Investing in the stock market is fundamental and essential, as there is no point in saving and not doing anything to make those savings work for you. Unfortunately, many people think investing in the stock market is unethical and immoral since it is “giving money to bad companies,” a company that invests in weapons, exploits employees, do not pay all the taxes they should, etc.
This article shows that people who think investing in the stock market is terrible can also support it since I will show you how to invest in the stock market ethically by investing in just companies, known as socially responsible investment.
What is a Socially Acceptable Investment?
The socially responsible investment consists of investing valued, in addition to the profitability you can achieve, the social and environmental impact of said investment.
How to Invest in Socially Responsible Companies
An option to practice socially responsible investment is to choose actions individually, using your criteria. However, another much more interesting is the use of responsible funds, of which the offer has been growing in recent years. Here is a possible example of an accountable fund, although I do not say it is the best.
My objective with the article is not to expose the socially responsible investment in detail because the truth is that I do not know it in excess, and I am not considering applying it right now.
The article’s objective is to show that there are investment options for many who do not want to know anything about the stock market because it seems evil, so here I leave the best source of information I have found. If you’re going to invest in the stock market and want to do it without putting your money in any company, then you must take steps in the right direction.
What is Passive Management?
Passive or indexed management consists of investing in the stock market using ETFs or index funds, which replicate the behavior of any stock index (for example, you could acquire a fund replicating the IBEX 35).
While someone who applies active management is dedicated to choosing actions individually to beat the market’s average return, someone who uses passive management buys index funds to match the market’s profitability.
Passive management has the following advantages:
· Low cost: Indexed funds and ETFs charge low commissions, and there are usually no sales or custody commissions.
· Great diversification: By buying a simple indexed fund such as the one in my portfolio, you can buy more than 1,500 companies worldwide.
· Little time of dedication: This is one of the most significant advantages of passive management and will focus on in this article. Making money in the stock market by spending little time is possible thanks to passive management.
Invest
As I said, passive management allows us to invest in the stock market, devoting little time and achieving more than decent returns. The profitability you can expect if you invest through index funds is the return on the index to which fewer fund commissions are referenced, usually between 0.2 and 0.5%. ( Here, you can see the historical profitability of the IBEX, for example).
Some investors practice active management and obtain returns far superior to the market’s. Still, they must dedicate hours a day to analyzing companies; even so, many fail.
I have two strategies, one based on passive management, buying funds indexed following a Bogle head strategy.
I continue this strategy because I believe beating the market in the long term is complex, and I want to invest in the stock market without spending much time. The most challenging thing is to start, so let’s see how to start making money on the stock market with passive management.
How to Make Money in the Stock Market
Let’s see how to start building a portfolio of indexed funds step by step, although there is something essential before. The first step is to decide if you will form your portfolio or if you prefer them to do it for you. It is critical to think carefully about the decision before you start since, depending on it, you will have to follow one way or another. Let’s see the advantages and disadvantages of each option so that you can choose the one that best suits you.
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