Put your money where it matters to you.
By Jenny Hoff, Photo by Katt Yukawa
If you’re looking to start investing your money but want to support companies aligned with your values, you can join millions of others who are committed to socially responsible investing. Fortunately, it doesn’t necessarily require hours of research and individual stock-picking to make sure you are making the right choices.
Environmental, Social and Governance (ESG) funds are becoming ever more popular as investors see an opportunity to align their money with their values. Also, many of the companies that fall under this designation have stable returns, perhaps due to more governance and self-monitoring in order to keep their ESG status. If you’re looking to put your money where it matters to you, it’s no more difficult than investing in a basic index fund through a financial company.
Where to Find the Funds
If you’ve read our past articles, you’ll know that an easy, low-cost way to invest your money in a diversified portfolio is through a global index fund using Vanguard, which charges very low fees. If you’re looking for the easiest way to invest in big companies that fall under the ESG designation, you can go to vanguard.com and invest in the ESG USA stock (ticker: ESGV). Some companies included in this bundle are Apple and Amazon; so you’re not exactly investing in the little guy. But at least you know there are some sort of standards they need to abide by to stay in the fund.
The Calvert US Large-cap Core Responsible Index Fund (CISIX) is another low-cost way to invest in companies that meet a strict set of criteria, including gender pay equity. Calvert is known for its rigorous vetting process to ensure the funds meet their criteria before including them in the fund.
If you’re more risk-averse or you want to diversify into more than stocks, you can socially invest through bonds. Through the Fidelity Sustainability Bond Index Fund (FNDSX), you can invest in a portfolio consisting of a mix of government and corporate bonds and mortgage-backed securities. The return is typically much less than investing in a stock portfolio, but bonds are also usually less risky options.
Other ways to Socially Invest
If stocks and bonds don’t entice you, look at organizations that support social entrepreneurs, for-profit businesses that also benefit society. Investors do often see a return on their investment, both financially and through social capital. Organizations like ashoka.org have been supporting social entrepreneurs for decades and can be a great resource for finding entrepreneurs creating products and businesses you care about. If you want to invest in a particular business, an organization like Ashoka is a great place to start your research. The idea that knowing your investment went to something worthwhile is a return in itself. Unlike GoFundMe or platforms where you can give directly to people or causes you care about, investing in social entrepreneurs does also return a financial profit, making it a true form of investment.
With current inflation rates, your money loses value every day it sits in the bank. As the cost of goods like gas and food go up, your money buys less. While it’s always good to have an emergency fund, cash you have above would serve you better if invested in ways that can help your money grow. If you can do that while also supporting your beliefs and values, you’ll have made a return even greater than expected.