In last week’s post, I talked about the differences between morally responsible investing and what so often parades itself as such. The takeaway is that the two are in fact very different, and the agendas that they serve can be quite opposite.

If you are concerned about what you own, it can be very difficult to stay on top of the ever-changing holdings in your portfolio. If you own mutual funds or ETFs, you probably own more than one, maybe up to 10 or more. Mutual funds and ETFs are required to report their holdings quarterly. Hundreds of holdings in tens of funds changing quarterly if not daily makes it virtually impossible to accurately track what you own. As referenced in the previous blog, you can build a portfolio of individual stocks, but for most that is not an appropriate or even realistic way to build a diversified portfolio.

So how does all of this influence your approach to investing? While I don’t necessarily agree with his assessment of the specific mutual funds referenced, I think Dave Ramsey made some good points here when a caller proposed this very question:

Even if you are curating your own individual stock portfolio, you couldn’t possibly track every dollar that a corporation spends. You couldn’t possibly guarantee that every organization that they support is up to snuff. So, the idea here is that you as the investor avoid obvious moral contradictions when investing. You are responsible for what you invest in, and it’s up to individual companies to run their business.

If you are morally opposed to gambling, you aren’t going to buy stock in Las Vegas Sands. Where it gets tricky is that you may own a mutual fund that decides Las Vegas Sands presents an opportunity. You don’t have a lot of say in the decision. So where do you draw the line? When you buy a Snickers bar in the checkout line at the grocery store, you’re probably not thinking about who the Mars Wrigley Company supports.

Remember, the fact that you own stock in a company does not mean that you are directly contributing capital. You are not actively funding their business. Unless you get in on the IPO (initial public offering) or a new issue, that transaction occurred a long time ago. If you own a mutual fund, you technically own shares of the fund itself. Additionally, if you are invested in index funds, you own a portfolio of stocks that mirror a broad index. You aren’t necessarily banking on individual companies to do well. Instead, you are participating in the overall performance of an index or sector of the market.

If this is something that you are seriously wrestling with, I realize that this may not put all of your concerns to rest. If not, I hope it doesn’t keep you from investing completely. There are funds devoted to only morally responsible investing. In the next blog, I’m going to dive into these funds specifically.