked for Koch Industries. I attended a meeting in which Charles Koch said 'do well so that you can do good'. I like that philosophy. It means make money (even if it is from 'bad' companies) so that you have the means (money) to do good things for others. Bill Gates has made money and is now trying to do good with it.

You have better control of how your money is used if you manage it yourself. If you let some faceless company manage it you are never quite sure that they are really helping others.

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