Investing for good: possible? What do folks do?

Dunno about America, but there is a local coop group near me that builds solar farms and let's members invest. You get a bit of the profits and you've helped fund a good thing.
The returns aren't guaranteed, but then again nothing is.

It's hard to "do good" while also making a profit. But it's a little easier to not be evil, not support evil, and still be responsible about earning enough to support yourself when you can't work (now or when you're old) or have an unexpected need for cash. For instance there are socially responsible stock-market funds that exclude the worst companies, but you'll want to check for your priorities like climate or worker exploitation because they vary in what they make compromises on.

Yep, if you're making money from stocks, someone else is losing that money because you're obviously not creating value by investing.

Just because the "winner" (thief) is separated by layers of abstraction from the "loser" (victim) doesn't make it ok.

So no, there's no such thing as ethical investment.

I was going for "the ownership class in capitalism is never ethical" but I'll take what I can get.

Its a tough one. Its a bit riskier because the safest thing is to be broadly diversified. Which is hard the less you have to invest. There at least use to be a microloan thing where they pool peoples money to use to lend to individuals in poor countries to buy things that would allow them to make money. sewing machine, bicycle, whatnot. It had this structure where they used the community to sorta police it (loans would not come to the community if payments were not being made). They charged interest enough to make up for any defaulting or such and still make some profit. Besides that there are a variety of moral funds that have specific rules but what they do is based on the fund. some avoid companies contributing to climate change while others avoid alcohol, cigarettes, or gambling and maybe another avoids weapon manufacturers. The thing is from what I can tell its hard to find one that is not investing in something that would be considered bad to another. You could straight up buy stock in businesses you do not think are to bad.

Check out the Calvert series of ETFs in the US, they have rigorous screening but still give you good diversified exposure to their targets. ICLN invests in clean energy worldwide, GRNB or BGRN target green bonds. CCSO is an active fund seeking to invest in climate solutions that are more industrial or address broader areas than just clean energy.

I mean, broadly speaking, you're always going to be a drop in the ocean as an individual investor. So you're not really investing ethically so much as investing to feel better about your choices.

That said, if you're interested in operating as a VC or Angel Investor, you can find (or even cultivate) entrepreneurs in your neighborhood. The risk is high. And the ROI probably isn't great. But you do get the satisfaction of contributing to the community, encouraging commerce you find ethical, and "job creating" in the literal sense.

I do feel like this treads the line between investment and simple philanthropy, though. Certainly not something I'd recommend for someone with a portfolio in the four or five digits, much less someone who has this money earmarked for retirement or some other explicit long term savings goal.

The Intelligent Investor, by Benjamin Graham

Required reading for any investing newbie.

Idk if this gets you ethical investment. But it at least lets you focus your investment cash on businesses you can expect will see a material ROI, rather than just throwing money into enterprises with a glitzy front page and sour financials.

But rather because if all the ethical people invest in Solar Panels and Gender Affirming Care For Everyone Inc, then all the ethically neutral money (which is almost all of it) will simply shift more towards Torture Palistinian Orphans Inc.

So, there's reasons why "ethical investing" doesn't work well in practice, but this isn't really one of them. Industries enjoy a networking effect and efficiencies of scale. Lowering the investing costs of a target industry will naturally improve their growth prospects. And a rising stock price can lure in growth-focused future investors, because investment cash is often dumb and prone to following trends rather than raw performance metrics.

If Good Guys Banking plans to throw $50B into solar panels over five years, that will drive up the price of solar stocks, drive down the cost of solar panels, and proliferate the number of installers and maintenance techs, all of which improve the long term economic prospects of the sector. Neutral investors will want to beat Good Guys Banking to these stocks (accelerating growth of these companies, employment in the field, etc). Retail customers will see more advertising, more local retail sales, and more of their peers getting panels installed, which will induce more spending. And competitors will seek to diversify into Solar in order to capture these gains.

Your real problem is that you're not a bank with $50B in investing cash to toss around, much less the sophistication to know which solar companies stand the most to benefit from the sudden infusion.

(1) Small local investments.

(2) Investing in yourself and your own business.

Definitely also good choices. But for the same reasons. Local investment has the double-benefit of ramping up your local economy and providing yourself and your neighbors with more privatized amenities. But it is also riskier. If your neighborhood goes into a downturn, you're both at risk of unemployment AND big investment losses.

Self-investment has the same problems, only magnified. You're putting all your eggs in one basket. It's also much more of a tax on your time, as spending more on your own business means managing more assets and staff directly. If you don't see profit in this investment, what you're doing isn't going to compound your savings.

Thanks to both!

So, there’s reasons why “ethical investing” doesn’t work well in practice

Could you say a bit more on this?

I'd like to tell myself that ethical investing would also... actually do stuff? Move numbers?

Very difficult for an outside investor to gauge the ethical practices of a business outside the broad brush stuff (war bad, solar good, etc)

The volume of cash you're investing is likely a rounding error on a rounding error for the business, nevermind the industry as a whole, so you're unlikely to shift behaviors with your choices

Ethical investing is riff with affinity scams.

It's hard to gauge long term net benefits of an investment decision, which can lead to "Longtermist" style behavior.

If you've got enough money, and you don't step into any big scams, sure.

But the first is hard and the second is arguably even harder. The Tech Sector was flush with greenwashing under Obama, for instance.

Just stay with ETFs. If you have a lot of money (unlike me) and too little experience in investing (just like me), you can either place a safe bet on ETFs, or you'll see your hard-earned savings disappear into thin air right the fuck quick.