happy man at desk reviewing investment portfolio

PAX Investments: Feeling Good About Your Portfolio

Financial Planning, retirement Nov 16th, 2020 by: Darryl Lyons

What makes a good investment? If you asked 10 people this question, you’d probably get 10 different answers. 

Of course, there are some non-negotiable traits we can all agree on. A good investment should be well-diversified, carry an appropriate level of risk, and help you reach your goals. But what else? 

For many people, a good investment should make your conscience feel good. It should align with your values and be something you’re proud to pour your money into. 

Believe it or not, investing according to your conscience is possible, and it’s a growing trend that I’m personally excited to see. As the founder of PAX Financial Group, I’m proud to be one of the investment firms in San Antonio to embrace this movement.

 

Why Should You Invest According to Your Conscience?

When you invest in equities, you’re investing in ownership. You’re putting your money into a business that will hopefully go on to make you more money. Doesn’t it make sense to want to believe in that company’s mission and stand by its practices?

I talk to clients all the time who don’t just want their money to produce a financial return. That’s not enough for them. They want to produce a return and feel good about what they’re investing in. 

Really, this shouldn’t be too much to ask. You shouldn’t – and no longer have to – choose between investing in a way that aligns with your conscience and securing your financial future.

 

Want to learn more about Socially Responsible Investing? Contact PAX Financial Group and join the movement.

 

3 Types of Socially Responsible Investing (and How to Choose the Right One for You)

Socially Responsible Investing (SRI) is a process that involves screening investments to exclude any that don’t align with your values. It can be traced back to the founder of the Methodist movement, John Wesley, who urged his congregation to avoid companies related to alcohol, tobacco, weapons and gambling. 

There are 3 major subtypes of Socially Responsible Investing. The one that’s right for you depends on your values, beliefs, ethics and goals. Here’s a brief overview of each and who it might be best for: 

 

Biblically Responsible Investing (BRI)

Best for: Christians who want to honor God with their investments.

Biblically Responsible Investing – also known as faith-based investing – allows investors to build a portfolio that aligns with their Christian values. It does so by avoiding companies involved with alcohol, tobacco, gambling, pornography, abortion and LGBTQ activism. 

For more on what this looks like, read our recent blog post: A Guide to Faith-Based Investing: 3 Steps to Getting Started.

Filtering through millions of companies to find faith-based investments that fit with your values can be an overwhelming process, but a financial advisor can help. At PAX Financial Group, we can use different screening tools to filter out investments related to the pornography, alcohol and abortion industries, among others.

 

ESG Investing

Best for: Socially conscious individuals who want a portfolio that focuses on people, profits and the planet. 

ESG stands for Environmental, Social and Governance – 3 metrics that investors can use to determine a company’s risk to sustainability. 

Here’s a rundown of what ESG means: 

  • Environmental relates to the company’s climate-change policies, carbon footprint, greenhouse gas emissions and other effects on the environment. 
  • Social references factors that look at how a company treats its employees. Does it value diversity and social justice? Is there a focus on workplace safety?
  • Governance refers to a company’s board of directors, compensation model and how the business is run. 

ESG investing analyzes a company’s business practices – along with its financial statements – to identify any potential risks. An investment is then given a score, with higher scores having the potential to produce better returns.

Again, doing the research on your own can be complicated. If you’re interested in this strategy, PAX Financial Group can help.

 

Impact Investing 

Best for: Investors who want to produce “a positive, measurable social and environmental impact alongside a financial return,” according to the Global Impact Investing Network.

Impact investing is a bit different than faith-based and ESG investing because it’s typically reserved for institutional investors. Instead of investing in publicly traded assets, an impact investor may put their money in an organization aimed at bettering society or the environment. 

Impact investors will typically pick the social issue they care about most, such as poverty, clean energy or education, and then invest in a company that’ll make measurable strides toward solving that issue. 

Even though impact investing is traditionally reserved for institutional investors, it’s not completely off the table for individuals. Several ESG mutual funds with a focus on impact investing have surfaced over the years. You can use tools on your own to find these companies, or you can reach out to an investment firm, like PAX Financial Group, that can take on the job for you. 

 

Does SRI Have Lower Investment Returns?

If you’re new to the concept of investing in a way that makes you feel good, your next logical question may be, “How will this impact my return?” 

This is a valid question as many investors assume they’ll pay a premium for investing according to their conscience. 

Luckily, there is a ton of industry research that shows that SRI returns are comparable to traditional stock market returns. Even better, some sustainable funds have a 20 percent smaller downside deviation than traditional funds, meaning they may offer lower market risk. 

 

Let Us Help You Build a Portfolio That Makes You Feel Good

Investing in a way that aligns with your conscience is a win-win. Not only do you get to make the most of your money by earning a good return, but you also get to support companies with like-minded values. The only real downside is that it can take a while to dig through your options and find the right investments for you. 

The good news here is we can help. PAX Financial Group is proud to be one of the investment firms in San Antonio that specializes in helping investors build a portfolio that aligns with their values. I would personally love to discuss any causes or concerns that are dear to your heart and help you build a portfolio based on these goals.

Contact us, and get the conversation started.

Retirement Guide - PAX Financial

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: Investing involves risk, and 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 or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.

Darryl Lyons

Darryl Lyons

CEO and co-founder of the PAX Financial Group, Darryl Lyons has been a licensed professional in the financial services industry since 1999. A lifelong Texan, Darryl began his career in the financial sector just one day removed from earning his bachelor’s degree in corporate financial management and accounting at St. Mary’s University. Throughout his career, he has won awards for recruiting and development from Fortune 100 companies. In January 2007, he chose to begin and develop his independent practice. He joined Andres Gutierrez and Joseph Schuetze to form the PAX Financial Group. Darryl also served as the Chairman for Brooks Development Authority. Shortly after his service, Mayor Julian Castro, named a park “The Darryl W Lyons Park” in honor of his service. He was named to the 2010 San Antonio Business Journal’s “40 Under 40 Rising Stars,” which honors people making a difference in business and in the community.