START TRACKING YOUR SPEND
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Let's stop pretending that being good at money means you need to be good at math. Instead, let's listen to our body and our mind.
The year I started investing my money, I chose to go the route of a Robo-advisor through the Canadian-founded company, Wealthsimple. It seemed like the least overwhelming option, and it meant I could focus on growing my net worth and retirement fund without actively managing any trades. Talk about the least intimidating way to jump in with both feet.
It was going great. My money was growing, and I didn’t have to check in to feel confident that things were working out. It wasn’t until a few years into investing that I started to get more curious about where my money was going.
After all, if there are pros to investing using a Robo-advisor, there have to be cons — right? It was something I had never thought about before. As I started to read about Robo-advisors’ unknowns, I found some information on Socially Responsible Investing (SRI). As a hands-off investor, I hadn’t heard too much about SRI. So, I began to read.
Similar to any investment, SRI is an investment you make into mutual funds or exchange-traded funds (ETF). The difference, though, is that SRI hosts a theme of socially conscious investments. In other words, the investment may mimic our current political and social climate.
There are multiple types of SRI funds. The most common are traditional SRI funds. Instead of investing in tobacco companies or corporate giants that don’t always do the right thing, your investments instead favour companies that support sustainability, clean energy or social justice.
Another is called Environment, Social, and Governance Funds (ERG) that focuses on the exclusion of companies that do not have ethical practices on top of having unethical products. Lastly, you can also invest in Impact Funds. Impact Funds focus on both ethics and monetary gain equally.
The idea of SRI has recently begun to grow, and companies like Wealthsimple and Questrade took notice. In March 2016, Wealthsimple launched its SRI option, and Questrade followed suit in November 2018. Now, there are many investment vehicles or products to help investors gain exposure to multiple sectors.
But, how can you get involved or make the change? If you have a financial advisor, you can ask them to change to see more SRI in your portfolio. If you use a Robo-advisor, you can easily make the transition into your account. But, if you are self-directed with your investments, you will likely have to do more research and spend more time reviewing the companies you select for your portfolio.
A great way to do this is to consider your values and determine whether or not a company abides by the same guidelines you would set if you owned the company. Look at their leadership board. If diversity matters and they don’t emulate this value, it likely isn’t a good fit for you. It might take some digging, but if it means something to you, it’s always worth the look.
There are two goals when it comes to SRI. Ideally, you’d like to create a positive social impact on our society. And of course, because we are talking about investing, it’s evident that you’d want to see some financial gain from this investment. Unfortunately, these two goals don’t always blend well together.
Therefore, you have to assess the outlook versus the fund’s value and consider whether or not this company is worth the investment. It’s similar to many assets, but the difficulty comes with realizing that there are far fewer SRI options than the latter. Overall, it’s essential to review SRI’s pros and cons to see whether this decision is right for you and your portfolio.
|Take action to follow your personal values and beliefs||Your investment may not see as significant of growth – read a historical review|
|Investing in and supporting companies you love||If you don’t do all of the reviews of your investments on your own, you may miss out on an investment you did want|
|Taking a small, but significant stand against systemic injustice||Not every company who states they are socially responsible is honest|
It’s frustrating to exist in a system we cannot change by ourselves. Instead, we have to do what we can to make a positive impact, while still using that same system to finance our futures. For me, investing isn’t a game or a way to make more fun money. Instead, it’s about making enough cash for the future, so that I can choose how I spend my time.
Freedom is an amazing feeling – and a solid investment account can help solidify that goal. The question is, what kind of investments are the right fit for you? Truthfully, the only way to determine the answer to whether SRI works for you is to consider your personal values.
Oh no, you missed the live webinar! But, good news: Mixed Up Money is pleased to share a free resource for anyone planning for a future child or family.
Mixed Up Money is pleased to share a free resource for anyone looking to cut back on non-essential spending. My most-requested product is these monthly calendars to share on your Instagram story, use as a phone background, or print off to track your spending habits.
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