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Roth: How to pursue values-oriented investing
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Roth: Values-oriented investing for people who hate 'The Great Reset'

As the World Economic Forum’s "The Great Reset" playbook touts the very scary predication of “you will own nothing and be happy,” the best way to combat that is through doing the exact opposite: ownership via investment. However, with so many financial institutions moving from financial metrics to including social and other metrics (like ESG), how can you invest based on your values?

One recent query we received noted, “As a new investor, I don't want to send my money to the people wrecking my future, but I also don't want to not invest at all.” With that in mind, here are some steps to take to align your investing with your values.

Note and disclaimer: This is not meant as financial advice, just as a starting point for your research, and all financial decisions should be made carefully based on your goals, objectives, and risk profile.

Hire a like-minded financial adviser: During times of uncertainty is where financial advisers really earn their keep. A certified adviser who is a fiduciary will keep in mind your needs as a customer. Seek out an adviser who shares your values and understands the types of companies you do and don’t want to support.

Also, consider researching advisers who are independent and see if their firms have mission statements or initiatives that support or conflict with your values to find the best fit.

KISS: There’s a phrase in business and investing called the KISS principle: “Keep it simple, stupid.” The reality is that even the pros who invest day in and day out have a hard time beating the stock market benchmarks over long periods of time.

This means, for the equity (and debt) portions of your portfolio, using low-cost index funds that provide exposure to many companies and even those that mimic market benchmarks is often a good strategy for parts of your portfolio. Your adviser can help you decide which ones are the best for you and perhaps exclude any that may overexpose you to the types of companies you don’t want to be invested in.

Diversify your portfolio: In addition to the diversification an index or mutual fund can give you, you should have a portfolio that is diversified in terms of asset classes more broadly. One thing to consider is exposure to certain commodities. For example, whether gold or silver or another commodity, these commodities don’t have a point of view and aren’t susceptible to social-engineering attempts like “sustainable investing”!

Timing the market isn't your friend: When things are uncertain, it is tempting to get nervous and pull your money out of investments, like those in the stock market. A certified financial adviser will keep you focused on your long-term plan and remind you that studies have shown just how hard it is to time the market. If you don’t get back in and miss just the 10 best market days of each decade, there is a massive swing in your overall portfolio performance. Staying invested in a diverse portfolio over long periods of time works to create value for most investors.

For any individual investments, evaluate the financials first: While you may want to invest in alignment with your values, that should never be a priority over the quality of the investment. To the extent you are going to invest in individual stocks and bonds, for example, evaluate the business model and financial health of the business first. Once you have screened for that, you can then look to see if the business has values aligned with yours.

Consider alternative investments, where appropriate: If you are a more seasoned investor and/or qualify as a sophisticated investor, you will have access to a range of alternative and private investments that make it easier for you to get to know the management teams and assess their values. Also, building your own business or investing in real estate can also give you both control and returns, but as with all other investments, make sure that your investment is commensurate with your appetite for and wherewithal to take on the financial risk.

Also, be wary of some of the latest Wall Street investment “gimmicks” or areas with a spotty track record, like SPACs or Chinese companies doing reverse mergers into public company shell corporations. Unless you have deep knowledge and conviction around these investments, they have proven quite risky. If you don’t understand something, you shouldn’t be investing in it.

Building your wealth is the best path to economic freedom. While there isn’t today an easy source to quickly find all the investments that may align with your values and fit your risk profile, the above steps can help set you in the right direction.

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