Table of Contents
Introduction
Investing can be life changing. It is a way for people to not only make money but to make the world a better place. Due to the fact that SRI is a fairly new investment vehicle, investors are now able to align their financial goals with their social goals. Betterment, one of the biggest robo advisors, offers a socially responsible investing portfolio that helps investors to align their investment with companies that embrace ESG principles. This article will discuss the socially responsible investing options available at Betterment and provide a basic introduction to SRI for individuals who are interested in incorporating it into their investment portfolio.
Understanding Socially Responsible Investing
Socially responsible investing (SRI), also known as sustainable or ethical investing, is an investment strategy that considers the social and environmental impact of investments in addition to the financial return. SRI investors seek to invest in firms with good ESG governance while excluding those with adverse social and environmental impact.
Through the integration of SRI in the portfolio, individuals can achieve their financial goals while upholding their ethical standards. This approach helps investors to support those companies that focus on social responsibility, diversity and inclusion, human rights, and other social and environmental issues.-
Betterment's Socially Responsible Investing Portfolio
In this regard, Betterment has a specifically dedicated socially responsible investing portfolio called the Betterment SRI portfolio. This portfolio allows investors to invest in companies that adhere to certain ESG criteria. It is an all-in-one portfolio that includes ETFs that make investments in firms with good ESG standing.
The Betterment SRI portfolio includes ETFs that invest in stocks of companies with high ESG ratings as well as those that avoid investing in firms associated with controversial industries such as fossil fuels, weapons, and tobacco. This way, investors can align with their values and have a diversified investment portfolio at the same time.
Benefits of Socially Responsible Investing
There are several advantages of incorporating socially responsible investing in your strategy:
- Compatibility with personal principles: SRI enables investors to invest in firms of their choice and at the same time contribute to the betterment of the society and the environment.
- Return in the long run: It has been proven that companies that embrace solid ESG practices outperforms their peers in the long run. Therefore, investing in such companies, investors may gain from the company’s growth.
- Risk avoidance: SRI can help investors avoid risks associated with industries with adverse social and environmental effects. Thus, avoiding such sectors, investors can avoid the risks associated with the worst-case scenarios or regulatory actions.
- Positive effects: This is because when investors decide to invest in companies with good ESG practices, they are sending a message that other companies may want to embrace in order to improve their social responsibility.
Getting Started with Betterment's Socially Responsible Investing
If you wish to integrate socially responsible investing into your financial plan, here is a step by step guide on how to do so with Betterment:
- Educate yourself: Spend some time learning about socially responsible investing and the ESG factors that are most relevant to you. Get to know the industries and identify the causes that are close to your heart.
- Find out your risk appetite: Determine your risk tolerance and investment objectives. Betterment has a survey that can help you identify your risk tolerance and suggest the most suitable portfolio allocation.
- Create a Betterment account: Go to Betterment’s website and create your account. You will need to fill in some basic information and finish the account creation process.
- Choose the SRI portfolio: Once your account is opened, select the socially responsible investing portfolio. Betterment will propose a suitable portfolio management based on your risk appetite and investment goals.
- Set up automatic deposits: Establish automatic deposits to ensure that you are consistently funding your Betterment account. This is because once you start investing, you should be disciplined in doing so.
- Monitor and rebalance: It is recommended to check on your portfolio on a regular basis and make changes if need be. Betterment offers the rebalancing service that automatically keeps your portfolio in line with your target weights.
Conclusion
Therefore, socially responsible investing can be seen as a great way to combine financial goals with individual principles. Betterment’s socially responsible investing portfolio is a good starting point for those who are interested in SRI. By investing in companies that adhere to ESG principles, one can make a positive impact on society and the environment as well as achieve long term financial results. No matter what your investment experience is, you should definitely check out Betterment’s socially responsible investment options and become a part of a change towards a sustainable and socially responsible world.
