In our new weekly series, readers can email in with any financial dilemma and enter the Money Moral Maze.
Are your friends racking up big drinks tabs and then trying to split the bill equally, is your partner spending overspending on your joint account? No matter your dilemma, email in anonymously, and i‘s money and business team will do our best to answer.
This week’s dilemma can be found below – email us at money@inews.co.uk with yours.
The dilemma
I’ve got my money invested in a fund that performs well – I’m happy with the returns I’m getting and it’s setting me up well for my retirement. I’ve never really paid much attention to where the money is invested but through a friend I’ve realised recently that it puts money into both cigarette and arms firms.
I’m less happy about this. Clearly I don’t support things that threaten others’ lives. What should I do? Should I look to put my money elsewhere?
Jessie Hewitson, i money and business editor, says the reader needs to focus on their own personal investing goals
I have one answer to this question that I would like to give, which is “yes, you should look to move the money elsewhere.” And then I have the other more honest answer which is that I do have money invested in some of these areas.
Before my house purchase decimated my (mostly invested) savings, they were in a well-known fund. It made my savings grow very nicely, and I avoided looking too hard into what it invests in.
I do believe we should not invest in anything that kills people – which means tobacco firms, arms manufacturers – but I’m a hypocrite, as the fund above has money in in tobacco, and if I looked at the fact sheet in more detail (which would tell me what else it was invested in) I would not be surprised if there was an arms manufacturer in there too.
My excuse (and I’m aware it is one) is that I have been late to pension saving, only starting properly only in my late thirties, and I’m very much in catch-up mode. So my savings at the moment are focused on profit.
This means ethical investing isn’t my number one consideration, partly because I don’t feel financially comfortable enough to remove profit as the primary goal.
I’m not alone: ESG investing (ethical, social and governance) boomed over the pandemic years when several prominent funds, like Baillie Gifford’s Positive Change one – which I have also been invested in – saw returns that rivalled any of the non-ethical ones.
Cue loads of money pouring in, but the question is: were people interested in ethical investing, or were they following the money? The likely answer is both.
My get out clause is that my husband is a scrupulously ethical investor and I like to think that gives me a little slack to focus on profit for the family. It’s not right, but then it’s hard not to focus on the money in tough economic times.
Callum Mason, i money and business reporter, says the reader’s ethics are as important as their returns
I suppose part of you wishes you had never found out where the fund you have invested in puts its money. That way, you would have been able to continue with your strong returns in blissful ignorance.
The reality is though, ethics are clearly important to you, as you state in your dilemma. Now you know where your money is, you’re not going to be truly happy with the returns it makes.
The situation is this: investing ethically and making good returns are not mutually exclusive. There are plenty of strong options for investors with a social conscience, as outlined in Jessie’s answer above. Why not take some time to have a look at these options, and consider one of them instead?
If you’re having to pose the question of whether you should move your money, it suggests to me that your decision is already partly made.
Financial returns are very important, and you may question why you would change a winning formula, but it sounds like you don’t want to be backing organisations that you do not agree with. Why not back those you do agree with instead, while still making money as you have been doing.
You’ll feel better about it in the long run.