Why You're a Socially Responsible Investor

It seems in the current market what goes up, must come down. The Dow Jones Industrial Average was up more than 900 on Monday, then down more than 700 yesterday and if you're strong enough to keep your stomach at the very least it can rattle your nerves.

So let’s review why you invest the way you do. As we’ve mentioned before, socially responsible investing provides the investor with a buffer of sorts. Not against losses in your portfolio, but against the temptation to sell in a panic.

Socially responsible investors have picked their stocks or their funds because they are fundamentally good companies and because they meet a certain list of personal priorities. They may be companies that have positive environmental records. Perhaps they’re corporations that promote progressive employee practices. They’re firms that don’t produce weapons or tobacco or they support human rights all through their supply chains.

Investors who choose companies such as those are not in the habit of jumping in and out of the market. They buy and hold. They think long-term. The companies or funds in which they’ve invested are not going to change their environmental, social or moral policies because their stock price has fallen.

As long-term investors you should also have a plan. You’ve allocated your assets in stocks, bonds, cash and perhaps some commodities. You may also invest on a regular schedule, such as dollar-cost averaging, in which you place a certain amount of money in the market every month or quarter or whatever your timetable. That would mean you’re probably buying the shares of your preferred companies or mutual funds at a bargain now compared to even just a month ago.

Remember why you’ve placed some of your money in the stock market. Over time it provides the best return out of all the major asset classes. Look to the future. There’s an enormous amount of uncertainty regarding the economy right now. Don’t try to time a bottom. Simply ask yourself if the companies that you own and which you know the best will be trading at today’s levels a year from now. How about in two years? Five years?