Investment Read Time: 3 min

Investing with Your Heart

Some individuals believe that return on investment shouldn’t be the only criterion for how they invest their money. For them, the social impact of investing is just as important – perhaps more important.

The history of socially responsible investing stretches as far back as the mid-18th century, but its more-modern form began taking shape in the 1960s, amidst the fight for civil rights and the emerging Vietnam War protests.

More than $17 trillion is managed under sustainable and responsible investing principles. This includes mutual funds, endowments, and even venture capital funds. It should be noted that amounts in mutual funds are subject to fluctuation in value and market risk. Shares, when redeemed, may be worth more or less than their original cost. Mutual funds are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.1

What Is “Socially Responsible Investing?”

The definition of socially responsible investing has evolved. And it may be referred to by different names, such as “sustainable and responsible investing” or “values-based investing.”

Whatever term is used, this investment discipline is usually characterized by a set of principles that govern how investments are selected. One widely used framework includes environmental, social, and corporate governance criteria (ESG).

What’s ESG?

ESG criteria of good corporate governance, positive environmental impact, and responsible community involvement are a guide for making investment selections, akin to other investment-related criteria, such as price-to-earnings ratio or revenue growth.

The underlying belief is that good corporate practices may lead to better long-term corporate performance.

Investor experience with socially responsible investing will vary. As with any mutual fund or exchange-traded fund, socially responsible investments are subject to fluctuation in value and market risk. Shares, when redeemed, may be worth more or less than their original cost.

Individuals should also recognize that each investment approach may operate under a different set of principles, so you should be careful that your selection mirrors your personal values and beliefs.

1. USSIF.org, 2020 (most recent data available)

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |

Have A Question About This Topic?

Thank you! Oops!

Related Content

Tying the Knot

Tying the Knot

With the right planning, you can build confidence in the life you’re building together.

It’s Time to Have a Talk with Your Parents

It’s Time to Have a Talk with Your Parents

One of the strangest developments in the ever-evolving child-parent relationship is reaching the point when an adult child starts dispensing advice to his or her parents. It’s a profound, but natural turning point in the relationship.

Is a Variable Annuity Right for Me?

Is a Variable Annuity Right for Me?

Pundits go on and on about how “terrible” or “wonderful” annuities are, but they never talk about whether annuities are right.