Updated, March 30, 2017
Many investors could increase profits and assemble a
portfolio more in accord with their personal values if
they actively managed their own investments.
This opportunity is in part due to the vast resources of
the web. But particular knowledge is also essential for
successful do-it-yourself (DIY) sustainable-ethical investing.
sustainable-ethical investors can make big
financial gains from three main sources:
1) Huge potential savings on investment related fees –
particularly by favouring low-fee individual stock
purchases and using a discount broker.
Total annual fees for most investors using a stockbroker
or investment advisor usually range between 2% to 4% of
their portfolio’s value. These include account advisory
fees, mutual fund/ETF management fees, trading
commissions, and account activity fees.
But these seemingly small percentages quickly add up
to quite a lot.
Consider an initial
investment, 5% yearly nominal growth and
2.50% total annual fees. After 25 years, that investment
would be worth $44,956.02. However, dropping annual fees
to 0.5% increases the value of that investment to
$74,687.77. An additional gain of $29,731.75 or 66.14%!
sustainable-ethical investors may see even lower
annual fees than 0.5%. For example, they may have no
brokerage maintenance fees, and after creating their
initial portfolio might only make a few trades a year –
each costing just $7-$10 in trading commissions. This
reduces their annual fees to almost nothing.
2) The DIY
sustainable-ethical investor often trades less, again
resulting in lower fees. This is frequently due to the
‘loyalty’ they have towards their investments.
3) Better returns can be made by focusing on ‘higher
quality’ securities. It’s a controversial point, but
consider that most
sustainable-ethical investors’ personal values
concerning investments typically relate to
environmental, social and governance (ESG) activities of
companies. And the most comprehensive independent
research confirms that companies excelling on these
criteria frequently produce above average long-term
As an aside, there’s bad news and good news concerning
the usefulness of stockbrokers and financial advisors.
The bad: many studies show their investment
recommendations routinely produce below market
long-term returns. The good: studies also show that
stockbrokers and advisors are often valuable in helping
investors maintain savings plans and tempering their
emotions in turbulent markets. Such help generally
improves these investors’ long-term results. Hence, this
is still the best option for investors unwilling to
seriously engage in the type of DIY long-term investing
How much capital is required for DIY
to create a personal values-based stock portfolio? Well,
it is generally accepted that a diversified portfolio of
at least 10-15 stocks is preferable. Since it is easy
today to purchase small amounts of shares inexpensively,
the amount of capital required need not be large.
(However, for infrequently traded stocks the investor
may have to pay above market prices, particularly when
purchasing a small number of shares.)
How much time is needed? Initially, DIY
investing needs about 2-3 hours a week for 3-6 months to
create a portfolio, and then 2-3 hours a month over the
long-term to manage it. (And no math or financial
accounting skills are required!)
Therefore, effective and most profitable DIY
investing requires spending time both acquiring and
practicing some special knowledge and having a requisite
For this optimal DIY path, investors first determine their personal values,
then what industries they best align with, and finally
proceed to select companies in industries that have
been pre-screened by ethically-socially responsible
investment (SRI) rating agencies and indices,
ethical-SRI funds, etc.
Among the many sources for locating such companies
RobeccoSAM's Corporate Sustainability Yearbook 2016,
S&P ESG Indices,
FTSE4Good Index Series, and
Corporate Knights Global 100.
Also, numerous ethical-SRI
funds are found at
Morningstar Sustainability Rating for funds,
US SIF SRI
Responsible Investment Association (Canada),
YourEthicalMoney.org (UK), and
Choice Ethical Investing Guide (Australia). Upon
determining the funds of interest, a little further
research reveals their screened holdings.
After choosing the companies that appeal to them, DIY
sustainable-ethical investors research corporate social
responsibility (CSR)/sustainability/media reports, etc.,
on how these companies perform in relation to their
personal values. For this, it is best to create a
computer filing system and a process to collate the
relevant information as well as a methodology to ‘score’
each company with reference to their personal values.
Companies with the top scores in each industry make it
to the financial and performance-review stages.
With the resources of online brokers and specialized
free sites and internet search facilities, investors can
view how numerous financial/investment analysts
ascertain and envisage the profit potential for most, if
not all, of their selected stocks. After this step, DIY
sustainable-ethical investors can make their stock purchase
sustainable-ethical investing requires some work it can
pay handsomely. The process is engaging and fun too. But
the skills to do it effectively can be more quickly
acquired with coaching from those experienced in this
© Ron Robins, 2016-2017.
Ron Robins, MBA, has more than forty years of
engagement with ethical investing and is founder,
analyst, and tutor at
the Soul. To help anyone learn and gain
proficiency in DIY
sustainable-ethical investing he offers an
online private tutorial:
Creating A Profitable Personal Values-Based Portfolio.
To contact him, e-mail
or call 289-271-0873.