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Align Your Money and Your Life with Values-Based Investing

Financial Planning, retirement Apr 11th, 2022 by: David Alvarez

We’ve been talking a lot lately about different types of themed investing, like faith-based investing and *Biblically responsible investing. Now let’s explore how values-based investing can be incorporated into your wealth management plan.

  • Values-based investing defined
  • How to get started with VBI strategy
  • Comparison to Faith-based Investing
  • Making VBI work for you
  • Choosing a Values-based financial advisor

 

Investing with a conscience is a quickly growing trend, thanks in part to millennial investors who tend to be socially hyper-aware and are starting to get serious about investing and saving for their retirement.

Like other faith-based and socially responsible investment strategies, values-based investing is another investment approach that ties together the wealth-building and social impact aspects.

NEED A HAND IN SELECTING A FINANCIAL ADVISOR IN SAN ANTONIO, TX, WITH THESE MORALS? THIS GUIDE WILL HELP!

 

What is values-based investing, and where does it fall on the spectrum of themed investing approaches?

When you practice values-based investing, you typically take one of two paths: 

  1. The inclusive path: where you either look for stocks and funds which have positive environmental, cultural, social, or governmental impact
  2. The exclusive path: in which you filter out investments that have more of a negative impact. 

The values-based investment strategy provides the ultimate power to align your money with your life's values.

 

How to get started with your own values-investment strategy

The first step is to assess your values. So, what are yours? If you don’t already have a comprehensive list of your values, do not worry. It’s not the kind of thing most people give too much thought to until they need it. 

You can begin to identify your personal values by asking yourself questions like:

  • What do I want to stand for?
  • What are my priorities in life?
  • What issues are most important to me?
  • What concerns me about the world today?
  • What kind of corporate behavior do I want to reward?

With the answers to these questions, you should distill a list of ideas, issues, and concerns that you can then convert into a directory of your personal values.

Once you've established your values, you can then decide what type of investing strategy best suits you.

Although it’s not easy and probably not for the novice investor, you can try to DIY by investigating potential investments, learning about each company and its mission, philosophy, business practices, environmental impact, etc. Some companies publish corporate accountability or responsibility reports, which may be helpful. Be mindful of the source of this information and whether or not it is reliable and trustworthy.

If you’re not into doing it yourself, you can work with a financial professional specializing in this type of investing. They will do much of the legwork for you and can make recommendations that align with your values. 

The world of investing alone can be challenging and complicated without adding the extra layer of trying to implement values-based investment strategies for your personality type. So there’s no shame in asking for help

Talk to your financial advisor to see if values-based investing would work for you, and if he or she can help you get started, or if not, if they can point you in the direction of someone who can.

The basic idea is that you’ll want to invest in companies that align with your personal beliefs, whether it’s employment equity, animal welfare, environmental impact, diversity, health and wellness, executive compensation, gender equity, human rights, and so on. 

 

Is values-based investing the same as faith-based investing?

The principles of values-based investing may not always fall in line with certain religious beliefs, which differs from faith-based and Biblically responsible investing strategies

Values-based investing takes a more liberal and secular perspective to investments. In contrast, the investment approaches rooted in religion are usually reasonably rigid in investing only in companies that uphold certain religious fundamentals and avoid those that don’t.

 

How to make values-based investing work for you

No matter which type of investment strategy appeals to your personality and goals, it's important to allocate money based on these factors to align with who you are as an individual. 

Note: Avoid investing in anything you don’t understand, and if you have questions or need clarification, ask.

It’s also essential to maintain a diversified portfolio. It would be unnecessarily risky to invest 100% of your savings in values-based investing or any other type of social impact investing. Rather, experts advise around 10 or 15% max.

And don’t get so caught up in the impact and values part of value-based investing that you lose sight of building a nest egg for your retirement

 

How to choose a financial advisor in Texas to help with your values-based investing

The best place to start is by asking friends, neighbors, or family members for recommendations of someone they’ve worked with. If that doesn’t turn up any results, or their references work with a different type of client, search the Certified Financial Planners Board or National Association of Personal Financial Advisors for someone in your area.

Narrow down your list of potential candidates by determining what services they offer, learning how they are compensated and about their fee structures, whether or not they are a fiduciary, and who their typical clients are.

Then meet with the advisors, and ask anything – especially the tough questions. Trust your judgment and gut. It helps to get communications in writing if you are not working with a fiduciary who has your best interests ahead of their own.

Remember to ask about their values, and whether they have values-based investing experience. Let them know this is a strategy you’re interested in trying out if it is. 

When you’ve got one or two advisors in mind, confirm their experience and credentials by reviewing their history with the Financial Industry Regulatory Authority (FINRA) Broker Check or Securities and Exchange Commission (SEC) Advisor Check

SELECT PAX – A REPUTABLE FIDUCIARY IN SAN ANTONIO, TX!

Schedule a no-obligation consultation here, or call PAX today! 

Want to learn more about Biblically Responsible Investing? Download our complimentary eBook.

 

Biblically Responsible Investing | PAX Financial Group, LLC

 

This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Biblically Responsible Investing(“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product and should not be relied upon as such. 

David Alvarez

David Alvarez

David Alvarez, CFP, is the son of Armando and Teresita Alvarez, both of whom immigrated to the U.S. from Cuba as children in 1962. David grew up in San Antonio, attending St. Gregory the Great Catholic School and Antonian College Prep. Following high school, David went to Northwestern University where he studied Economics and History, played baseball and met his wife, Meredith. After more than a decade spent in New York and Chicago, they moved back to San Antonio in 2012. David and Meredith have two boys, two dogs and no idea what they will do if their house is ever quiet.

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