Morals and Investing – Can they be Balanced?

can morals and investing be balanced?
Morals and investing. This is getting deep. Once again, good old Steve at Kapitalust has provoked me to writing a longer reply to a topic he recently posted about – ethics/morals and investing. A fascinating discussion ensued is still taking place over at Kapitalust HQ. Our wonderful Belgian buddy, No More Waffles, has also recently discussed the morality of investing in tobacco companies, in his analysis of British American Tobacco.
This is really turning into an intriguing and absorbing discussion. I like what NMW and Potato both said. There is a very fine line indeed between what people are willing to do, and what they’re not; equally, can we really have an impact at the share purchase level?
Our World is Imperfect
I do much prefer to invest in individual companies that I research myself. But as I mentioned in the discussion, we live in an imperfect world. It is sad that there are companies out there which are damaging both society and the planet. But we are not perfect either. I am sure the people running those companies could point the finger at ourselves too. We have all made mistakes. So how do we balance out our morals and investing?
We cannot live as hermits. If we want to engage in the world, in society, in nature, then we will affect these things somewhat. It is inevitable. We walk out of our house, through a spider web, thus destroying it. We tread on ants across the yard, thus killing them, on our way to our car, which is polluting the atmosphere (even electric cars do, where does the electricity come from that powers them?!). We are imperfect beings interacting in an imperfect world, in an imperfect society, in an imperfect economy. Therefore, whichever companies we invest in will by default, be imperfect. We need to remember this when worrying about morals and investing.
In Every Deed, there is a Seed
But the whole point of this discussion is, I think, that we are not automatons, we are not robots. We have emotions and morals and ethics and ways of living. We may all be slightly, or even vastly, different in these things, but we still have them. And these things can (and maybe should?) affect every decision we make. Someone once said ‘in every deed, there is a seed’, so perhaps morals and investing really ought to go hand in hand?
Following the Moral Compass
For me, I do not like to go against my conscience. It is like a moral compass. The more I go against it, the more ‘off track’ I feel. If I am going off track, that means I am entering dangerous territory, and therefore I do not want to be there. Clearly, we do not always keep to the right path in life, but I will at least attempt to stick to it as much as I can.

Photo credit: David Castillo Dominici/



  1. First time here, but am very intrigued by this discussion. In fact, I’ve been going back and forth with a couple of friends recently on this very topic. I can understand the moral concerns when dealing with individual stocks, but what about mutual/index funds which hold many stocks inside them? (Not trying to start an argument, just an honest question.) Any discussions elsewhere that may have addressed this already? Thanks!

    1. Dear Al,

      Thank you for visiting and welcome to our site. We have not long started blogging about value in our purchases, investments, and everyday life but we hope you will enjoy what you find here. I recently found your blog and spent hours just reading through previous articles! Thank you so much for your content.

      Regarding the discussion above. Both Kapitalust and No More Waffles (see links at top of this post). I think NMW and myself are both of a similar opinion, in that we would be unlikely to buy an individual stock such as a tobacco company for moral reasons.

      However, as I think you are suggesting, it is impossible to choose individual stocks when buying an index, and thus there may be a moral dilemma about whether to contribute to mutual funds, if they contain disagreeable companies.

      I have a small amount of money in index funds. I justify it in this way: an index fund is a representation of the economy at large (or whatever subset of the economy the index is replicating, e.g. small-caps). We all have to interact in the economy of the country in which we live. There are a few exceptions e.g. if you’re a hermit; a 100% self-sufficient person; if you’re in prison. Since we are none of these things, we interact with all sorts of people and all sorts of companies on a daily/weekly/regular basis. Some of these may be morally questionable. We cannot avoid them 100%. And for Christians in particular, we are called to love the ‘sinner’ and be Jesus to them. This does not mean supporting evil or sinful behaviour, but I am sure even the supermarkets, albeit generally seen as harmless, engage in some things we may consider immoral .

      As I see it, investing in a mutual fund that I know contains a tobacco company is like what I would describe as engaging in the wider economy, whereas buying them directly would be wrong for me.

      I personally prefer to buy individual stocks when I can, but in my son’s account, as we are only contributing tiny amounts per month, index funds are the only viable option to invest until we have built up enough money to make it worth buying individual shares.

    2. We think very similarly on this. I wouldn’t feel comfortable investing directly in “vice stocks” either, but I am OK with mutual funds (I prefer index funds). The way I look at it is three-fold. 1) What are my motives in my investing? Is it to get rich quick/greed, is it without any moral evaluations, or is it to save for reasonable goals without undue speculation? 2) What level of control do I have? Like you mentioned, there are a myriad of “immoral” activities that I may indirectly contribute to simply by participating in the economy. It’s one thing to buy tobacco myself or buy a share of ownership directly, but what about shopping in a grocery story that happens to carry those products? I think an index fund is like the latter example. (Appears like you think similarly.) It seems to me that if I accept moral culpability for anything anyone does that I can be traced to, that I would have to be a hermit and have no contact with society in order to remain morally consistent. 3) What is the materiality of my involvement? Am I materially involved with a business in question when I am a fractional share holder of an index fund which then in turn is only fractionally invested in that business?

      These are issues I believe we need to wrestle with individually, but these are a few principles that have been helpful in my own thinking.

    3. Absolutely love what you’ve said here Al. Thank you once again for contributing. I like how you have split it into those three parts of motives, control, and materiality. Very sensible and practical way of working through the thought process on these issues.

      As you say, it is something an individual (or a married couple) may want to struggle with on a personal basis. Clearly, there are also many different types of business that one may find disagreeable and one may not.

