If sustainable investing isn’t part of your investment strategy yet, you might want to have a closer look at it, as this sector is worth paying attention to for many reasons, even reasons that go beyond doing something good for the planet.
Firstly, of course, these investments allow you to have a positive impact, by investing in projects that improve our environment. Secondly, green investing does have a history of good performance, sometimes beating traditional investments. Finally, sustainable investments are increasingly used to better mitigate and manage risks in volatile and uncertain times. The S&P Global Market Intelligence has recently shown that sustainable funds beat out the S&P 500 in the 1st year of COVID-19.
So, if you do not have sustainable investments in your portfolio, know that it is never too late to get started! You just need to think about how to add sustainable investments to your portfolio. There are also a range of ways to invest in this sector. You can, for instance, invest in sustainable funds or individual stocks.
Funds are great tools for investors wanting to have an exposure to this market without having to analyze individual companies. By choosing individual stocks, however, you can better support the growth of companies you’ve carefully selected. These companies may be very popular ones that make the headlines, like what’s currently happening with the Robinhood stock in the traditional market, or they could be start-ups you do not often hear about. Both can provide great returns. You just need to find the right investment vehicle for your trading strategy and your investment horizon, as each trader and investment have different goals and trading styles.
Why is sustainable investing one of the hottest investment opportunities right now?
Around the world, people are increasingly worried about environmental challenges. With more and more wildfires, flooding, and droughts, governments have no other choice but to acknowledge climate change and act to protect their country’s populace. That’s why most countries have set climate goals to meet.
Therefore, companies providing solutions to address climate changes and deal with any other environmental challenges are increasingly popular, which makes them a great market to invest in. Not to mention that there are many different companies you can invest in, which means that there is something for everyone. You can choose to invest in companies dealing with pollution control, clean water, or sustainable construction materials, for instance. Renewable energy is one of the most popular sub-sectors, with companies looking to develop new products and services that preserve natural resources while using alternative energy sources.
Not only is sustainable investing about investing in companies fighting climate change and the negative impact people have on the planet, but it is also about supporting companies working towards increasingly considering human well-being in their activity. That’s why sustainable investing is also called ‘ESG’ – investing for Environmental, Social, and Governance – or ‘SRI’, for Socially Responsible Investing.
Regardless of the name you give to investing in companies looking to minimize environmental impact, these firms are here to stay and seek to play a significant role in the future, so you should think about adding them to your investment strategy!