The goal of most investors is to make as much money as a you can, while taking the least amount of risk. But what if your objective was entirely different? What if, for example, you wanted others to benefit from your investments?
That's the objective for a growing slice of the socially responsible investing universe. For this installment of Investing 101, we sought insight from Shari Olefson, an advisor and author of the book Financial Fresh Start, who says its not just about the bottom line, it's about impact and responsibility too.
1) What is socially responsible investing?
There are two distinct types of socially responsible investing, or "SRI" as it is often called. The first kind tends to focus on only owning stocks that are deemed to be "green" and pose no societal threats. As you might expect, the debate over what is - or isn't - environmentally harmful, or trying to reach consensus over which industries or companies qualify as SRI's, can be quite fierce.
The other, newer type of SRI takes a more proactive approach. As Olefson explains in the attached video, "it's investing for an impact," not just investing to grow your wealth. Instead of looking for personal gains, she explains, the objective tends to be more "outward facing" and supportive of a particular cause or country or class of people.
These miniature aid programs are called microcredit or microfinance and offer an opportunity to "really put your money where your mouth is," and for as small a commitment as $25.
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