It takes a lot more than just assembling a list of vegan stocks to design an investment portfolio that aligns with your financial and ethical goals. After all, vegan investing is inherently complicated, and any plan that doesn’t take into account your willingness and ability to bear risk is unlikely to meet your needs over the long term.
That’s why we’ve assembled this guide. As an ethics-first asset management firm that specializes in helping clients align their financial resources with their ethical values, we have confronted, controlled for, and conscientiously responded to many of the issues that arise when trying to build vegan investment portfolios.
We want to make sure that knowledge is accessible to everyone who might need it because we’ve seen too many people make preventable mistakes with their investment portfolios, lose money, and lose hope as a result. So please consider this guide as a practical complement to the work that has already been done by groups such as Cruelty Free Investing, Vegpreneur, and VegFAQ.
We are also available to help you directly, regardless of how much money you have available to invest. You can always click here to schedule an exploratory meeting or click here to begin filling out our client intake forms in order to begin the process of working together.
Identify Specific Investment Goals
When they’re designed and managed thoughtfully, investment accounts can be powerful engines of personal and societal liberation. After all, building financial security for yourself is the first step in making sure that you have the wherewithal to support your community through thick and thin.
It’s tempting to skip to the sexy stuff (like picking stocks) but much more important to take inventory of your income, expenses, and assets before you do that. If you’ve got high interest debt from credit cards or student loans, paying off those balances is likely to be the highest-return investment opportunity available to you. This is particularly true if your interest rate is in the double digits.
Beyond this basic inventory, it is crucial to also examine what you’re trying to accomplish with your investment dollars. It’s common to be working towards many goals at once, so don’t worry if you’re hoping to buy a house, save for a child’s education, and investing to fund your own retirement at the same time.
It’s crucial to know that, though. Since the three goals above might occupy very different places in your planning. For instance, if you’ve just had a child and are looking to move to a bigger house, this has dramatic implications for your ability to bear financial risk, since you’d hate to lose the money that’s earmarked for such an immediate need.
Match Your Money With Your Goals
The stock market has a near-magical ability to turn money into more money over time. But vegan investors that are unprepared for personal emergencies are always at the risk that they will be forced to sell their investments at an inopportune time.
This can be profoundly damaging to your long-term financial wellness.
To see how, consider the example of Megan, a 45 year old single mom who put all of her financial assets into a portfolio of vegan stocks that she managed herself.
At the beginning, the stocks seemed to only go up and she felt like a genius. About two years after she began managing her money this way, she found a beautiful and affordable house nearby with a big yard for her children to play in.
She had hoped to sell some of her portfolio to fund this purchase, but the market was down significantly since she started investing. To buy the house, she’d need to sell all of her stocks and take a significant loss.
To avoid this situation, Megan could have worked with a financial adviser to identify that buying a house was a near term goal before she jumped into the stock selection phase of investing. That would have allowed her to work towards her long-term goal of funding her own retirement without jeopardizing her ability to meet shorter term objectives, like coming up with a down payment for her house.
Manage Risk Through Imaginative Diversification
Modern investment management techniques tend to emphasize diversification for straightforward reasons. Investing in just one company or industry is quite risky! Recessions, geopolitical events, or even seemingly random occurrences can lead to outsized moves in stock prices, and if your portfolio isn’t adequately diversified this might wind up leading to substantial losses.
This is one of the primary issues investors encounter when trying to build a portfolio of vegan companies on their own: most of the companies that get a lot of attention are in the same industry! Which means that even if one wound up spreading their investments evenly among all of the publicly traded companies that are involved in vegan proteins, it’s unclear how much protection that would generate in a downturn.
That’s why we work with clients to implement a more imaginative approach. Our flagship Veda Ethical Growth strategy invests in public companies that stand to benefit from the growth in demand for plant based protein, but also in companies that produce a wide range of products that align with our vegan vision for the planet.
After all, the world we want to live in has more than just an abundance of plant-based protein.
We’ll need affordable housing, effective infrastructure, renewable energy, and lots of each in order to get there. So we generally advocate for including firms that are making strides in those areas alongside more obvious choices in protein, beauty, and personal care to create a balanced portfolio suitable for long-term investors. This allows those interested in vegan investing to access them without having to do a tremendous amount of research, monitoring, and analysis work on their own.
Don’t Be a Sucker
Companies tend to overstate the degree of positive impact they are associated with. This should come as no surprise to anyone that’s tried to cope with capitalism before, since this tendency can be observed almost every day by those with the capacity for critical thought.
There is an entire cottage industry of marketing consultants, intermediaries, and other apologists for bad corporate behavior that tactfully obscure the true nature of their businesses in order to entice investors to part with their hard earned cash.
This isn’t unique to vegans. It’s relevant to sustainable investors of all stripes since overstating a company’s alignment with certain environmental, social, and governance risk frameworks is a particularly popular way to persuade people who really care about the world to adopt a false sense of security.
At Invest Vegan, we use a disciplined investment process to help ensure that our clients’ investment portfolios are assembled with truly impactful companies. If you’d like help separating the wheat from the chaff, please don’t hesitate to reach out. You can schedule a time to chat with us, fill out our onboarding form, or just send us an email to begin a dialogue at your convenience.