5 Ways to Get Started with Impact Investing

World-wide threats from global warming, the COVID pandemic, and social inequality call for change. However, the conversation extends beyond recycling, clean air, and electric cars. People from all backgrounds work to make the world a better place.

The priority shift has led investors to evaluate their portfolios. The desire to outperform the market while making a positive change is enticing and possible. Impact investing makes a difference.

Experts say that impact investing offers competitive portfolio performance. Sustainable investment funds with assets of more than $260 billion have tripled over the past decade, and the growth continues. Bloomberg predicts that ESG assets alone will exceed $53 trillion by 2025. So while the future is unknown and investing risky, change is coming. Impact investing is a trend worth knowing.

What is Impact Investing? Impact investing was first coined in 2007. As an investment strategy that focuses on corporate social responsibility, it's considered an extension of philanthropy. However, its desire to promote the welfare of others doesn't negate the return on investment.

Impact investments generate positive, measurable impacts to address the most challenging problems, such as energy, poverty, climate change, sustainable agriculture, waste, healthcare, real estate, etc. An impact investor invests in investment opportunities that make an impact on the world.

What's The Difference Between ESG Investing, Socially Responsible Investing, and Impact Investing? Impact investing can be confused with socially responsible and ESG investing. However, they're easy to distinguish by their priorities.

The ESG investor wants to see companies that are addressing all three factors. While the socially responsible investor centers on social factors and the impact, investors pick any one cause.

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