Sustainable Stocks. Worth the Investment?
Green stocks; Renewable energy; ESG investing. You may have heard these buzzwords being bandied about.
According to industry reports, millennials fuelled the growth of sustainable investing in the 2010s, with investors contributing $51.1 billion to sustainable funds in 2020, up from less than $5 billion five years ago.
According to a survey conducted by The Harris Poll, over 70% of older millennials believe climate changes poses a serious threat to society. According to Morningstar, millennials entered their prime investing years at the same time that ESG investment options became more plentiful than ever, while the first sustainable mutual fund launched in the 1970s. Almost 500 actively managed funds in the United States added ESG criteria to their prospectuses in 2019.
The largest generational wealth transfer in history will occur over the next few decades, with an estimated $30 trillion USD being transferred from baby boomers to millennials, according to a report from MSCI Inc. This will be a watershed moment for ESG investing.
Future of Sustainable Investing
The demand for long-term investments appears to be growing. This will allow more of us to put our money to work, while also helping to solve some of the world's most pressing problems.
Investors will increasingly expect their investment managers to demonstrate how they invest responsibly, according to our predictions. And to make ESG (Environmental, Social, and Governance) analysis a standard part of their operations. ESG considerations will be required in the financial advice process as a result of upcoming regulatory changes.
Furthermore, as people become more aware of the dangers of climate change and pay more attention to politics in recent years, ESG investing will become even more popular, regardless of age. The Covid pandemic, too, served as a wake-up call for many people of all generations, exposing many existing social injustices.
The social trends that are influencing today's society, just as they have in the past, will inform future investment solutions and services. This surge in sustainable investing will benefit the companies that are developing innovative ideas and "fixes" for some of the most pressing issues we face.
3 Leading Investing Apps for ESG Investors:
1. Ellevest
Platform: Ellevest
How it works: Ellevest designs an investing portfolio for you that includes a wide mix of stock, bond and alternative funds to help decrease the overall risk of your portfolio.
You can invest in women in leadership, environmental practises and community development through its Impact Portfolio.
Ellevest: finance for women by women
2. Earthfolio
Platform: Earthfolio
How it works: Answer 10 questions about your risk tolerance and goals, and a portfolio will be suggested; quick and easy. You will then have a fully diversified portfolio that is automatically balanced and tailored to meet your unique objectives.
3. Wealthsimple
Platform: Wealthsimple
How it works: Wealthsimple creates portfolios that use low-cost exchange-traded funds (ETFs) to monitor the market as a whole. This method reduces the risk to your money by minimising the volatility of individual stocks and capitalising on winners, by investing in a large number of stocks at once - optimising your investment results.