sustainable investing

Your Complete Guide to Sustainable Investing

Did you want to start sustainably investing? It’s a great way to build wealth for the long term while also supporting causes that are near and dear to your heart. Sustainable investments reached $35 trillion in global assets in 2020. But it can be daunting to get started, and I get that. So we’ve made you a guide to sustainable investing.

Is sustainable investing worth it?

It’s long been known that sustainable investing is good for the environment, but it also can mean more money in your wallet? According to Morgan Stanely, sustainable investing stocks outperformed their peers during the pandemic by 4.2%.

That means if you have $1,000 invested, you earn an extra $42. You could use that extra funds to have a nice dinner at an environmentally friendly restaurant, or keep investing in climate friendly funds. 

Because unfortunately, climate change is real. Our earth’s core temperature is slowly heating up – and companies who aren’t preparing for that are, in fact, damaging the environment. Investing sustainably helps you do your part to ensure companies like this are not getting your money. 

You can be the change you want to see in the world by voting with your dollars. And that’s exciting as hell! Sustainable investing means knowing your money is aligned with your values and you’re able to see that money grow – all because you’re sustainably investing. 

What are examples of sustainable investments?

Sustainable investing is investing in products and companies that are in some way supporting social, gender, or environmental efforts.

Sustainable investing uses both inclusion and exclusion strategies to create funds that adhere to these principles. For example, one fund might EXCLUDE any companies involved in weapons manufacturing and sales. Another fund might seek to INCLUDE companies working to protect the environment.

(We cover sustainable investing strategies in detail in our sustainable investing course Ethical Investing 101: Make Money and Be a Good Person.)

Many different brokerages will have sustainable stocks. If you’re already investing, you can find out what yours has by searching “<brokerage firm> + Sustainable ETF”. You’ll usually have a few pop up. Then you can evaluate them. 

How to start investing sustainably

Sustainable investing isn’t any more difficult than unsustainable investing. Here are the steps to follow to get started.

1) Choose a brokerage to open an investment account at.

(We like Vanguard and M1 but you can go with any options!)

2) Chose an account to open at the brokerage.

This might be a retirement account like an IRA, or a non retirement account like a brokerage account. If you’re a new investor we suggest starting with a retirement account. 70 year old you will be thankful that you started investing early!

3) Choose your sustainable investments.

Now comes the fun part! And yes, the most time consuming. You can read all about how to choose sustainable funds right here. The most important part of choosing your sustainable investments is to know what values you want to express via your investments. Maybe you want to avoid companies that use prison labor or make guns; you can find those!

You’ll also want to avoid financial greenwashing. That’s when a company markets itself as doing the right thing, but then does shitty things behind the scenes. Read our guide to financial greenwashing right here.

4) Set up recurring contributions to grow your wealth.

Finally, set it and forget it. You’re going to want to set up monthly contributions to your investments. Don’t worry, you can start small, with $20 or $40 a month! Ideally over time, you’ll increase how much you invest each month. Like every investing, this can be as passive or as active as you want it to be.

Rollover Your Old Non-Sustainable Investments

If you’re already investing and you have an old 401k, you can roll it over into an IRA. Since IRAs are usually managed by individuals, you can control what you do and don’t invest in much easier. AKA< it’s easier to invest sustainably in your IRA!

You can use Capitalize to find and rollover your old 401k for free. (They don’t charge you, they charge the brokerage companies.) Capitalize is easy to use, free to use, and can help you make your overall investment portfolio much more sustainable.

Sustainable investing isn’t really that different from regular investing – you’re just being choosier about where your money is going. 

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