The stock market is filled with opportunities for investors looking to make a profit on their money. But every stock also comes with some risk.
There are so many red flags when it comes to investing ethically, and those who follow these principles know it’s important not to invest in anything or anyone that even has the potential to come under scrutiny for an unfair business practice.
Here are some things you should consider before putting your hard-earned cash into any given ethical stocks.
Lots of Research
Before you invest in a company, you should learn as much as you can about their history, their products and their business practices — and not just what you read on the company’s website.
A great first step is to comb through the company’s Securities and Exchange Commission (SEC) filings, including annual and quarterly reports, which can be found on the SEC’s website.
Other resources like Hoover’s Business Intelligence, Business for Social Responsibility and EthicHub.net can also provide a great deal of information about the companies in which you’re considering investing.
If you’re not willing to put in the time to dig for this information about each company you’re considering investing in, you might not be cut out for ethical investing.
The Basics: What Does the Company Do
What exactly does the company do? How does it make money? What does it sell? You want to dig a little deeper than the company’s mission statement or slogan to really understand what it does and how it makes money.
There are lots of websites that allow you to search businesses by their main products or services. You can also visit the SEC’s EDGAR website, which lists earnings reports, annual reports and other filings from major public companies.
You can also find a lot of this information on the company’s website or by searching Google or another search engine.
Their Ethical Values
Some businesses may be more ethically-minded than others, but that doesn’t necessarily mean you should write them off as an investment.
You can research a company’s ethical values by reading their mission statement, their company history and any other information about the company you find on their website. You can also search for the company’s name and “ethical” on EthicHub.net, which is a database of companies that have committed to upholding certain ethical standards in their business practices.
Where Is the Company Based and for How Long Has It Been Operating?
Some investors are wary of companies based in a country with looser regulations and higher corruption than the United States.
If a company is based in a foreign country, it’s a good idea to research where they’ve been conducting operations and whether they’ve been following the rules and regulations put in place by that country.
It’s also important to know the duration at which the company has been in business. Companies that have been operating in the same industry for a long period of time tend to be more stable than those that are fairly new to the field, but there are plenty of exceptions.
Summing Up
Ethical investing isn’t just a trend — it’s a growing movement that’s gaining traction as people become more aware of the businesses they choose to support and the potential consequences of those decisions.
It’s important to do your research before investing your money in a company, and ethical investing is no different.
By doing your research and following these tips, you can find great ethical stocks that can also make you money.
