Investment Read Time: 3 min

Investing with Your Heart

Some individuals believe that return on investment shouldn’t be the only criterion for how they invest their money. For them, the social impact of investing is just as important – perhaps more important.

The history of socially responsible investing stretches as far back as the mid-18th century, but its more-modern form began taking shape in the 1960s, amidst the fight for civil rights and the emerging Vietnam War protests.

More than $17 trillion is managed under sustainable and responsible investing principles. This includes mutual funds, endowments, and even venture capital funds. It should be noted that amounts in mutual funds are subject to fluctuation in value and market risk. Shares, when redeemed, may be worth more or less than their original cost. Mutual funds are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.1

What Is “Socially Responsible Investing?”

The definition of socially responsible investing has evolved. And it may be referred to by different names, such as “sustainable and responsible investing” or “values-based investing.”

Whatever term is used, this investment discipline is usually characterized by a set of principles that govern how investments are selected. One widely used framework includes environmental, social, and corporate governance criteria (ESG).

What’s ESG?

ESG criteria of good corporate governance, positive environmental impact, and responsible community involvement are a guide for making investment selections, akin to other investment-related criteria, such as price-to-earnings ratio or revenue growth.

The underlying belief is that good corporate practices may lead to better long-term corporate performance.

Investor experience with socially responsible investing will vary. As with any mutual fund or exchange-traded fund, socially responsible investments are subject to fluctuation in value and market risk. Shares, when redeemed, may be worth more or less than their original cost.

Individuals should also recognize that each investment approach may operate under a different set of principles, so you should be careful that your selection mirrors your personal values and beliefs.

1. USSIF.org, 2020 (most recent data available)

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 Suite 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 FMG Suite.

Share |
 

Related Content

5 Keys to Fiscal Fitness

5 Keys to Fiscal Fitness

These basic moves, if done consistently, can help ensure that you are fiscally fit both now and in the future.

Business Boosters: Can Your Business Survive Without You?

Business Boosters: Can Your Business Survive Without You?

If you didn't show up tomorrow, would your employees be able to go it alone?

Supplementing Retirement Income with Whole Life

Supplementing Retirement Income with Whole Life

Whole Life insurance can add to your retirement income and allow you to live confidently.

 

Have A Question About This Topic?







Thank you! Oops!

Disability Protection for Your Employees and Your Business

Many business owners are surprised to learn that wages paid to a disabled employee, not subject to a written plan, are not tax-deductible business expenses.

How Retirement Spending Changes With Time

It can be difficult for clients to imagine how much they’ll spend in retirement. This short, insightful article is useful for jumpstarting a conversation about retirement spending, spending habits, and potential medical costs.

Budgeting After a Divorce

Divorce is the second most stressful time in a person's life. Here's some tips to get through it.

View all articles

Historical Inflation

This calculator shows how inflation over the years has impacted purchasing power.

What Is My Risk Tolerance?

This questionnaire will help determine your tolerance for investment risk.

Tax Freedom Day

Assess how many days you'll work to pay your federal tax liability.

View all calculators

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

5 Smart Investing Strategies

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

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

View all presentations

The Cycle of Investing

Understanding the cycle of investing may help you avoid easy pitfalls.

Investments

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

The Fed and How It Got That Way

Here is a quick history of the Federal Reserve and an overview of what it does.

View all videos