You may have heard the term “Impact Investing” – which is a term for investing based on things like social or environmental values. While putting money into investments that do good is growing in popularity, is it smart for your money? Certified Financial Planner Paul Fain joins us again with his financial planning advice.
PAUL TELL US MORE ABOUT DO-GOOD INVESTING.
The terms are sometimes confusing: Impact Investing is any investment strategy which seeks to consider both financial return and social/environmental good.
- SRI, or socially responsible investing, allows investors to align their investments with their values. This often means excluding certain areas, such as tobacco, weapons or gambling.
- ESG stands for environmental, social and governance. An ESG-integrated fund will focus on companies that are paying attention to those areas. That means that, if you want your investments to focus on everything from including companies that are doing good for the planet or promote women and minorities.
- Other terms: Sustainable, green, ethical investing, or values-based investing.
ARE THERE MANY INVESTMENT OPPORTUNITIES IN THIS ARENA?
The number of sustainable funds has climbed to 351 in 2018, while the assets in those strategies reached $161 billion.
HOW DO YOU PICK AN IMPACT FUND?
There may not be a perfect fit. What is your primary value, concern or goal?
- Excluding companies?
- Including companies?
- Influencing companies?
WHAT ABOUT PERFORMANCE, HOW DO THESE FUNDS COMPARE TO THE OVERALL MARKET’S PERFORMANCE?
- If you exclude certain industries, you may underperform the market at times.
- Impact investors expect a reasonable rate of return.
- Fund manager. Fund costs. Fund strategy.
FAST MARKET FACT: “Sell in May and Go Away”
S&P 500 Index
May: – 6.35%
YTD: 10.74%
QUESTION FOR OUR MONEYMAN?
Send them to Paul@assetplanningcorp.com!
You can also reach Paul by using the contact page on APC’s website.
