Do you want to make an impact with your money and learn how to invest intentionally? More and more, millennials and members of Gen X and Y are expressing an interest in using their wealth in a way that aligns with their values. A number of options for intentional financial planning have become popular in recent years. From Socially Responsible Investing (SRI), to Impact Investing, to where you choose to bank and spend your money, there are so many options available to help you invest intentionally.
Before you start on your journey toward intentional finances, it helps to have a game plan. Try following these steps to ensure you don’t become overwhelmed along the way:
- Determine your why.
- Reverse engineer your strategy to accomplish your goals.
- Find experts who can help you work your wealth intentionally.
Ready to learn more? Let’s dive in.
Know Your Why
What’s motivating you to build invest intentionally and align your money with your values? The truth is that everyone has a different “why” behind their strategy – and there are a variety of factors that go into it. Here’s what to consider:
- What do you want to personally achieve? In other words – why are you investing in the first place? Everyone has different long-term and short-term financial goals that investing can help them to achieve. Whether you’re saving for retirement, want to help fund your children’s education expenses, or want to reach short-term goals like purchasing your dream home or starting a business – it’s important to be very clear about what you want investing to help you accomplish. These ideas will help to guide your intentional investing strategy.
- What kind of impact do you want to make with your investing? When you envision the kind of impact you want to make with your money, what do you see? Maybe you’re passionate about caring for your community, or you want to use your wealth to impact the causes you care about, like renewable energy, affordable housing, microfinance, access to healthcare and education, etc. Whatever kind of impact you want to make, there’s a way to tailor your investment strategy to help you get there.
- How do you want your money to align with your values? This may be broader than just your investment strategy. How do you want to spend your money in a way that lines up with what matters most to you? Getting clear on what you value, and how you want your finances to support those values, is a critical factor in building your financial plan and determining where you allocate your dollars in every day life.
Reverse Engineer Your Strategy
Now that you’ve clearly identified the goals you have for your money, the values you hold, and how you want your wealth to make an impact, you’re ready to start building a strategy to both spend and invest intentionally. Let’s start by looking at a few of the impact-focused ways you can work your wealth.
SRI and Impact Investing
SRI (Socially Responsible Investing) and Impact Investing focus on investing your wealth in funds that match your values. Whether you want to support specific kinds of businesses and organizations, or you want your portfolio to “screen out” companies that don’t score well on ESG (environment, social, governance) standards, those options are available to you.
Various forms of socially focused investing have been around for the past few decades, but have dramatically increased in popularity over the last several years. As our culture becomes more and more socially conscious, investors want their money used in mindful ways without sacrificing their ability to invest and save toward their goals.
You no longer have to select a bank solely based on convenience of location and whether or not they have ATMs in your hometown. Now, there are plenty of online and national banking options available who are raising the bar when it comes to being intentional with your money and with their revenue. For example, some banks choose to donate large percentages of their revenue toward charitable causes and avoid investing member funds in low-ESG-scoring accounts.
It may be a small way you can focus on making an impact, but every little bit counts. Plus, you’ll feel more fulfilled knowing that your money is housed by an organization whose values align with your own.
Looking for a streamlined way to give to charity and maximize tax benefits simultaneously? Options such as Donor-Advised Funds (DAFs) can help you to give money to charities you’re passionate about. You can donate appreciated assets to a DAF and receive the full tax deduction for your charitable donation while skipping any capital gains taxes you may have owed on the assets.
Additionally, when you contribute to a DAF, your contributions are invested and can grow over time. Then, when you’re ready, you request a grant from those funds to charities of your choice. DAFs can, essentially, act as a way to both invest and donate in an intentional and impactful way.
Spending and Saving
Don’t be afraid to look beyond investing when building your intentional financial strategy. You can choose to align your money with your values outside of the money you invest. Determining where you want to spend your money, or what goals you want to save toward can also impact the causes you’re passionate about. A few small examples might be:
- Consider supporting companies that are Certified B-Corporations, which are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.
- Shopping local for birthday and holiday gifts to support small businesses.
- Focusing on purchasing sustainable and eco-friendly clothing.
- Choosing sustainable home cleaning supplies next time you’re at the store.
- Buying organic or sustainably farmed food at the grocery store.
Whether you’re invested in ESG-focused funds or not, you can get involved in more intentional investing just by speaking up as a shareholder. When you invest in a public company, you have a voice. As a shareholder, you can speak up about company policies, investments, and social actions through shareholder voting. You can also work to bring public attention to the actions of the companies you’re invested in. This is called “shareholder activism” and can alter the way companies choose to do business.
Leaving a Legacy
If you’re struggling to build an intentional investment strategy, don’t worry. You can always hit “pause” and revisit your “why.” Your investing strategy, and your financial plan in general, should connect back to the legacy you’re passionate about building. Too often, investors get caught up in building their wealth to leave a legacy after they pass away when the truth is that you can start using your wealth to make an impact and build your legacy starting now!
Any time you feel overwhelmed about investing intentionally, think back to your personal financial goals, and the type of legacy you’re working toward. Then, determine whether the investing paths you’re choosing move you toward those big-picture objectives.
Team Up With an Advisor
Working on building your own strategy to invest intentionally?
It can be overwhelming trying to determine how you want to invest according to your values, or the best way to make the impact you want to make. There are so many options available, and it’s hard to know what investing strategies will actually move you toward your goals while still intentionally supporting your value system.
Contact us! Our team would love to talk to you about the goals you have for your wealth, and how you want to start building your legacy. Together, we can create a plan for your money that makes an impact you can be proud of.