Are you eager to invest your money without funding nuclear weapons? Perhaps you’d like to make healthy returns without ravaging the planet. Good news – like fashion brands, fund managers have woken up to the fact that more and more of us are putting our money where our morals are. Many now offer so-called ethical, sustainable or socially responsible ways to invest.

In the UK, socially responsible investing (SRI) – a term used to describe everything from investing in renewable energy to not investing in sin stocks, for example tobacco, weapons, gambling and adult entertainment – is forecast to grow by 173 per cent to reach £48bn by 2027. But while the karma-earning potential of ethically investing is clear, can it benefit your capital?

“There has been a persistent myth that investors need to sacrifice returns in exchange for their morals,” says Mr Peter Michaelis, head of sustainable investment at Liontrust, a London-based fund management company. “But the reality is that long-term transformative developments, such as advancements in sustainable technologies, not only have positive impacts on society, they also have the potential to deliver returns for investors.”

Here are four expert tips for making your money do good, in every sense:

The first step in investing ethically is to define what exactly “ethical” means to you. One man’s morally reprehensible is another man’s fair game, so it’s worth making a list of exactly what you will and won’t invest in, whatever you stand to earn.

Got a beef with the meat industry? You’ll want to avoid big food companies such as Tyson Foods, which flouts animal rights. Concerned about climate change? Consider investing in green energy ventures such as Vestas, a European manufacturer of wind turbines whose share price has more than doubled in the past five years.

This all might sound obvious, but like other industries, investment is subject to greenwashing, so you’ll have to do your research (more on that later) to find companies and funds that match your principles.

Whether you’re investing in sustainable fashion or solar energy, the fundamental rules of investing still apply. “The first step is to be clear about why you are investing, what you want to achieve, for how long do you want to invest and how much risk are you able to take, that is, how much of your money are you prepared to lose?” says Mr Michaelis.

Say, for example, you inherited £10,000 and wanted to stash it away for your retirement. A smart way to make it grow would be to invest it in a stocks and shares ISA, a tax-free investment product that could, if left alone for 30 years, yield you a tidy total of £70,000. Nice, right? The downside is it could also leave you with just £12,500 or even £7,500, less than you put in initially.

This, gentlemen, is where risk and average annual growth rates (quite simply, the average rate at which your investment is expected to grow) come in. When investing, you’ll need to decide whether you’re prepared to play it safe and opt for investment products marked as low-risk, which generally offer low average growth rates (about two per cent) and yields but are more dependable, or take more risk for bigger potential gains with high-risk investment products that offer potentially high rates (about eight per cent) and yields but are much more volatile and so could end up being worth less in the long run.

Let’s take another example. Say you have £20,000 to play with and are confident you’ve found the next big thing in renewable packaging. Depending on how much you like to play with fire, you might invest all £20,000 in this company by buying shares in it directly. Its current share price is £5, so you acquire 4,000 shares in the company. Five years pass, the company does well and its share price increases to £10, which means your initial investment of £20,000 is now worth £40,000. But the company could just as easily founder and its share price could drop to £1, which would mean your initial investment of £20,000 is now worth just £4,000. Bummer.

Whatever your goals, you should be prepared to lock away your money for at least five years and be cognisant of the fact that you could end up with less than what you put in.

Next, decide how you will invest. Without getting too technical, there are two main options: buying stocks in companies directly, or buying shares of a fund, examples of which include The Royal London Group’s Sustainable World Trust or Standard Life Investments’ UK Ethical Fund, both of which pool stocks owned in many companies involved in socially responsible activities.

The former is well-suited to those whose situation is similar to that outlined in the £20,000 example above, who like the look of a company and what it’s doing and are prepared to take on more risk. It’s the investment equivalent of putting all your eggs in one basket. The latter, however, allows you to spread your risk.

“Investing in a sustainable or ethical fund means you can benefit from the knowledge and skill of a professional fund manager, as well as diversify your risk across multiple companies,” says Mr Michaelis. “This means that if one company performs badly, this may affect only two or three per cent of your investments.” Liontrust, for example, offers Sustainable Future funds that invest in companies such as Kerry Group, which is developing products that help reduce obesity), and Intertek, which ensures robust supply chains that can benefit sustainable manufacturing).

Of course, investing in a fund means it’s slightly more difficult to keep track of exactly which companies and activities your money is supporting, so don’t just take your fund manager’s word for it. Always do your research. Mr Michaelis recommends swotting up at 3D Investing and SRI Services.

Unless you’ve got £50,000+ to play with, you can do away with fantasies of discussing your fantastically performing portfolio with your dedicated wealth manager. But that’s not to say there aren’t platforms and resources specifically built for those who want to invest ethically with less.

An investment platform, whether it’s a website, app or both, is a bit like a department store. In much the same way as a department store offers numerous brands that offer different things – leather shoes, ties, cotton T-shirts – a platform allows you to pick and choose shares and funds, so you can invest directly in companies, spread your risk through funds or do both. Generally speaking, you will be charged both for using the platform and for buying or selling any investments.

“Some of the most well-known fund platforms such as Interactive Investor and AJ Bell allow you to invest from £100 upwards,” says Mr Michaelis, who also recommends checking out Hargreaves Lansdown and The Big Exchange, a soon-to-launch venture that promises to be the world’s first ethical-only investment platform. Investments apps such as Nutmeg and Wealthify, which make investing more user-friendly than ever before, also offer access to socially responsible funds.

So what are you waiting for? There’s never been a better time to make your money work both for your pocket and the planet.