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Investing your money can have a substantial impact on your finances as well as the world around us. As the 21st century continues, there is a growing focus on environmental maintenance, eco-friendly business practices, and sustainability. Many companies are moving toward a more financially and environmentally sustainable business model and you can help those companies by investing in them. Here is a look at what Sustainable Investing is and how to know if it is right for you.
Sustainable Investing (SI) is a way for you to support companies that prioritize sustainable and eco-friendly business practices. Essentially, it is niche investing in companies that are good for the environment. These companies often prioritize a sustainable business model over being highly profitable, and startup costs can be higher than for other companies. By choosing to invest in them, you can help them get off the ground and become profitable, which will have returns for you and benefits for the environment.
By now, we have all seen the impact of out-of-control business practices that hurt the environment. Companies have been known to clearcut forests, leave giant strip mines open, and pollute uncontrollably while trying to make a profit. These methods are not sustainable and can quickly ruin an environment. SI allows companies that take the time and energy to develop practices that are good for the environment to get the support that they need to continue their development into a profitable business. Choosing sustainable businesses to invest in is a way to diversify your portfolio as well.
Using one of the best online robo advisors, you can focus your investments on motifs that matter to you. In fact, there’s an app called Motif that will do exactly that: Let you select bundles of investments that center around an idea, such as “Renewable Energy.” Check out our Motif review here for more.
SI is right for anyone that wants to have a bigger impact on the environment while investing. There are many companies out there in every industry that focus on sustainable practices. The risk involved with SI is that many companies that use sustainable practices are smaller and newer than their industry leading counterparts. This could limit the scope of your returns. However, many smart investors use SI as a means of diversifying a portfolio as well as investing in the future. SI companies are rapidly growing and the returns on your investment can grow over time.