Posts Taged sustainable-investing

Common Misconceptions About Sustainable Investing

As investors continue to grow more aware of sustainable investing, there are a greater number of discussions happening around the topic.

Understandably, investors want to know as much as they can before making any investment decisions, but that can be challenging when truths are hard to discern from common assumptions. As with any topic in the realm of investing, it’s important to dig beneath the surface to separate fact from fiction.

If you’re curious about sustainable investing, read on to learn the truths behind some prevailing misconceptions.

Misconception #1: Sustainable Investing Isn’t Real Investing; It’s Just for People who Like to Feel Good About Themselves

Some investors are concerned that sustainable investing isn’t quite the same as traditional investing. After all, what could be wrong with the traditional system? How could viewing investments sustainably really make a difference?

Even though the idea of sustainable investing might bring images of popular green brands or alternative lifestyles to mind, sustainably-minded investing doesn’t have to be in opposition to other investment methods. Instead, what sustainable investing offers is a values-based way for investors to evaluate their portfolios and make shifts that align with their financial aspirations, as well as their personal code of ethics.

Depending on the investor’s goals and resources, sustainable investments might fit well into portfolios where other companies would not. And just because an investor chooses to consider sustainable investments for a portion of their portfolio, doesn’t mean that they have to rework everything. Every investor has different needs and should work to find a unique balance of that works for them.

Misconception #2: I Need to Choose Between Sustainability and Returns

Another common misconception about sustainable investing is that investors need to sacrifice returns in order to invest in brands that are truly sustainable. As it turns out, it’s possible for a company to be both sustainable and deliver potential similar returns over time.

A financial advisor can help you analyze your investment options for sustainability and other metrics important to portfolio design. This is why a close relationship with your advisor and transparency about your values and aspirations is so important in your investment conversations.

Misconception #3: Sustainable Investing is Just a Fad

There is a certain assumption that the conversation surrounding sustainable investing is just a fad. After all, sustainability in everyday life, from communities banning plastic straws to discussions over global conservation, is a trendy topic.

When it comes to sustainability in business, there is reason to believe that the practice of sustainable investing is here to stay. A big part of this is that sustainable investing isn’t actually a new concept; it’s just receiving a little more attention as sustainable practices are gaining more popularity in the public eye and businesses are dedicating more resources to sustainability.

Misconception #4: Sustainable Investing Holds Businesses to Certain Moral Standards

It used to be that ethically-minded investing naturally excluded certain “sin” industries, like tobacco and alcohol. But today’s sustainable investing is less about making a moral statement by withholding investments from “bad” companies and more about what a company is doing to make the world a better place.

Companies don’t have to adhere to a certain set of morals to be considered sustainable. And investors can choose brands that align with their values, even if the companies themselves might get an eye roll from an older family member.

If you’d like to learn more about how sustainability investing might work for your portfolio please call or email us today.

What Is Sustainable Investing?

Financial notebook, plan, and coffee

Whether you’re looking to build, protect, or grow your investment portfolio, you need to base your investment decisions around a variety of factors in order to find investments which have the potential to meet your financial goals. You might consider factors like a company’s past performance, a colleague’s advice, market trends, or portfolio diversification.

Each investor makes unique judgement calls every time they make a decision to build or update their portfolio. And while it’s important to not make these judgements for emotional reasons, is it possible that there are other considerations you should take into account?

For example, how important is it to you that companies you invest in uphold certain ethical standards? Does it make a difference whether Company A has greater carbon offsets than Company B? Or whether Company C is committed to sourcing only organic inputs?

Sustainable investing is a component of investing that is related to investors finding companies that align with their moral and ethical standards. After all, if you’re going to invest your money with an organization, you may enjoy the confidence that comes with knowing your dollars are doing work you agree with.

Lead with Your Values

You know it’s important to bring your values to the table when you build your financial portfolio. After all, it’s your values, rather than your emotions, that should shape your priorities and investing behavior.

When it comes to sustainable investing, your values will take an even more obvious lead in guiding your investment behavior. If, for example, you’re concerned with environmental issues, you might want to learn more about green investment options.

The concept of sustainable investing makes it possible to make sound investment decisions that fit your personal values and long-term financial goals. In fact, many investors find that companies that are committed to doing societal and environmental good may well have a similar commitment to financial responsibility, meaning that they might perform better over time.

Find Companies Committed to Doing Good

Sustainable business practices are becoming more and more popular, which means that it’s even easier to learn whether companies you want to invest in operate in a way that you agree with. In fact, many companies have started to include sustainability reports along with their annual financial reports.

If you want to find companies that are making the kind of difference that you want to see, you can talk to your financial advisor about finding information on companies’ sustainability and corporate social responsibility reporting.

Balance Your Portfolio

If you choose to go the sustainable investing route, you can balance your portfolio with sustainable investment options in a number of ways. Maybe you want to dip your toes into sustainable investing by choosing one or two companies to add to your portfolio. Or perhaps you’d like your portfolio to boast a larger percentage of sustainable companies.

Whatever your feelings on sustainable investing, your financial advisor can provide direction to finding brands that align with your personal values. If you’d like to learn more about how sustainable investing can help pursue your investment goals contact Jacob Sturgill today.