The world is facing a host of new challenges: pandemics, natural disasters, political upheaval, and more. In the face of these troubles, many people are looking for ways to help society as a whole.
Whether you’re interested in making your portfolio more responsible or simply trying to do good with your money, investing in socially responsible companies can be a great way to support causes that are meaningful to you.
Sustainable investing involves putting your money into companies that align with your values. It’s much broader than just organic food stocks or solar energy companies—there are thousands of causes and NGOs out there for you to choose from depending on what issues are important to you.
Read on for more information about investing responsibly and how it can benefit you financially and ethically.
Table of Contents
What is Sustainable Investing?
Sustainable investing is investing in companies that meet certain social or environmental criteria. For example, an investor might choose to invest in renewable energy companies or health and wellness companies rather than companies in fossil fuels or tobacco.
The idea is that an investment can be profitable and have a positive impact on society at the same time.
Sustainable investing covers a range of industries, so you can invest in a diversified portfolio of companies with one fund. You can put your money in a brokerage account, mutual fund, or exchange-traded fund (ETF).
Note that funds used in sustainable investing typically have slightly higher fees than funds that invest in the broader market. But the increase in fees is worth it if you’re getting a higher rate of return due to the added social value of the companies you’re invested in.
Of course, it’s important to do your research and make sure the fund you choose is legitimate.
Benefits of Sustainable Investing
Investing in socially responsible companies can benefit you in several ways. The most obvious is that you’re doing good in the world by supporting companies that are making positive impacts. You’re also diversifying your investment portfolio and helping to support smaller companies that may otherwise not be able to get funding.
Additionally, sustainable investing could lead to higher rates of return. Many SRI funds are outperforming the broader market, which is good news for you as an investor.
Tips for Socially Responsible Investing
Make sure you understand the criteria for investing before you decide to put your money in a company. Many companies have varying, specific values that must be met in order for companies to be included in the fund.
Do your research to see which industries you want to support and which ones make the most sense for your personal situation.
Finally, remember that sustainable investing is not a substitute for normal investment diversification. Even with funds that support good causes, you still want to make sure you’re spreading your money across different companies and industries.
The Final Words
Investing responsibly is a great way to support causes that are meaningful to you while also earning a profit. You can invest in funds that invest in a wide range of companies, including those that produce renewable energy, produce healthy foods, or offer innovative travel experiences.
No matter where you put your money, it’s important to do your research and make sure the companies you’re investing in are legitimate and trustworthy.
