Companies, organizations, and investment funds make a difference in the world by fusing natural elements with man-made discoveries. Thanks to technology, impact investments have gained substantial recognition because of its measurable investment growth. Today, impact investors are interested in business development and ecological advancements for improving the quality of life.
The concept of impact investing uses mutual funds or ETFs (exchange traded funds), offering diversified opportunities to fit your financial goals. These diverse portfolios manage equities, bonds, and other securities. It’s the blend of impact investment types that allow investors to reap the highest yields. You’ll find impact investments comprised of organizational equity and debt (long-term projects), venture capital (start-ups) and foundations (infrastructure).
1. It’s Not a New Concept
There is extensive data and information generated by sustainable research, authoritative energy analyses, and predictable medical studies. As part of your portfolio, knowing the facts about impact investing helps to recognize its worth and potential for growth.
As a front-runner in trade, impact investments have grown in recent years aligned with the advent of technology and social issues. No matter which investment you chose, don’t select randomly. You should compare each one’s social investing value against your portfolio’s planned growth percentage.
2. Stimulating and Challenging Growth Impacts
Millennials have been an instrumental factor in this market segment driving the growth of impact investing. Why? It seems to be the generation accepting social responsibility for sustainability. They believe that life gets better when you integrate technology with nature's sources, and positive investment returns naturally follow.
Impact investments are founded on methods that continue to grow based on the market's demand and the human factor to persevere. Millennials, and some Gen Xers, consider equity investments as a shareholder. It’s an angel design that attracts investors and large corporations seeking emerging technology.
3. Risk Factors
Let’s not forget one eternal fact – investing in any form comes with risk. Some assert that volatility and risk are the price one pays to invest. Impact investing can be exciting, but it has its share of problems. You want to be sure to temper your emotions as you see your investment fluctuate in value. Working with a trusted advisor is a reasonable avenue, as he/she can help you understand the kinds of issues that occur with this type of investment.
Over the years, impact investments have expanded outside of the traditional economic and commercial activities. For first-time impact investors, you can reduce your risks by starting with a small percentage dedicated to impact investing. You can always increase the investment percentage down the road.
4. Teaming Economics with Investments for Profit
Climate change continues to be an important topic and in need of further long-term developments for a healthier planet. Other aspects affecting impact investing are alternative energy incentives from solar, wind, and water. Agriculture investments will see resource improvements as benefactors (investors) influence productivity options.
Green bonds were created to fund environmental impact projects. Economic demands set the pattern for bond performance yields. Nobody’s sure about everything, but the goal of impact investing is to find a balance between the environment, business, and the consumer.
5. Market Measurements Linked to Growth
Choose your investments by considering the desired returns and preferences on how to impact the world’s improvements. Here is some impact investment data to keep in mind:
- Approximately $502 billion of impact investing assets are managed worldwide, as of 20181
- Green Bonds grew by 78 percent in 2017, a significant increase from 2016.2
- Of impact investors, 67 percent choose to only make impact investments.3
- In a recent survey, 91 percent of impact investors said their investors were in line or exceed their financial expectations since their inception.4
For most investors, impact investing is a chance to make a difference, while securing their financial future. As investor interest increases, so do the possibilities of impact investment opportunities. It’s okay to be adventurous within limits. Just be sure your choices are founded on established approaches.
This content is developed from sources believed to be providing accurate information. 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. 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.