11 Feel-Good Ways to Invest Your Savings
Many investors today, particularly millennials, want to direct their money toward companies that reflect their values. Financial advisers and investment professionals often refer to this as socially responsible investing, or SRI. It's also called environmental, social, and governance investing or ethical investing. No matter the name, the goal is to align investors' money with their morals. What exactly constitutes an ethical or responsible investment varies based on the person, but here are 11 options that might fill the bill.
Before making any investment decision, it is wise to consider the risks involved. Investors should speak with a financial adviser or planner first.
By investing in municipal bonds, investors essentially loan money to state and local governments, which can use the funds to pay for public projects such as a new school or repairs to a city's water system. The earnings from some municipal bonds are exempt from federal income taxes. Investors that buy a muni bond issued in the state where they live also may be exempt from state and local taxes on the earnings.
SolarCity offers corporate "Solar Bonds" directly to investors -- one way to invest in alternative energy without the ups and downs that come from buying a company's stock. The minimum investment is $1,000, and the bonds have a yield of 1.1 percent to 5.75 percent with three-month to 15-year terms.
Calvert is one of the oldest investment management funds in this space. It creates, manages, and sells SRI portfolios of equity and fixed-income assets, and its Calvert Equity Fund is one of the largest SRI funds. Potential investors can review the company's Principles for Responsible Investment for an explanation of how it chooses where to invest.
Calvert Investments may have pioneered SRI funds, but there are many others to consider. Pamela Capalad, a certified financial planner in New York, suggests looking to the Forum for Sustainable and Responsible Investment for a list of SRI mutual funds and basic information about each. There are also SRI exchange-traded funds, which may appeal to investors who cannot meet the minimum requirement or don't want to invest in a mutual fund.
B Corporations are certified for-profit businesses that make a commitment to do no harm and benefit all. There are more than 1,400 B Corps and several, such as Etsy and Brazilian company Natura, are listed on public markets. Companies with the certification, which comes from the nonprofit B Lab, must renew it every two years.
Using Motif Investing, investors can choose a theme -- or motif -- to invest around and buy a group of stocks with a single trade. (There's a minimum deposit of $250 to make trades; after that, purchases come with a $10 commission.) Some motifs for investment include water shortage, high-yield dividends, and smart grid. The social responsibly motif does not hold businesses involved in alcohol, tobacco, gambling, weapons, or pornography. Some of its largest holdings include Microsoft, Alphabet (formerly Google), and Coca-Cola. Investors can also create their own motif of up to 30 stocks.
This investment firm lets clients choose how much to pay in fees, even if it is zero percent of the assets managed. Aspiration also donates 10 percent of its earnings to charities around the country. It currently offers two funds to investors, each with a $500 minimum investment: The Flagship Fund seeks long-term growth with limited volatility, while the Redwood Fund is made up of companies with environmental, workplace, and governance practices that Aspiration considers sustainable.
Buying or funding a business that can effect social or environmental change -- a practice known as impact investing -- is "the next level of investing for higher net worth people," says Peter Creedon, chief executive of Crystal Brook Advisors. Investors may need to qualify to take part, by meeting criteria such as making more than $200,000 annually. The Global Impact Investing Network website has more about impact investing.
This crowdfunding platform lets people invest directly in commercial real estate in their communities. Most of the investments are available only to accredited investors, and the minimum investment is often $5,000. But Fundrise also offers an eREIT, an investment in a portfolio of commercial real estate properties, which has a minimum investment of $1,000 and is open to all U.S. residents. The one stipulation is that the investment must not make up more than 10 percent of the person's gross annual income or net worth.
On this equity crowdfunding platform, investors can browse and invest in startup companies. Some current offerings include Loeb's Crunch, a crunchy condiment company, and Playground Sessions, an online music teaching program co-founded by the record producer Quincy Jones. Investing is limited to accredited investors right now, but when Title III of the JOBS Act goes into effect May 16, non-accredited investors will also be able to invest in businesses on Crowdfunder.
Lending Club and Prosper are two peer-to-peer marketplaces that allow individuals to invest directly in loans to other people. The borrower's identity is secret, but investors can screen for loans that have a particular purpose, such as medical bills, debt consolidation, a wedding, or travel. The peer-to-peer lending marketplaces grade the debt and give estimated yields for each. Both sites require a minimum investment of at least $25 toward a loan.