Overview of Is Investing Ethical? How to Invest Without Compromising Your Values
In this BiggerPockets Money episode, Mindy Jensen and Scott Trench tackle a difficult listener question: is it ethical to invest at all, and how can you invest in a way that aligns with your values? Their core conclusion is that investing is ethically acceptable, but “pure” ethical investing is nearly impossible because capitalism is full of trade-offs, subjective moral judgments, and interconnected supply chains. Instead of chasing perfection, they argue investors should define their own values, make intentional trade-offs, and express broader moral views through voting, advocacy, and charitable giving.
Core Takeaways
Investing itself is not inherently unethical
- Both hosts say they believe investing in the stock market, real estate, and other assets is ethical.
- Their view is that investing helps:
- grow personal wealth and support family goals
- allocate capital to productive businesses
- contribute to a system that generally raises living standards over time
“Ethical investing” depends on your worldview
- The episode emphasizes that ethics are subjective:
- one person may see defense contractors as harmful
- another may view them as necessary and beneficial
- Because of that, there is no universal “good” or “bad” company list everyone will agree on.
There are always trade-offs
- The hosts repeatedly stress that no company is morally pure.
- Examples they discuss:
- Costco may be employee-friendly, but its poultry practices raise ethical concerns.
- Tesla is environmentally beneficial in reducing gas-powered car use, but still raises questions around Elon Musk and lithium extraction.
- Tobacco companies are a clear no-investment choice for Mindy, but they are still a tiny part of broad market index funds.
- Their message: if you invest in a capitalist economy, you will inevitably participate in some trade-offs.
Ethical Investing Options and Their Limits
ESG funds are not a perfect solution
- Mindy researched ESG-style funds from Vanguard and Fidelity and found they still hold companies many people would consider controversial, including:
- NVIDIA
- Apple
- Microsoft
- Amazon
- Alphabet
- Meta
- Tesla
- Their point: ESG labels do not guarantee alignment with every investor’s values.
You can get closer to your values, but not perfectly
- Investors can:
- screen out industries they strongly oppose
- overweight companies they support
- avoid certain sectors entirely
- But the hosts argue that complete moral purity is unrealistic in a connected economy.
Financial Independence and Ethics
Pursuing FI is ethical
- They believe financial independence is ethical because it usually requires:
- producing more value than you consume for a long period
- investing capital productively
- creating more optionality and freedom without harming others
Working after FI can also be ethical
- They reject the idea that continuing to work after reaching FI is inherently wrong.
- In their view, ethics are about knowing you are doing something wrong and doing it anyway—not simply choosing to keep working or investing.
Consumption is also part of the same system
- They point out that even consumption can be framed as ethical or unethical depending on the lens:
- consumption uses resources
- but it also creates jobs and demand
- Again, the answer depends on the worldview being applied.
Their Practical Framework for Investors
1. Define your values first
Ask yourself:
- What industries do I want to avoid?
- What causes do I want to support?
- What trade-offs am I willing to accept?
2. Accept that “good” and “bad” are subjective
- A company one person calls harmful, another may see as necessary or beneficial.
- This makes broad moral judgments about investing difficult.
3. Use investing as one tool, not the only tool
The hosts suggest that if you want to change society:
- vote
- advocate politically
- support causes with donations
- give time and money to organizations you care about
Their view is that politics and law are better places to push moral boundaries than portfolio construction.
4. Don’t expect perfection from an index fund
- Broad index funds are convenient and effective for building wealth.
- But they will always include companies someone could object to.
- If you want more control, you may need to:
- choose individual stocks
- use more customized screening
- accept lower diversification or more complexity
Notable Insights
- “There is no way to totally fail to participate in capitalism and not touch something objectionable.”
- “Ethics is when you are doing something wrong and you know that you are doing something wrong.”
- “You can only approach a worldview; you can’t express it perfectly in a portfolio.”
- “If you want to push changes in society, the best way is the voting booth.”
Final Verdict
The episode’s main thesis is that investing is ethical when done thoughtfully, even though it is impossible to avoid every questionable company or system. Mindy and Scott encourage listeners to:
- invest in a way that supports financial independence
- make values-based trade-offs where possible
- avoid obsessing over purity
- use voting, philanthropy, and activism to express deeper moral commitments
In short: invest intentionally, not perfectly.