Ask the Money Lady,

We are just starting to invest and wondered if there were any good investments you could recommend.  We want something that makes money of course, but also promotes environmental change and social justice.
Thanks, Craig and Valerie

Bravo – Craig and Valerie – great to see you are trying to make a difference in the world!

I don’t get asked this question often and am very glad to answer it.  So, how can a small investor empower change and impact the world we live in for our children and future generations to come?  In the past it has been virtually impossible for everyday investors to apply their beliefs and values to their portfolios, but now they can.  Sustainable Portfolios have been around for a number of years and now, more than ever, are entering center stage,  as more people want to show their commitment to positive environmental and social changes.  When you invest in Sustainable Portfolios, you are really making a stand towards global responsibility and environmental change.  So, what are they?

Offered mainly at large investment firms, a Sustainable Portfolio would include a guided stock portfolio of proven high-quality companies that demonstrate superior corporate governance, business ethics, labor and human rights standards, as well as responsible actions towards climate change, water management and pollution.

If you are thinking of changing your portfolio to hold more environmentally sustainable options, be sure to do your research.  Not all investment firms hold a socially responsible platform, and many are still not forward thinking when it comes to global change.  It should be something your financial planner takes very seriously and not touted as a sales ploy to get your assets on the books.  Most large brokerages who believe in the value of Sustainable Portfolios will be rated (A+Rating) by the UN Principles for Responsible Investments, as well as provide investors with a framework and product offering for a wider impact and active management philosophy.  Ask about the firm’s assets under management in this sector – it should be at least $2-5 Billion if they are serious and committed to advancing the options for Canadians to invest better.  Portfolios should always be actively managed from both a top-down and bottom-up perspective and evaluated using macroeconomic and geopolitical factors, trends, and with specific selection processes in place.  Short- and long-term risks should always be mitigated in the fund analysis to ensure strong portfolio returns.

For those that wish to enhance their existing portfolio with a small portion of sustainable stock options, many can choose from a variety of mutual funds (MF) or exchange traded funds (ETF).  These are generally always actively managed funds with many offering downside protection, risk control, flexibility and the potential to outperform the market.  Talk to your advisor.  Do your homework, always be well diversified when investing, and why not consider a higher standard to your stock selection this year, to do your part in creating a better world for us all.

Good Luck and Best Wishes,
Money Lady

Written by Christine Ibbotson, Author of “How to Retire Debt Free and Wealthy”  Follow on Facebook & Instagram

Written by Christine Ibbotson, Author of “How to Retire Debt Free and Wealthy”  Follow on Facebook & Instagram

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