4 Ideas for Investing in a Socially Responsible Manner

4 Ideas for Investing in a Socially Responsible Manner

Many of us like the idea of investing in a socially responsible manner. If you are hoping to invest in a good cause, here are a few ideas.

For many of us, life is about more than just making money, and investments are about more than a bottom line. Many of us like to feel as though we are contributing to the world in a meaningful way. One way you can do that is by choosing your investments carefully. Investing in a socially responsible manner can give your the warm fuzzies, knowing that your money is going to a good cause. Here are 4 ways you can get involved in socially responsible investing:

investing in a socially responsible manner

1. Avoid Companies that Do Harm

The first suggestion is a little more passive. If you know a company does active harm, you can refrain from investing in that company. When you choose mutual funds, you can avoid funds that include that company. Even major institutions are starting to use this tactic by divesting their endowment funds from fossil fuels.

Of course, you might not care about fossil fuels. Instead, you might have other priorities. So you might decide to avoid investments in medical companies that support fetal stem cell research. Perhaps you want to stay away from tobacco companies or companies that use child labor to make their products.

Figure out what matters most to you, and where your own ideas of social responsibility intersect with your finances. Then, you can examine your portfolio holdings and move your money out of companies that do harm.

2. Invest in Companies and Funds that Do Good

Next, you can look for companies and funds that are in line with your own values. Investing in a socially responsible manner means that you look for companies that engage in practices that you believe are good for society (and maybe the earth). You might invest in an education company that you believe has the potential to help disadvantaged youth. Perhaps you buy shares in an index fund that focuses on renewable energy companies. It’s even possible to invest in real estate with a social benefit. Crowdventure is a new real estate crowdfunding platform that includes social benefits, like helping homeowners stay in their homes.

Think about where you can put your money where you might get a return with investments that aim to positively impact the world.

3. Microlending

One of the more interesting opportunities in recent years is microlending. You can provide a loan to someone in a third-world country who is trying to improve his or her life. Help a single mother start a small business to feed her children or fund some other person that you think could see an improved life with your help. Microlending allows you to invest in small chunks — usually about $25 — to help spread out your risk while potentially helping others.

A cousin of mircolending is P2P loans. While you might not be helping an impoverished person rise above his or her surroundings, you can still benefit someone else with P2P lending. You might help someone consolidate debt and start fresh, or help someone with a college education. If you believe the stories people tell, and want to help them live better lives,

If you believe the stories people tell, and want to help them live better lives, microlending and P2P lending can be a way of investing in a socially responsible manner.

4. Volunteer Your Time

Maybe, instead of investing your money and hoping for financial gain, you could invest your time in a way that benefits your community or your world. Look for a cause that you believe in, and make an effort to advance it. You can even provide money if you think that would help. Volunteer at the soup kitchen. Sit on the board of a local arts council. Participate in PTA legislative advocacy to encourage good education policies.

This time investment might not provide you with a direct monetary benefit, but the dividends you reap can be just as valuable. Feeling good about what you do, helping others and making the world a better place can all be just as rewarding as seeing financial gain.

As you consider ways to invest, don’t forget to think about making the world a better place. And remember: it doesn’t always have to be about the money.

Written by Miranda Marquit

Miranda Marquit is a freelance writer and professional blogger, specializing in personal finance, small business, and investing topics. She writes for a number of financial web sites and blogs, and has been featured in numerous media. Read about life as a freelancer at MirandaMarquit.com and in her book Confessions of a Professional Blogger.

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