ModVegan’s Guide to Vegan Investing

How should I invest as a vegan? This is a question I’ve been asked a few times, and I’m excited to finally be exploring vegan investing with you!

Socially and environmentally responsible investing is a hot topic these days. Currently you can find multiple funds that specialize in socially responsible companies. Rather than suggesting a specific fund, in this video I explain why saving and investing is important (especially for activists) and discuss several different strategies that you might want to combine as part of your investment portfolio.

 

 

Index funds and Exchange Traded Funds (ETFs)

I am personally a huge fan of broad market index investing. Index investing allows you to own a small portion of every stock in an index, rather than attempting to pick individual stocks. Many companies now offer index mutual funds (which are great for beginning investors) and ETFs. ETFs, or exchange traded funds, are much like mutual funds, but you can buy shares in an ETF in the open market and trade them much like stocks. If you think you might be tempted to trade ETFs, it’s probably better to stick with Mutual Funds. I prefer ETFs because they’re very liquid, but this can be a big disadvantage if you are the sort of person who will be tempted to buy or sell ETFs based on market information – this sort of defeats the entire purpose of index investing.

Index investing spreads your risk and frees your time so that you can focus on the issues that matter to you most, rather than constantly watch your portfolio (which is a recipe for investing disaster, since most investors aren’t disciplined enough to sit back and watch the stock market plummet without selling off their shares out of sheer panic). Index investors are exactly the opposite of day traders.

If Index investing interests you, I’d recommend looking at the low management fee funds available through Vanguard. Vanguard has some of the lowest management fees in the business, which means you get to keep more of your money!

Socially responsible investing

Nothing beats index investing in terms of simplicity. But you also have the option of investing in a fund that targets socially responsible companies. A fund like this usually tries to choose companies that have excellent track records for social responsibility and environmental initiatives. Unfortunately, if you apply a strict standard, the truth is that few companies will actually meet the true standard. In my personal opinion, this approach can end up much like a form of  “greenwashing”, where companies with mediocre to weak policies are rewarded for pretending to care (perhaps pretending is a bit harsh, but it’s a real risk). For example, many energy companies make the cut, and while I realize that there are energy companies that are attempting to improve their policies, I wouldn’t want to give them an outsized share of my investment.

And greenwashing is sometimes the least of the problems. A popular “community values” fund sold by RBC (a large Canadian Bank) contains a large investment in Manulife stock. I’m curious if they are concerned that Manulife was just fined $1.15 million for violating anti-money laundering reporting rules? I don’t have much faith in their methods if companies that violate the “proceeds of crime and terrorist financing act” are considered exemplars of “community values.”

For this reason, I’m not really going to recommend these funds for vegan investing. You might be able to find an excellent one, and I’d be happy to hear about it. But I honestly think if you’re going to focus on a small number of individual stocks, you might as well pick them out yourself, rather than relying on a targeted fund.

Picking individual stocks

If you prefer, you can also personally select individual companies that have values similar to your own, This can be tricky, as most companies try to portray themselves as environmentally sensitive, etc. If you do choose to go this route, be sure to read through the material on the company carefully, and play close attention to the corporation’s financial stewardship – chances are if they aren’t good stewards of their financial assets, they are unlikely to be socially or environmentally responsible, either.

Finally, there is only one publicly traded vegan company that I know of. That’s Tofutti (Ticker symbol: TOFB). I don’t consider it a great stock, but if you want to invest in vegan companies, there aren’t very many options. Honestly, I would personally spend my money on vegan food, and use my savings to invest in a broad market index fund.

I hope this gives you some ideas for how you might consider adapting your investing portfolio to your vegan values. I personally feel that index investing is the best option, even though it seems like the “least vegan” option mentioned in this post. Of course, if you buy shares in an index, you’ll end up owning small amounts of companies that you disagree with. But, on the other hand, you will have more time and energy to devote to other parts of your life (like activism) and that is valuable in itself.

If you choose to go the route of picking individual stocks, just be aware that there are precious few publicly traded “vegan” and “green” corporations. It’s true that there are some individual companies, like TESLA, that have loudly proclaimed their green values. But you might be forced into a situation where you are putting all your funds in just a few investments, and that is risky. So you might still want to invest most of your money in an Index fund or ETF, and then put the remaining 10% or so of your funds into your favourite companies.

Final thoughts on vegan investing

As a lifetime finance enthusiast, I can tell you that it’s very easy to get carried away with the fun of the stock market. But it’s important to remember WHY you are saving and investing. If, like me, you are pursuing financial independence, then your investments should reflect that. You want stable, long-term investments that you can hold for a lifetime. For this reason, I believe Index funds are nearly always the best investment. Of course, you always need to speak to an investment professional before you decide what to do with your money!

Thanks so much for watching!

Why save? Isn’t that just for rich people? No! Biggest misconception ever. If you are on the sense about saving, please read Your Money or Your Life by Vicki Robin and Joe Dominguez. It’s the classic book on financial independence, written by a seriously down to earth couple.

If you’re interested in saving and investing, I also strongly recommend this book by John Bogle, the founder of Vanguard:
The Little Book of Common Sense Investing.

Special thanks to all my Patreon supporters, especially Richard, Genevieve and Jess for their continued generous support!

2 Responses to “ModVegan’s Guide to Vegan Investing

  • Mike Smith
    2 months ago

    Hi Margaret. I would like to know your opinion about how to invest with a decreasing capital.

    Suppose that someone has a capital, and he doesn’t want to get to pursue financial independence, but to give donations every year to animal rights charities. So the capital would go decreasing. This person wants to waste that capital through 20-30 years, so he would finally live with a retirement pension. Ideally the capital would be zero when his retirement begins.

    What differences do you find for an investing strategy in this case?

    I guess that it’s interesting to assume less risks, because there is not a pressure to get financial indepence.

    • I suppose it would depend on what you want. If someone does wish to do something like this, the easiest way would be planned giving to an animal charity. If they wanted to have the greatest impact (and were great investors) they would carefully invest and leave the money to a charity when they were gone, since the power of compounding would result in a greater contribution.

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