Credit: This content is made possible by our sponsor; the views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
These days most people don’t just want to pay lip service to the causes they care about. Whether it’s climate change, saving our oceans, zero waste or gender equality, we’re more aware than ever of the world’s issues—and how we have a responsibility to solve them. Enter socially responsible investing, or SRI investing, a trend that helps investors who want to make a social impact put their money where their mouths are and, in the best case scenario, make you a nice profit too. "In a study conducted last year, we found 78% of millennial investors are currently investing in socially responsible, or plan to in the future," said Natalie Rix, communications director for Swell, one of the companies focused on SRI. "Today’s investors are more interconnected than ever because of the rise of social media and the continuous media cycle. Millennials are acutely aware of the challenges the world faces and feel they have a duty to align their investing dollars with their values."
Swell is just one of the companies catering to this new market of values-conscious investors. Below is a roundup of some of the more prominent players in the socially responsible investing space and how one may be the right fit for you.
Newday
Who's it for? People who want to dip their toes in SRI but don't have a lot of expendable income to do so.
What's it cost? The minimum investment is $5, and Newday won't charge a fee on any accounts less than $100 or that are created by college students. Any accounts by non-students more than $100 are charged a 1% annual fee. The app is also running a launch promotion by waiving management fees for the first year on any accounts opened before Sept. 1.
How is it socially responsible? Users choose from among six portfolios to invest in, each with a different focus:
- Global Impact consists of companies whose core business helps solve at least one of the 17 Sustainable Development Goals drafted by the United Nations, which includes everything from "No Poverty" to "Affordable and Clean Energy."
- Ocean Health consists of companies that help limit the environmental damage humans cause to the world's oceans.
- Gender Equality consists of companies that promote equal pay and policies eliminating gender discrimination, with an emphasis on family and caring responsibilities.
- Fresh Water consists of companies helping protect sources of fresh water from pollution and promote equal access to water sources.
- Animal Welfare consists of companies focusing on the humane treatment of animals, including disease prevention and nutrition.
- Climate Action consists of companies researching technologies to move the world toward a future free of carbon fuels.
Ease of use Once you enter your phone number on Newday's website and download the app link they send, you'll be asked some questions to help determine which portfolio best matches your values. You'll also choose how much risk you want to take on (which can be adjusted later) and can schedule.
Check it out here.
Swell
Who's it for? People who want to own stock in companies rather than exchange-traded funds (ETF), meaning they could conceivably walk into a shareholders' meeting and act like a boss.
What's it cost? Swell requires users to invest a minimum of $50, and charges an annual flat fee of .75% on whatever amount of money you have in your account.
How is it socially responsible? Swell offers 7 portfolios from investors to choose from:
- Renewable Energy
- Green Tech
- Disease Eradication
- Clean Water
- Zero Waste (companies focused on recycling and repurposing waste products)
- Healthy Living (companies focused on nutritional foods and health centers)
- Impact 400 (companies in multiple sectors that each have a core business interest aligned with the UN's Sustainable Development Goals).
Ease of use After signing up on Swell's website, you'll have to provide some basic information in addition to your Social Security number and employment status (this information helps keep Swell compliant with SEC regulations). Then you manually pick how much of your money you want to invest in each of the portfolios.
Check it out here.
Betterment
Who's it for? Someone who feels it’s important to pick up the phone and talking to an actual human about their investments.
What's it cost? There's no minimum requirement amount for your investment, meaning you could in theory scrounge together some spare change from under the couch cushion and ask Betterment to turn it into millions. The company does charge an annual .25% of any money you do invest when you have a basic account. If you sign up for a premium account, you pay .40% of your account and gain access to a certified financial planner (CFP) who helps you manage your investments, even those outside of Betterment. However, the premium tier only becomes available after you've invested $100,000 with the company.
How is it socially responsible? Betterment as a company isn't solely focused on socially responsible investing, but it does offer a portfolio marketed as socially responsible. Using similar criteria to Earthfolio, Betterment's SRI portfolio consists of companies deriving revenue from actions which protect the environment, promote gender equality and more.
Ease of use After downloading the Betterment app, you're walked through a series of screens asking you basic questions about who you are, what your finances are and your investment goals. You also can select your portfolio strategy, which is when you would choose the SRI investing option. The intuitive interface has your bank account linked to Betterment in a manner of minutes, meaning you'll quickly put your money to work.
Check it out here.
Wealthsimple
Who's it for? People who know they will invest $100,000 or more with Wealthsimple, as well as anyone who wants financial advice without having to make a huge investment.
What's it cost? A basic Wealthsimple account doesn't have a minimum investment requirement and charges a .5% annual fee. Basic account members can call or text a team of advisors at any time with any questions about how to spend their money. Users who invest $100,000 or more pay a smaller fee of .4%, while also gaining perks such as a complimentary session with a financial planner and access to more than 1,000 VIP airline lounges in more than 400 airports around the globe.
How is it socially responsible? Users can't pick specialized portfolios emphasizing, say, the environment over gender equality, but the SRI investing portfolio Wealthsimple offers spreads your money to a variety of companies that each help advance at least one of the six causes it associates with socially responsible investing. Those factors are:
- Low Carbon (companies that have a smaller carbon footprint).
- Cleantech (companies actively pursuing environmentally-friendly technology)
- Socially Responsible
- Gender Diversity (companies with more women in leadership roles)
- Local Initiatives (bonds issued by municipalities to support local initiatives)
- Affordable Housing (Government-issued securities that promote affordable housing)
Ease of use Signing up on Wealthsimple's website is a three-step process that takes minutes. Whether filling out basic information about your identity or providing information about your prior investment experience, Wealthsimple assures you at every turn that each step is hassle-free, and soon you'll be ready to start investing.
Check it out here.
Earthfolio
Who's it for? Well-off investors who don't feel the need to chose themed investment portfolios.
What's it cost? A whopping $25,000 is the minimum investment required, meaning it's probably not the first choice for millennials struggling with student loan debt. Investors are charged an annual fee of .5% of their account, but Earthfolio absorbs any commission fees it accrues during its investments, rather than passing it on to you.
How is it socially responsible? Earthfolio doesn't allow investors to pick portfolios specialized on one aspect of SRI, instead building portfolios that includes funds from companies across a broad spectrum of industries. These companies are vetted on their sustainability based on up to 10 criteria, ranging from dedication to non-violence (sorry Boeing) to shareholder advocacy.
Ease of use Signing up on Earthfolio's website leads you to a questionnaire, which will help the company evaluate your current financial status and how much risk you’re willing to tolerate in your investments. Earthfolio will then send you a personalized portfolio recommendation, a history of that portfolio's performance and your exact fee.
Check it out here.
The article, Socially Responsible Investing: Is It for You? , originally appeared on ValuePenguin .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
