Current events and the political climate have inspired many people to invest in a way that can make a difference. According to the Wall Street Journal, after the U.S. withdrew from the Paris climate accord, investors moved money into sustainable funds. Morningstar’s Jon Hale reported on Mediumthat millions of dollars flowed into environmental, social and governance (ESG) funds after the Parkland school shooting. (Many ESG funds don’t invest in gun companies.)
Many people want to use their investments to support the issues that matter to them, but they aren’t sure how to do it. Fortunately, the same rules of investing still apply: Stay diversified; pay attention to risk and return; invest in no-load funds (you don’t have to pay hefty loads or sales charges to invest in a sustainable way).
Here’s how you can put these practical guidelines to work for you.
If you’re new to sustainable investing, these four tips can help you get started and avoid common mistakes:
1. Start with sustainable funds
When I first started managing sustainable portfolios, I focused on what were then called ‘socially responsible’ or ‘socially conscious’ funds. Today, these funds are better known as sustainable funds or environmental, social and governance (ESG) funds, and there are many more funds to choose from.
By investing in sustainable funds, you’ll get diversification, and you also won’t have to try to evaluate a company’s environmental, social or governance (ESG) records on your own. Your fund likely has a whole team of people who are doing this important work.
If you click on the ‘account minimums’ tab, it’s easy to see which funds are available for as little as $1,000.