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5 Important Facts to Consider About Impact Investing Thumbnail

5 Important Facts to Consider About Impact Investing

Companies, organizations, and investment funds are making a positive impact by fusing natural elements with man-made discoveries. Thanks to technology, impact investments have gained significant attention due to their measurable investment growth. Today, impact investors are interested in business development and ecological advancements for improving the quality of life.

The concept of impact investing uses mutual funds, offering diversified opportunities to fit your financial goals. Mutual fund portfolios manage equities, bonds, and other securities. By diversifying across different types of impact investments, investors can reap the highest yields. You’ll find impact investments comprised of organizational equity and debt (long-term projects), venture capital (start-ups), and foundations (infrastructure).

1. It’s Not a New Concept

There is extensive data and information generated by sustainable research, authoritative energy analyses, and predictable medical studies. However, understanding the facts about impact investing is crucial for recognizing its value and growth potential within your portfolio.

As a front-runner in trade, impact investments have grown in recent years alongside technological advancements and social issues. No matter which investment you choose, avoid random selection.  You should compare each one’s social investing value against your portfolio’s planned growth percentage.

2. Stimulating and Challenging Growth Impacts

Millennials have been an instrumental factor in this market segment driving the growth of impact investing. Why? It seems to be the generation accepting social responsibility for sustainability. They believe that life gets better when you integrate technology with nature's sources, and positive investment returns should naturally follow.

Impact investments are founded on methods that continue to grow based on the market's demand and the human factor to persevere. Millennials tend to consider equity investments as a shareholder. It’s an angel design that attracts investors and large corporations seeking emerging technology.

3. Risk Factors

Let’s not forget one eternal fact – investing in any form comes with risk. Impact investing can be exciting, but it has its share of problems. You want to work with a trusted advisor, who can help you understand the various issues that can occur with this type of investment.

Over the years, impact investments have expanded outside of the traditional economic and commercial activities. For first-time impact investors, you can reduce your risk by starting with a small percentage dedicated to impact investing. You can always increase the investment percentage if you decide to do so down the road.

4. Teaming Economics with Investments for Profit

These days, global warming is still a hot topic and in need of further long-term developments for a healthier planet. Other aspects affecting impact investing are alternative energy incentives from solar, wind, and water. Agriculture investments will see resource improvements as benefactors (investors) influence productivity options.

Green bonds were created to fund environmental impact projects. Economic demands set the pattern for bond performance yields. Nobody’s sure about everything, but the goal of impact investing is to find a balance between the environment, business, and the consumer.

5. Market Measurements Linked to Growth

Choose your investments by considering the desired returns and preferences on how to impact the world’s improvements. Here is some impact investment data to keep in mind:

  • Approximately $502 billion of impact investing assets are managed worldwide, as of 20181
  • Green Bonds grew by 78 percent in 2017, a significant increase from 2016.2
  • Of impact investors, 67 percent choose to only make impact investments.3
  • In a recent survey, 91 percent of impact investors said their investors were in line or exceeded their financial expectations since their inception.4

For most investors, impact investing is a chance to make a difference, while making some money. As investor interest increases, so do the possibilities of impact investment opportunities. It’s okay to be adventurous within limits. Just be sure your choices are founded on established approaches. 

  1. https://thegiin.org/assets/Sizing%20the%20Impact%20Investing%20Market_webfile.pdf
  2. https://www.climatebonds.net/files/reports/cbi-green-bonds-highlights-2017.pdf
  3. https://connect.societycorpgov.org/blogs/randi-morrison/2018/06/13/impact-investing-trends
  4. https://thegiin.org/assets/2018_GIIN_Annual_Impact_Investor_Survey_webfile.pdf