More people are considering making socially responsible investments as a way to do well and do good at the same time. This method of investing involves putting money into companies that have a proven track record of sustainability and ethics. They are companies that look out for their employees, care for the environment, and have it written into their business plan that they desire more than just profits, but to see people prosper.
Companies that are looking out for their fellow humans and the planet they live on strike a chord with many people. People want to support those companies, so they buy stocks and bonds from them. In doing so they encourage the companies to continue to expand and they encourage other companies to get in on the game. Perhaps the most compelling reason the investor chooses to put their money into these companies is that it makes them feel good.
There are some great benefits that come from socially responsible investing. In the end the company benefits everyone, not just their own bottom line. That means even those people who do not invest or work for the company get a benefit. The planet stays healthier if the company has a green commitment. This means future generations will have less pollution to worry about. And the investor benefits by seeing their portfolio grow (these investments still carry risk) when the company does well. They do not have to sacrifice their return in order to be responsible.
The biggest drawback of choosing socially responsible investments is that there are significantly fewer options. Since this is a relatively new area, there are not too many companies that are on board with it yet. When the investor does find a company that has a great socially responsible business plan, they may find that the company focuses too much on it, and not enough on profits. This will cause the investor to lose money, and ultimately they may take their money somewhere else.
The decision to make socially responsible investments is a personal choice. There is no wrong way to invest, and ultimately the purpose is to watch your portfolio grow. For those who are interested, they can find stock or mutual funds that are from companies that match their values. A little research beforehand on how financially fit the company is, what they have done in the past, and what their goals are in the future goes a long way to smart investing. Regardless of who the investor is, socially responsible investments can make up part of any portfolio.