      Best Wishes,


  2. M,

    you really do a great job of connecting blogs. This discussion is another fruit of that.

    I own a tobacco stock in Altria. While I am no fan of smoking, I am a great fan of the business model. Obviously I haven’t thought too much about the moral side of that.

    However, know that you raised my awareness, I might take some time and think about this topic at some point. This will probably result in me joining the discussion with another blog post.

    Thanks for the inspiration.

    1. Vielen Dank!

      As an ex-smoker, I know the problems that smoking causes. I also used to work in a hospital, where I saw the serious results of long-term smoking. So for me personally, I now do not *actively* invest in tobacco companies. This is just based on cigarette production and consumption. I feel less concerned about cigars and pure pipe tobacco, as they are somehow ‘cleaner’ than cigarettes, and I never knew anyone to smoke 30 cigars in a day… and I never heard of anyone getting lung cancer from a pipe, although it could have happened… who knows.

      Anyway, I just feel bad about profitting from a company that produces cigarettes…

      Keep up the good work on your blog, I really like it a lot.

      Alles Glueck!

  3. I have no issues investing in morally gray companies. I am an environmentalist, conservationist, anti-war, non-smoker, and a lot of those other hippy-dippy things but that doesn’t stop me from investing in any company I want. And it’s not about chasing returns for me. It’s because we are all adults.

    We all can make choices on what we want to support, some people say that cigarette companies market to children, but I say, what kid over the age of 10 doesn’t know that cigarettes are addictive, cause cancer, and bad for your health? In the US all kids know that, and while when kids are younger and their pre-frontal cortexes are still not fully developed so they might make impulsive decisions, I somehow made it through life making the conscious decision not to do it. I have faith that other kids are aware enough to make the decision too.

    I may not like GMO foods but that doesn’t mean I’m going to go on a witch hunt for anyone that doesn’t mind them. I have a lot of vegan and vegetarian friends, they complain ALL THE TIME about people that eat meat, it’s actually quite annoying, but I never complain to them about kale and other crap that they are into because we are all free to choose to support whatever you want to support.

    That being said buying shares of a company does not mean you support them, that just means you have the possibility of that share increasing or decreasing in value based on the people that do support that company, the customers.

    Like I said, people are free to do what they want, and if people want to smoke, I’m not going to stop them, if people want to eat GMO foods then I will let them. Just because you don’t support them doesn’t mean you can’t profit off of them. Personally I’m not a fan of Apple, I just think all of their stuff is waaay to overpriced and I don’t understand the cult like mentality behind their following. But that doesn’t mean I wouldn’t invest in their company.

    I don’t support our recent wars. But that doesn’t mean that I wouldn’t invest in companies that make bombs, do I think that not investing in those companies will stop the war? Do I think that if all investors sold their shares the wars would end? No.

    As a consumer you support the company, as a shareholder you believe other people buy what they are offering.

    Telling someone that they shouldn’t invest in a company because that company is morally wrong, is like telling someone they shouldn’t get married because they are gay. You are just projecting your views onto someone else’s company, if what the company does or sold was actually not legal then that would be a different story.

    As a side note, I don’t actually own any shares in any companies that produce oil, cigarettes, make bombs, etc. (or Apple) I’m merely stating why this wouldn’t stop me from doing it if I felt inclined to do so. Also using this same logic I’m not supporting some of the companies whose stock I do own such as Tesla and Starbucks….

    1. Yes, hear you Zee. What you have said here is along the lines of my thought process that I went through sometimes when thinking about purchasing a particular share or not.

      I do not believe in war being the answer always, but I do invest in defence companies, but that is because I think they are necessary and important. It is what the government does with those products that is morally right or wrong.

      However, as I do not believe in going against my conscience, I would not buy Monsanto for example. Everyone else can make their own decisions, but as far as I’m concerned, to buy shares in what one might call ‘a morally gray’ company as you describe it, would go against my conscience. To me, it does mean I am supporting that company, because buying a share essentially means that I have become an owner of that company, albeit a small one. Would I be proud to own shares in Monsanto? No. Therefore I do not buy them.

      As an aside, I am not very interested in the share price going up or down, as I am interested in the continued raising of dividends above inflation. So actually if the shares go down, I am happier because that means the yield usually goes up.

      Thanks for your extensive comment, very much appreciate your contribution to this fascinating debate.


  4. Me, wonderful? Could you put that in writing for my parents? 🙂

    Great post, though. I think the topic of ethics and moral investing is often overlooked in the personal finance community.

    The important part about investing to me is that an investment feels right to me. I don’t feel right investing in tobacco, whereas investing in Big Oil is totally OK with me even though you can argue the latter is more destructive to our environment than the former.

    Like I said in Steve’s post, I lean towards a pragmatic approach: I’m not going to look for the best-yielding stocks no matter what, but I’ll try to do what’s best for me as a person without selling out my values and beliefs.


    1. yes, that’s exactly how I feel. I also do not mind investing in oil. I personally believe that oil is less destructive than some of things that monsanto and the big pharma companies do. the world will heat up even if we stop using oil tomorrow, but on the other hand I am really excited about solar panels, wind farms (so are you, with your windmill I guess!), and especially fuel cell technology!


  5. You’re makin me blush M! I may have started the ball rolling on this post but it was all you writing this insightful commentary!

    I agree that as imperfect beings occupying an imperfect world, we have to make the best decisions we can balanced between our ethics and living. Like you said, analysis paralysis would make us freeze from ever making any move if we over-analysed ethical and moral issues. We make the best decisions we can with the information at hand. If we make mistakes, we try to learn from them and move on.

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