Sustainable Investments: The new-wave investments balancing profit and purpose
With the world becoming more aware of the environment and social issues, several "sustainable investment" firms have popped up, offering both profit and a humanitarian rewards
Words: Charlie Bentley
“Greed is good,” says Gordon Gekko in the 1987 film Wall Street. But we’re nearly halfway through the 2020s now, and the socio-political paradigm has shifted since the era of contrast collars and brick-sized telephones. Several financial firms have started to make “sustainable and ethical” investment decisions. Usually, this means investing in businesses that have good practices regarding the treatment of their workers and the planet. However, critics argue that it is financially unwise for individuals to place their hard-earned cash into the hands of “moral investors” who promise to generate profit while prioritizing social ethics simultaneously. So, what’s the answer?
There are a number of “ethical firms” to choose from, including Betterment, EarthFolio, SVX, Empower, and Ellevest. Betterment offers “socially responsible investing” through proclaimed cost-effective, diverse ETF portfolios. One can choose from investing in “Climate Impact,” “Social Impact,” and “Broad Impact” portfolios. However, the higher the percentage of bonds to stocks you choose, the lower the percentage of the portfolio will be allocated to socially responsible investments.
An article hidden away on the Betterment website is titled “Will the Betterment Core Portfolio Beat the Market?” The answer from the Betterment team is, “The Betterment Portfolio is not designed to beat the market, which is difficult to do with any certainty and involves a lot of risk.”
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