The term “going green” is more than just a buzzword nowadays. As the general public’s awareness of sustainable initiatives increases, so has investment opportunities in sustainable companies. Compare this with just a few years ago when sustainable investing was viewed as people trying to make a statement with their investments and were considered to be taking an activist approach to managing their wealth. So what is sustainable investing and how can the average investor take advantage of it? Here are some of the details to understand.
What Is Sustainable Investing?
Socially responsible investing has increased dramatically in the past few years. Companies are setting aside funds specifically for sustainability and investors could take advantage of significant investment opportunities as a result. The criteria for a sustainable investment contain several different aspects, including the environmental impact, waste and pollution, climate change, natural resources, social factors and governance. Any company you invest in that meets these criteria can be considered a sustainable investment.
Sustainable Investment Strategies
As with traditional portfolio management, there are different ways to manage a sustainable investment portfolio as well. One strategy is with hands-on investing. This simply means investors manage their portfolio without the assistance of a financial expert or advisor. If this is the strategy you choose, it’s important to understand the Eco-Smart Index Funds so you can make the appropriate decisions for your portfolio.
Hands-off investing is the most common strategy for sustainable investing, as it means investors work with an advisor. Since sustainable investing is fairly new, it’s important to work with an advisor who specializes in it so they can provide you with appropriate guidance. The more you learn about the sustainable practices companies are implementing in their business model, the easier your decisions could be when it comes to investing and portfolio management. When you work with a reputable financial advisor, you don’t have to have a significant amount of financial knowledge to feel confident in your investments.
Incorporate Diversification In Your Sustainable Portfolio
It’s important to diversify your portfolio with sustainable investing just like you would with any other investment. Invest in multiple types of bonds and stocks and allocate assets accordingly. Even though you may be specifically interested in alternative energy, for example, investing your complete portfolio in a company you believe in isn’t the best idea. You can allocate the majority of your assets in the company, but also consider spreading out some assets so your entire portfolio isn’t impacted negatively if the market decreases.
Stock Investing Info stays on top of the latest investment strategies to help clients build a well-diversified portfolio. Sustainable investing is more than just a buzzword today and can provide great investment opportunities for the average investor. Because of the increase in sustainable investors, companies will continue incorporating sustainable practices. This will, in turn, generate even more investment opportunities. To learn more about whether sustainable investing is right for you, contact us and we will reach out to you soon.