Your biggest savings pot is likely not aligned with your values

Our pension is often our biggest savings pot, yet the one we are least intentional about.

Passive investing is usually a good thing. Actively managed investments often underperform - even when managed by professionals.

But the issue for Muslim investors - and ethical investors more generally - is that the 'default' fund you were enrolled in and never switched from is likely not aligned with your values.

Pension funds are usually a mixture of bonds and stocks, with the proportion of bonds (the safer option) rising as you approach retirement.

But:

• Bonds are not Sharia-compliant.
• Stocks will include a mixture of compliant and non-compliant companies.

That's why, a year or so ago, I switched from Aegon's default fund to a Sharia-compliant global equities ETF.

Even that wasn't ideal, though.

Some months later, I checked what the top holdings in the ETF were, and I got the list of usual suspects: big companies that I was ashamed to support.

I looked for alternative Sharia-compliant funds, but couldn't find any.

Even the pension providers that use Sharia-compliance as their main selling point were just investing into the very same companies. Disappointing.

After a frustrating research process, I finally decided to leave my pension provider and switch to a self-invested personal pension (SIPP) with AJ Bell.

AJ Bell's SIPP appealed to me as it included a very broad range of ETFs, including the ones I usually invest in (outside my pension).

I could easily allocate my investments between alternatives more suitable for me, such as Sukuk (Sharia-compliant bonds) and emerging market equities.

I am not advocating that you constantly fiddle around with your pension - you may do more harm than good.

But don't leave it invested into the default fund either.

Invest time in researching what funds you want to invest in and determining how much to allocate to each fund to form an ethical portfolio.

Then use modern platforms to automatically allocate your future pension contributions according to this portfolio.

Take control during take-off, then let the auto-pilot cruise along.

While I can't give advice on what to invest in, I'm very happy to help with the process of switching platforms - feel free to reach out!