More investors are looking for ways to support cruelty-free companies. How can they follow their consciences while maximizing tax efficiency? This video offers some ideas on how to take positive steps that benefit all sides.
Transcript:
Why More Investors Are Avoiding Certain Companies
Today’s investors have different reasons for avoiding certain industries than previous generations. Ethical investing has evolved, incorporating concerns about animal welfare, the environment, and human rights.
The Origins of Animal Cruelty Screens in Investing
In the early 90s, while rescuing dogs, I created the first animal cruelty screen. This approach has since expanded to include additional social and environmental considerations.
Aligning Investments with Your Beliefs
Many investors want to avoid companies that conflict with their values. For taxable investors, it’s also crucial to incorporate tax-efficient strategies. In this video, I’ll explain how we blend social screening with tax efficiency.
What Does Cruelty-Free Investing Exclude?
We avoid investments in:
- Factory farm companies
- Companies that conduct animal testing (biotech, pharmaceuticals)
- Food and leather retailers (supermarkets, shoe retailers)
- Oil and mining companies
Are You Missing Out on Profitable Investments?
The industries we screen out often have:
- Low profit margins
- Slow or no free cash flow growth
By avoiding these industries, you’re not necessarily sacrificing strong financial returns.
Long-Term Investing for Tax Efficiency
The best way to minimize taxes on profitable investments in taxable accounts? Never sell. However, most stocks are too volatile for a true buy-and-hold strategy.
The Key to Sustainable Investing: High-Quality Stocks
We focus on companies with:
- Protective moats and barriers to entry
- Decades-long lifespans
- Consistent capital and free cash flow growth
Balancing Risk and Return for Long-Term Growth
Studies by Morningstar and others show that investing in high-quality stocks is one of the best ways to manage risk while maximizing returns. We prioritize companies that demonstrate steady, year-over-year growth.
Examples of Strong, Ethical Investments
FICO and Cintas are great examples of consistent, high-quality investments that align with our strategy.
Using Charitable Giving for Tax Efficiency
Donating shares of low-cost-basis stocks to a qualified charity helps investors:
- Avoid capital gains tax
- Potentially receive a tax deduction if they itemize deductions
Work with a Qualified Advisor for a Tailored Strategy
Considering socially responsible investing? A qualified investment advisor can:
- Define investments that align with your values
- Maximize tax efficiency
- Make strategic year-end or mid-year portfolio adjustments
Final Thoughts
If you’re looking to invest ethically without sacrificing returns, an expert advisor can help you make informed, tax-efficient decisions. Thank you.