Vermont Retirement Planners, LLC

54 Highland Avenue
Manchester Center, VT 05255
nick@vtretirement.com
(802) 367-3958

87 North Main St.
Rutland, VT 05701
nick@vtretirement.com
(802) 772-7945

Investment Read Time: 3 min

Are You Ready for Your Portfolio to Make a Difference?

Interest in making an impact with one’s investments has grown in recent years, which means many investors may have an increased interest in environmentally or socially focused investments as well. In fact, impact investments account for $502 billion of managed investments worldwide, with 58% held in North America. Curious to learn more about impact investing? Read on.1

What Are Impact Investments?

Impact investments are made with a measurable or tangible goal for social change in mind. From there, the criteria may differ depending on your own values and focuses. For example, you may choose to invest in a company that commits to planting a certain amount of trees per year or another organization that provides resources to school districts in low-income communities.

You may hear other phrases used in conjunction with impact investing, such as socially responsible investing (SRI) or environmental, social, and governance investing (ESG). These investment models follow more specific criteria and guidelines such as ethical business practices, environmental conservation, and local community impact.2

Impact Investments, SRI and ESG investments have certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.

Setting Expectations

Making a difference in the world is only one consideration with impact investing. In a 2020 survey of impact investors, 88% indicated that the financial performance of their investments were either in line with or outperformed their expectations.3

Tips For Impact Investing

Here are a few concepts to keep in mind with Impact Investing:

  • Your values: What specific areas of impact are you hoping to make with your investments? Are you focused on sustainability, social justice, your religion, or another area? Deciding what you’re looking to accomplish can help narrow your focus.
  • Types of investments: There are a variety of investments that are structured to help pursue your goals when it comes to Impact Investing. As you define your values, the types of investments may become more clear.
  • Impact reports: Impact reports are designed to provide information that breaks down how the company is making a difference and what measurable goals they’re following. Impact reports are one factor to consider as you evaluate opportunities.

Impact investing can help keep your investment aligned with your personal beliefs. As you consider whether this choice may be appropriate for you, don’t hesitate to reach out. We may be able to provide some information or identify some resources that you may find insightful.

1. TheGIIN.org, April 2019
2. CFAinstitute.org, April 2021
3. TheGIIN.org, 2020

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite.

Share |
 

Related Content

Behavioral Finance

Behavioral Finance

An amusing and whimsical look at behavioral finance best practices for investors.

How to Invest in LGBTQ+ Friendly Companies

How to Invest in LGBTQ+ Friendly Companies

This article allows those who support LGBTQ+ interests to explore the possibilities of Socially Responsible Investing.

5 Smart Investing Strategies

5 Smart Investing Strategies

Getting what you want out of your money may require the right game plan.

 

Have A Question About This Topic?







Thank you! Oops!

Alternative Investments - Going Mainstream

Alternative investments are going mainstream for accredited investors. It’s critical to sort through the complexity.

Value vs. Growth Investing

Among stock-market investors there’s long been a debate between those who favor value and those who favor growth.

Getting a Head Start on College Savings

A few strategies that may help you prepare for the cost of higher education.

View all articles

Taxable vs. Tax-Deferred Savings

Use this calculator to compare the future value of investments with different tax consequences.

Impact of Taxes and Inflation

Estimate the potential impact taxes and inflation can have on the purchasing power of an investment.

What Is My Risk Tolerance?

This questionnaire will help determine your tolerance for investment risk.

View all calculators

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

View all presentations

Investments

You’ve made investments your whole life. Work with us to help make the most of them.

Jane Bond: Scaling the Ladder

Agent Jane Bond is on the case, uncovering the mystery of bond laddering.

Bursting the Bubble

Tulips were the first, but they won’t be the last. What forms a “bubble” and what causes them to burst?

View all videos