Do you want to make a better world? You have in your possession a tool that can do exactly that.

It's your money.

What's more, you can make a profit at the same time. How? By joining the ranks of socially responsible investors. Video: Ann's investments

In a nutshell: SRI investors try to make sure that the money they keep -- in a bank, a 401(k) or a brokerage account -- is supporting companies that deal conscientiously with the world around them. Chart: How Ann's investments line up

A word that's becoming frequently used to describe these companies is "sustainable." A sustainable company measures its success over the long term, so it takes care not to damage the Earth, the employees, the customers or the local economy on which it depends for its success.

The idea that you should put your treasure where your heart is goes back centuries, says Amy Domini, the CEO of Domini Social Investments and one of the early advocates of socially responsible investing. But what we know as the SRI movement got its start in the 1970s, as a reaction to the Vietnam War and the first Earth Day. Video: Mostly for women?

Since then, SRI investments have become one of the fastest-growing asset classes, both domestically and around the world. In the United States, assets in SRI investments now total almost 10% of all invested assets. In Europe, clean-technology investments alone are growing at 30% to 50% a year. Video: What you're leaving your kids

But for most investors, here's the $64,000 question: Can you do good with your money and do well for yourself at the same time?

Many financial experts say no, but their argument is based more on theory than on fact. It's true that by limiting the types of companies you invest in, you're limiting your investing universe. One popular line of thinking says that by limiting your universe, you're limiting your opportunity for good returns.

Yet study after study has shown that, in practice, screening for social factors has no effect on investment returns. Some recent studies indicate that socially responsible companies may, over the long run, actually perform better than competitors focused on short-term profits. One compelling statistic: Over its lifetime -- since its launch in 1990 -- the Domini Social Index of sustainable companies has outperformed the S&P 500 Index ($INX). Video: No guns, no oil . . . no problem?

Of course, there will be periods when your investments will under perform standard stock indexes.

For instance: Socially responsible funds tend to be heavily invested in tech, so when the tech bubble burst, they suffered. So let's remember that socially responsible investing is a long-term investment strategy, not a way to make a quick killing in the market. Adam Seitchik, the chief investment officer of Trillium Asset Management and one of the managers of the Green Century Balanced Fund, says there is no question you can pursue "both good financial returns and a second bottom line of environmental sustainability." Chart: How the funds stack up

If green is your passion, you can find a lot of places to put your money, starting with mutual funds.

Whatever their investment focus -- and fund screens range from Muslim religious values to bans on gambling and sweatshops -- most socially responsible funds pay some attention to environmental issues. But some go further: So-called green funds invest only in companies that are working actively to help the environment -- producing more-efficient energy, cutting the carbon-dioxide emissions behind global warming, and providing clean water and healthful food. If you want to go green in the fund arena, you've got at least half a dozen to choose from, including two from Green Century Capital Management -- the Green Century Balanced Fund (GCBLX) and Green Century Equity Fund (GCEQX) -- and the Sierra Club Stock Fund (SCFSX), sponsored by the Sierra Club.

There are other options, too. You can buy an exchange-traded fund that's traded like a stock, such as the recently launched PowerShares WilderHill Clean Energy Portfolio (PBW, news, msgs).

Your checking account can be green as well: Look for a community bank, such as Chicago's ShoreBank or Boston's Wainwright Bank & Trust, that lends to environmentally sound projects. While you're at it, why not get your next order of checks printed on recycled paper -- or go paperless?

Perhaps the most satisfying -- but also the riskiest -- form of socially responsible investing is buying stocks of green companies directly, where you can really see your money at work. You can find plenty of advice on companies on the Web, where green investing sites abound -- try SustainableBusiness.com, EnvironmentStocks.com or some of the stocks recommended by MSN Money's Jim Jubak -- or from a financial adviser who specializes in green investing. But tread cautiously; individual stocks are far more volatile than a mutual fund, and it's easy to lose your shirt. Video: What should you ask?

Whatever vehicle you choose, remember this: In green investing, as in any other attempt to help build a greener world, you're not going to reach perfection. A company might devote enormous effort to minimizing its environmental footprint but pay its workers a pittance, for instance.

There are often hard choices to make. So it's important to know what matters most to you. Then you can cut yourself -- and your investments -- a little slack on other issues.

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Published Dec. 17, 2007