Socially responsible investing (SRI), also known as impact investing, is an investment strategy that has garnered tremendous attention in recent years. However, long before SRI became a household word, individuals decided to put their money into ventures, causes, funds, and companies close to their hearts.
In the U.S., impact investing is documented as far back as the 1700s. So why do so many people choose this investment strategy? Read on to learn more about SRI and why it is so important for many people to focus on the impact of a particular investment instead of only looking at the profit potential.
What is Socially Responsible Investing?
Socially responsible investing is a highly personalized approach to investing because it involves investing in companies or industries that align with your unique values. To that end, what you value may differ significantly from what another person values.
Irrespective of your specific values, socially responsible investing aims to support or promote the change you wish to see while earning a return on your investment. SRI may be accomplished through the purchase of individual stocks or through investing in mutual funds or exchange-traded funds (ETFs) that match your values.
Conversely, socially responsible investing can also be a strategy to ensure you do not invest in companies that do not align with your values. For example, if you are passionate about creating a sustainable future, you may opt to invest in green energy companies (solar, wind, electric). You may intentionally avoid investing in companies that rely heavily on fossil fuels.
If you think tobacco use is unhealthy, you may refuse to invest in companies that produce cigarettes or vaping products. If you’re passionate about supporting marginalized communities or diversity you may choose to invest in companies that prioritize those.
How Do I Get Started with Impact Investing?
Whether you’re a seasoned investor or just beginning to invest your money, investing in companies, industries, mutual funds and causes that matter to you can be an exciting journey. It can also feel a bit overwhelming or time-consuming.
If you don’t have time to research which investments align with your values, it’s wise to work with a financial planner who can steer you towards the investments that best align with your values. They will also be able to guide you away from investments that contradict your values.
If you turn to a financial advisor for help with impact investing, take the time before meeting with them to make a note of causes, goals, and company practices that are important to you. Likewise, write down any activities, products, or company ethos that are absolute dealbreakers for you.
For example, if you are vehemently anti-guns, you may tell your financial advisor that you do not want your money invested in weapon manufacturers. If you prefer to only support corporations that give back to their communities or society at large, you may choose to invest in companies that support social welfare initiatives through philanthropy. Providing all this information to your financial advisor can help them guide you toward companies and funds that align with your values while offering excellent potential to earn money.
SRI: The Best of Both Worlds for Savvy Investors
For many people, SRI represents the best of both worlds regarding how they plan for the future. Socially responsible investing allows you to support sectors or companies that align with values that matter to you, all the while offering an opportunity to earn money on your investment.
Founded in 1987, The Investment Counsel Company (ICC) CEO, Randy Garcia, has been named the #1 Financial Advisor in Nevada by Barron’s and the Wall Street for eight consecutive years.. ICC consultants are fiduciaries committed to transparent pricing to prevent conflicts of interest and focus on what is best for your personal situation. If you have $1,000,000 or more in investable assets and would like to put our investment management expertise to work in socially responsible investing, contact us at (702) 871-8510.
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