Ethical investing’s all about matching your beliefs to those of the company investing your money: it’s about wanting to make the world a better place. Ethical investments are also called Socially Responsible Investments (SRIs).

The way you feel about some things can have an impact on the places you would be happy to invest your money – like tobacco, or companies that carry out animal testing. If you don’t want your money to be used in these types of business, then ethical investments may be the ones for you.

So what makes an ethical investment, ethical?

OK, you’re unlikely to find gun manufacturers, nuclear power firms or publishers of pornography in an ethical investment. Tobacco manufacturers, gambling enterprises, oil and petrochemical refineries, or businesses that employ children are also unlikely to be on the list. On the other hand, you may find that companies are included in an SRI if they have pro-active policies in some areas. Perhaps they’re passionate about community projects, or they have a big ‘green’ policy – there are different ‘shades of green’, when it comes to ethical investments, but an independent financial adviser (IFA) can tell you more.

The fund managers who run ethical investments simply add a mix of positive and negative factors to their decision-making process, as they decide which companies they’d like to invest in on your behalf. And just because something’s ethical, doesn’t mean it’s less (or more) likely to help your money grow or be a risky investment.

As you can see, it’s important to know the facts before you make a decision about investing in SRIs. An IFA can tell you more about ethical investing, and many IFAs now offer advice on ethical investments as a specialist service.

Questions you might like to ask an IFA…

How ‘green’ is the fund?

How much are the charges, and what are they for?

How would this investment help my plans, and which levels of risk are involved?

Which companies are included in the investment I’m looking at?