From a Centered Wealth client who became motivated to do more: I came into the financial planning field through an unconventional path— that is, not from the world of finance, but from my personal experience of moving money into socially-conscious investments. The fruits of that personal decision motivated me to help others do the same. Discovering impact investing drove home an important truth. Despite the time and energy I put towards social change work, I was ignoring possibly the largest tool I had at my disposal: my money, or more specifically, my investment dollars. This is true for so many of us. It may not be a fortune now, but think about the total amount of money we’ll ever earn, save and invest. That’s a sizeable chunk of change! What’s more, taking steps to move that money in a new direction and talking about it with friends and family can encourage others to do the same.
People’s first objection to impact investing is often fear about financial under-performance. This fear has been debunked many times in numerous studies. But I think sometimes our hesitation is deeper. Here are some core realizations it took for me to fully commit my money to this path:
My money is already making an impact— I simply want to be intentional about it. Whether we’re aware of it or not, we’re tacitly supporting company policies and banking practices by buying stocks or opening a checking account. As New Resource Bank puts it, “Do you know where your money spends the night?” When I took the time to look up the companies held in my retirement portfolio, I was shocked to find culprits there I wouldn’t dream of supporting otherwise- like tobacco companies or weapons purveyors. You can do the same by looking up the top holdings in funds in your portfolio. Helpful tools can give you even more information, like fossilfreefunds.org, which shows the carbon footprint of your investments. As I suspect is the case with so many of you, once I knew what my money was doing, I had to take responsibility for changing it.
The problems are huge, and philanthropy is not enough. Donating time and money to charity is a wonderful thing to do… BUT it isn’t enough. To effectively tackle the great social and environmental issues of today (like how to help two billion people climb out poverty without further taxing our already over-heated earth), we simply need to harness the much larger pool of private capital. Americans donate roughly $390B a year to charity, whereas US stock markets alone have $30T (yes, that’s trillion) invested in them. That’s not counting money invested in private equity, US Treasuries, real estate… you get the picture. Additionally, if done well, socially-conscious investing allows you to give over and over again by reinvesting as your pool of money grows (as opposed to the “one-and-done” model of giving money away).
I want a healthier relationship to my money. Perhaps the largest impact that socially-conscious investing has- and one that is perhaps most overlooked- is the effect it has on the investor. Despite my parents’ constant exhortations, when I was growing up I never could quite motivate myself to learn about investing. With the socially-conscious lens, though, I was inspired to take control of my investments. Knowing my dollars could be funding solar installments or incentivizing companies to place women on their boards was inspiring. Suddenly I felt empowered to make the best financial decisions for myself, which was in turn bettering my community. Luckily for us, new investment products continue to be added each year that offer different socially-conscious choices.
We don’t have to be millionaires or have Warren Buffet-like expertise to start. I’m excited to continue to learn more—and invest more—along with you.