21 Jul Socially Responsible Investing
Your money is a gift. You are blessed with the ability to earn it and use it to make a positive difference in your own life and the world at large.
That’s what Julia and I believe anyway.
These days, multitasking purchases with social good is becoming commonplace. Think of TOM’s shoes, Burt’s Bees or The Body Shop. These brands have their missions interwoven throughout their products. Through your purchase, you become a part of that mission. It’s only natural that many people, especially us idealistic creative-types, want to do the same with the money they invest. So we wanted to give you a very quick guide to navigating this relatively new and expanding world of “Socially Responsible Investing”
What is it?
Socially responsible investing is an investment strategy that factors in both financial return and social good when picking investment vehicles. With the ultimate goal to bringing about social change.
Most people take part by putting their money into mutual funds that invest in groups of companies with similar missions or structure.
What do I need to know?
Twenty years ago, socially responsible funds simply omitted companies involved in tobacco, guns and alcohol.
Now, the landscape is much more diverse. Different fund groups focus on different things. Some group companies that pass certain environmental impact benchmarks. Some are all about women-led corporations. While others can be about forgoing foreign child-labor or treating employees especially well.
You need to look closely and do research before putting your money anywhere. Just because it says “socially responsible” doesn’t mean it’s focusing on the thing that YOU actually care about. Get specific on what your personal mission is and try and focus there.
What’s the cost?
Everything costs something.
What if I asked you to go into a grocery store and find me the absolute best deal on my dinner ingredients, but you could only shop on two aisles. That would be tough right? As Wealthsimple puts it “there is a good reason for the higher fee: someone smart needs to screen for the most socially responsible companies by combing through reams of data and designing cutting-edge analysis tools. And smart people usually don’t work for free.”
Sometimes they can lag the market at large as well.
Where can I find them?
Thanks to Google…all over the place! Some robo-advisors like WealthSimple offer them at the click of a button. You can also check out http://www.socialfunds.com/ if you want to get really nerdy with it.
I think the most important thing to remember about this kind of investing is that the perfect fund doesn’t exist. All companies are flawed in some way because all people are flawed in some way. But don’t let the quest for the perfect become the enemy of the good!
Have more questions about this? Hit us up!