Purifying your investment
Just as important as purifying all things else, purifying investments is necessary for sustenance and healthy maintaining for wealth. Often this exercise is overlooked and is only visited when one hits a brick wall. Nevertheless, the ‘interesting’ new principle in ethical fund management is investment purification, and it is applied by a number of prominent wealth managers across the world.
What is it?
In a nutshell, it is the approach by which an investor can purify his returns from any fraction of non-permissible revenue he has gained from investing in a compliant stock. Relatable to ethical investing to a great deal, it is about being socially conscious when investing, by having an overarching set of guidelines to select a portfolio to have a more personalized result.
Purifying investment is often motivated by one’s religion. The earliest recorded instance of ethical investing was in America and was made by Quakers in the eighteenth century. The company restricted members from investing their time or money in the slave trade. However, today it is largely due to the social views of people.
Where to invest?
While there is a lot of emphasis on sustainability and being socially responsible, increasing numbers of investors are look at possible ‘permissible’ business. Such include businesses in sectors such as construction, telecom, and aviation, to name a few. Basically, you look at sectors that do not cause any harm due to its operations and outcomes. Areas to keep away from during the quest of purifying is on sectors such as alcohol, gambling, tobacco; those that cause potential harm.
Is it practical?
Although it might seem like a rather complex affair, the reality is that it is quite straightforward. On the face of it, finding a company that is fully socially responsible is challenging, and one might find that a small proportion of its revenue could be due to some activity that may not be acceptable. In the process of purifying investments, looked at is the revenue ration. If the revenue of permissible channels overpowers that of its opposite, it is a go!
What do you accomplish?
By purifying your investment, you will be pushing capital toward the more benign parts of the economy, although in a liquid stock market the effects are necessarily understated. No matter what your intentions, it’s important to fully research a company before investing. You must determine whether the investment is a sound financial decision by reviewing the company’s history and finances.