Most people are working toward creating an estate plan that aligns their money with what they value most in this world. They want to take care of their families, donate money to charities and causes they care deeply about, and support parts of their community they love. What many people don’t realize is that you don’t have to wait until you set up your estate plan to use your money in a meaningful way. Socially responsible investing, or SRI, can help you to invest in companies or organizations that are doing good work in the world - all while still keeping you on track to reach your financial goals.
Not every company in the world acts responsibly. It’s a sad truth, but you aren’t powerless against these organizations. Socially responsible investing is a way for you to ensure that your investments are supporting businesses that act responsibly and continue to do work you want to support. You can align your investing with your beliefs and values in a very custom, tailored way. SRI is all about how you want to make a difference in the world, and that’s what makes it such an incredible concept.
In short, yes. There are three different terms that are often thrown around when it comes to responsible investing: ESG (Environmental, Social, Governance investment screens that eliminate companies who don’t meet a responsible criteria), SRI, and Impact Investing. It’s easiest to look at this as a pyramid. At the bottom, ESG is a financially-focused investing strategy that has an additional socially responsible focus.
SRI is investing that actively seeks to eliminate investment opportunities that actively go against specific criteria that you set - meaning your money won’t go to an organization that supports beliefs that don’t match yours. Finally, impact investing is investing with a positive result intended. A financial planner can help you to incorporate responsible and impactful strategies into your plan in a way that helps you stay on track to meet your financial goals and grow your wealth.
In short, yes. Although you’re pursuing an ethical investing strategy, it’s still just that: a strategy. Like any other investing and saving strategy, it’s intended to help you grow your wealth and move toward your long-term financial goals, like retirement. SRI is one of the fastest growing areas of the investment industry. When you connect with a financial planner, they’ll be able to help you select specific screens that weed out companies or organizations that don’t match your same value set.
It’s also possible to apply “positive” screens that highlight investment opportunities in companies who are actively doing good in the world. If SRI is something that interests you, or you want to learn more about how you can use your money in a way that matches your values and beliefs, contact us today. We’d love to walk you through how responsible investing can be incorporated into your plan.
Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.
"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.