Intentional Investing: How to Make an Impact with Your Money

Intentional Investing: How to Make an Impact with Your Money

More and more investors are choosing to align their money with their values.

Intentional Investing: How to Make an Impact with Your Money
Monday, 11 May 2020

The world we live in has undergone significant change in recent months, leading some investors to rethink their strategies. While it’s usually best to stay the course during a time of market volatility, it’s also a good time to self-reflect and ask yourself whether you are using your wealth in alignment with your values. More and more young investors are leveraging their assets to make an impact in the world by using an investment strategy meant to produce some sort of positive social result. It’s called impact investing, and it has given rise to a new trend in financial planning.

If you think impact investing may be right for you, get intentional about what you want to accomplish. This means taking three steps at the outset.

Step 1: Determine Your ‘Why’

If you’re ready to make values-based decisions about your investments, it’s helpful to determine your specific reasons for wanting to do so. Identifying your ‘why’ will help you form your strategy. Here are a few questions to ask yourself as you get started:

  • What do I want to achieve on a personal level? Think about why you’re choosing to invest in the first place. You might have both long-term and short-term goals, but you should be clear about them. You could be saving to buy a vacation home, working to help your children afford college or building a retirement savings that supports your dream to travel the world. Whatever your personal goals may be, they will assist in guiding your strategy.
  • What specific impact do I hope to make in the world? This question is about what’s important to you; your values and passions. Maybe you’re committed to eradicating childhood hunger in your community or microfinancing for female entrepreneurs. Whatever impact you desire, there’s likely a way to tailor your investments to line up with it.

Step 2: Build Your Strategy

Once you have a clear vision of your goals and the ‘why’ behind them, use this information to determine exactly how you’ll spend and invest in intentional ways. There are several options available to you for putting your wealth to work in impactful ways.

  • Socially Responsible Investing. This strategy works in two different ways. First, it focuses your investments on particular kinds of businesses or organizations that you want to support. Second, it specifically avoids companies that don’t score well against whatever value standards you’re using, such as environmental impact.
  • Banking Decisions. Long gone are the days when you had a limited selection of banks based upon where you live. Today, there are a multitude of national banking options, not to mention online banks, too. If you want to be truly intentional about how you use your money, consider a bank that donates a percentage of revenue to causes you support. It might seem like a small step, but this impact is long-term and you have the peace of mind that your values align with those of your financial institution.
  • Charitable Giving. If you want to support a specific charity or social cause – and there are so many in need today – a Donor-Advised Fund is a great vehicle to use because it also helps you maximize your tax benefits. Contributions are invested and grow over time, and you can decide where and when to grant the funds to charitable organizations of your choosing.
  • Shareholder Activism. Part of being more intentional in your investing can be simply speaking up as a shareholder in the public companies you invest in. You get to have a say in things like company policies and social actions through voting opportunities, and it gives you a very tangible way to change the way a company does business.

Step 3: Consider Your Legacy

Have you thought about the legacy you want to leave behind someday? Your ‘why’ can help connect you to what you want to build for future generations, and your strategy is the path that will help you achieve your goals. Your investment strategy – and your larger financial plan – should all trace back to what you plan to leave when you pass away. It can be overwhelming to think about, and many people struggle to gain clarity in this respect. Just remember, it’s always an option to revisit the two steps above until you feel sure about the legacy of the impact you desire.

How a Financial Advisor Can Help

As you strategize about the best way to create the impact you desire with your money, it may be worthwhile to enlist the guidance of a financial advisor you trust. Not only can a professional suggest options you may not have considered but it’s a smart way to ensure your strategy will truly move you forward in the ways you desire.

If you’d like a professional opinion on your investment strategy, let’s start a conversation today. Together, we can create the ideal, impactful financial plan for you and your money.

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