So if you’d like to make a positive change in the new year, we think you could make a great start by investing responsibly, for the benefit of all.
As we approach the end of the year, many of us will no doubt be thinking about New Year’s resolutions. Lose weight, learn a new skill, drink less, travel more. All common examples of aiming for positive change in the next 12 months. But what about having a resolution for your investments? We think we have just the thing that could change your investment portfolio for the better in 2022.
Investments: really a resolution?
Investments aren’t a natural choice for a New Year’s resolution and with good reason – they should be planned with the long term in mind, not just over one year. Fortunately though there are things that can be changed without throwing a spanner in your long-term investment plans. Things like cost and diversification. There’s something else though that’s overlooked by many investors, either because they don’t know how to do it, or they’re not even aware it can be done at all;
Investing responsibly means you’re not investing purely with profit in mind. You also want to know your money is being put to work either in areas where it’ll do good or avoid doing harm. So for example, it could involve investing in companies lowering their carbon emissions, or committed to the UN’s sustainable development goals (SDGs), or avoiding controversial industries such as weapons and tobacco.
It’ll of course mean slightly different things to different people, but overall investing responsibly is looking for a win-win – growth of your portfolio for the benefit of a better world.
How is investing responsibly different?
Traditional investing has focused on choosing companies that could make sound investments. Investing responsibly also aims for this but on the basis that companies have good or improving environmental, social and governance (ESG) credentials too. That normally means low-to-no exposure to fossil fuels, tobacco, mining, weapons, alcohol, adult entertainment and gambling.
In general, responsible investment fund managers also engage far more with the companies they invest in. Their aim is to encourage positive change and make sure they’re remaining responsible businesses.
In many ways though investing responsibly can also be very similar to how you’ve invested before. You don’t have to change your asset allocation (how much you invest in shares, bonds and other investments), you don’t have to significantly increase portfolio costs (in fact in some cases they can be lowered), and you can remain well-diversified across geographies and industries.
Importantly, investing responsibly also doesn’t mean you have to give up investment returns to achieve it, as some may believe. In fact, responsible investment returns have on average delivered higher returns than a broad market approach in recent years. There are no guarantees that’ll always be the case, but it’s also definitely not the case that investing responsibly will by default hold back performance.
Helping you invest responsibly
Knowing where to start on your responsible investment journey may seem daunting. There are many thousands of companies to scour, and it can be difficult to know how responsible a business really is. That’s why we think selecting them is best left to a professional fund management team with the resources and expertise to identify which companies are acting responsibly and could also make sound investments.
Choosing the funds is where we come in. We can create portfolios that invest in what we believe are among the best responsible investment funds around. Just like our main portfolios, we’ll always make sure they’re well-diversified, thoroughly researched and low-cost, aiming for long-term growth of your wealth with a risk level to suit you.
So if you’d like to make a positive change in the new year, we think you could make a great start by investing responsibly, for the benefit of your wealth and the world. If you’d like to find out more about investing responsibly, speak to your Skybound Wealth consultant or contact your nearest Skybound Wealth office.