Part of the beauty of giving back—aside from the warm and fuzzy feelings it can produce—is that there are countless ways to flex your charitable muscle.
For some, it may mean rolling up their sleeves to help build houses for the homeless, while for others, doing good means lacing up those running shoes to raise money for a humanitarian cause.
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Whatever your personal charitable calling may be, it all comes down to making a difference in the world—be it through donating your time or your dollars.
Speaking of dollars, it’s even possible to be more socially mindful when it comes to your portfolio.
It’s called impact investing, and in its simplest terms, it’s when you invest with the dual purpose of seeking returns and making a positive social and environmental impact. According to the Forum for Sustainable and Responsible Investment, investing with a social purpose is gaining serious momentum: From 2014 to 2016, sustainable, responsible and impact investing assets grew 33% in the U.S.—reaching $8.72 trillion.
For some investors, impact investing may involve choosing to invest in companies or industries that uphold certain principles, such as sustainability or fair labor practices. For others, it may involve seeking out mutual funds or ETFs that screen out sectors—such as manufacturers of tobacco or firearms—that may not reflect their personal values or choosing funds that target specific environment, social or other impact-related objectives.
Regardless of the route they take, impact investors want to make a positive difference in both their portfolios—and the world.
Curious about the people who are putting their money to work in this way?
So were we, which is why we rounded up three such investors to share their personal investing-with-impact stories.
“I Want to Put My Money Where My Heart Is”
Nell Debevoise, CEO of a consulting firm, New York City
“I began investing in 2009. But I didn’t want to just open up a standard portfolio, where my dollars would end up supporting industries that I didn’t believe in.
I’d been working in the nonprofit sector for seven years by then, and through that world—and while getting my Global MBA—I’d heard talk about impact investing. So I started researching options that would support sustainable change.
I opted for a negative screen mutual fund, which allows me to avoid investing in companies with practices [I find objectionable]. A negative screen was an easy way for me to invest in a meaningful way—yet still maintain a balanced portfolio.
I have a low-cost, low-fee, long-term fund that [seeks to] track the S&P 500 Index—and avoids firms that produce tobacco, weapons, and harmful chemicals.
In my job, I work hard every day to try and make positive change in relatively small, local ways. At the same time, I understand the scale of publicly-traded companies is hundreds of thousands of times bigger.
But if, via my investments, I’m helping big companies [I don’t believe in,] then I’m undoing the good that I strive for on a day-to-day basis.
I believe that if you’re serious about changing the world, it’s necessary to address the bigger problems.”
“I Opt for Fossil-Free, Clean Energy Investments”
Raman Bindlish, senior business development manager, San Jose, Calif.
“I’m very hands-on when it comes to my investments, and I’m always on the lookout for good opportunities.
To that end, I make it a point to stay up to date on international news so that I can understand what’s happening across the world and—as a result—formulate smart personal investing strategies.
Last year, for example, I picked up on an intriguing trend: There was a lot of press about developing countries becoming increasingly environmentally conscious.
“I believe companies that function in an ethical way earn better returns because they run a lower risk of having to use shareholder dollars to amend their unlawful practices.”
So I spoke to friends in China who told me they were really concerned about the environment and looking into clean energy.
They even pointed me to a viral video of a Chinese journalist talking about how she feared for her baby’s future because of pollution.
I also learned that a lot of people back home in India are focusing on solar energy—on going off the grid. One of the airports is even powered by a solar plant.
So in 2014, based on these observations, I started digging into research on fossil-free ETFs and began investing in companies that are moving away from fossil fuels in favor of more environmentally friendly alternatives—from solar energy to electric cars—if they seem to be a good investment choice.”
“I Believe Doing the Right Thing Is Good Business”
Jay Sukits, assistant professor of business administration, Pittsburgh
“The first time I thought about impact investing was 2008, when I was asked to participate in a debate about using socially responsible investing in the framework of college endowments.
So I did some research, which eventually gave me the idea to create a socially responsible investing portfolio management project on campus—and inspired me to begin using the concept to inform my own portfolio.
I don’t see impact investing as an emotional issue—I’m not investing based on how I feel about certain issues. For me, there’s a logical rationale behind it.
I believe companies that function in an ethical way earn better returns for their investors because they run a lower risk of having to use shareholder dollars to amend their unlawful practices—whether that’s in the form of paying government fines or having to underwrite expensive lawsuits.
In addition, I believe companies that, for example, discriminate against certain people are at an economic disadvantage because they aren’t hiring the best talent and therefore aren’t performing at the level they should.
To me, it’s just smart investing, which is why I’ve been involved with socially responsible investing for several years now.”
No investment strategy can guarantee a profit or protect against loss. All investing carries some risk, including loss of principal invested.
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Unless specifically identified as such, the individuals interviewed or otherwise listed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services and the views expressed are their own. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies. LearnVest, Inc., is wholly owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company. LearnVest Planning Services does not specifically recommend any particular security product.