Want To Invest With Impact? Here Are 4 Options To Consider
While investing might be a great way to build personal wealth, buying certain stocks benefits the common good. As an investor, you have the power to support companies and causes that are near and dear to your heart while also padding your wallet.
Letting your values lead your investments is commonly known as socially responsible investing. Practitioners put their money where their hearts are, screening out organizations that produce products they deem harmful or headquartered in regions known for human rights violations.
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We talked to some experts about how socially responsible investors can positively contribute to the world while enjoying healthier returns.
1. Eco-Conscious Companies
Paulo, Peres, founder of specialty coffee importer Agrisapien Traders, said investors passionate about preservation also support publicly traded companies that focus on protecting the environment. Among these companies, he named solar energy provider Sunrun and the plant-based food manufacturer Beyond Meat.
"These companies are working to solve real problems," he said. "For investors who care about more than just profits, stocks like these can be very appealing and help align your money with your values."
If you're searching out some socially conscious companies on your own, Peres suggested you look for companies that are transparent about their supply chain, sustainability initiatives and community impact.
He advised seeking B Corporations, organizations with specific interests in fair trade, renewable energy or even social justice issues you care about.
"While risk is always part of investing, you can feel good knowing your money supports meaningful change," he said. For many investors today, that kind of impact matters."
2. Healthcare and Biotech
By supporting companies in the healthcare and biotech sectors, you can help support the next life-changing, or lifesaving, discovery in medicine. According to Dennis Shirshikov, finance professor at the City University of New York and head of growth at Gosummer.com, that is essentially what investors in Johnson & Johnson and Moderna did as vaccines were released during the pandemic.
"Companies that focus on innovative healthcare solutions and accessibility can provide both financial returns and social benefits," he said. "Moderna (MRNA) and Johnson & Johnson (JNJ) have made significant contributions to public health [...] by developing vaccines and treatments that save lives."
3. Green Bonds
If you're looking to get a little creative with your investing and spread your funds across different projects to promote environmental sustainability, you might consider green bonds, which Shirshikov described as debt securities that are issued to finance environmentally friendly projects.
"Companies and governments issue these bonds to fund projects like renewable energy installations, energy efficiency upgrades and sustainable agriculture," he added.
4. Impact Investing Funds
Should you be concerned about supporting investments that generate demonstrable social and environmental impacts, along with financial returns, Shirshikov suggested you investigate impact investing funds.
"Funds like the Global X Conscious Companies ETF (KRMA) focus on companies with strong ESG (Environmental, Social, and Governance) practices," he said.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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