Next Avenue: Putting your money where your values are: A guide to socially responsible investing

by | Aug 17, 2022 | Stock Market

This article is reprinted by permission from One hot trend in investing today, and one you may want to embrace if you haven’t yet, is investing in ways that represent your values. The practice is often called ESG investing (environmental, social and corporate governance), though some dub it socially responsible investing or, in certain cases, impact investing. Years ago, the name was “ethical investing.”

Leading the charge toward socially responsible investing: women. A June 2022 survey by the financial research firm Cerulli Associates found that 52% of women would rather invest in companies that have a positive social or environmental impact; 44% of men felt that way. “Women want more than just financial return,” Janine Firpo, author of “Activate Your Money” said on the “Friends Talk Money” podcast I co-host with Terry Savage and Pam Krueger. “We’re realizing that when we invest our money in the things that we care about, it makes our money more meaningful to us.” Krueger, founder of Wealthramp, a firm that vets financial advisers, says advisers tell her that “the clients who are asking these questions [about socially responsible investing] are women.” And, she adds, “lots of women who are close to retirement or already retired seem to want to make a difference with their money.”More investments to choose from Investing this way is becoming much easier to do. Every major mutual fund and ETF company now sells ESG products. And according to InvestmentNews, U.S. mutual-fund companies last year came out with 70% more of them than in 2020. Similarly, nearly two-thirds of new ETFs last year were ESG-focused. Roughly two-thirds of financial advisers now use ESG products, InvestmentNews Research has found. A year ago, 59% did. The Biden administration is expected to reverse the Trump administration’s limits on ESG investing in retirement plans this summer, too. That’s apt to make it far more …

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