Table of Contents
Introduction
Investing is a powerful tool that allows individuals to grow their wealth and make a positive impact on the world. With the rise of socially responsible investing (SRI), investors now have the opportunity to align their financial goals with their values. Betterment, a leading robo-advisor, offers a socially responsible investing portfolio that allows investors to support companies that prioritize environmental, social, and governance (ESG) factors. In this article, we will explore Betterment's socially responsible investing options and provide a beginner's blueprint for those interested in incorporating SRI into their investment strategy.
Understanding Socially Responsible Investing
Socially responsible investing, also known as sustainable investing or ethical investing, is an investment approach that considers both financial returns and the impact of investments on society and the environment. SRI investors seek to support companies that demonstrate strong ESG practices and avoid investing in industries that may have negative social or environmental impacts.
By incorporating SRI into their investment strategy, individuals can align their financial goals with their personal values. This approach allows investors to support companies that prioritize sustainability, diversity and inclusion, human rights, and other social and environmental issues.
Betterment's Socially Responsible Investing Portfolio
Betterment offers a socially responsible investing portfolio, known as the Betterment SRI portfolio, which allows investors to invest in companies that meet specific ESG criteria. The portfolio consists of a diversified mix of exchange-traded funds (ETFs) that focus on companies with strong ESG practices.
The Betterment SRI portfolio includes ETFs that invest in companies with high ESG ratings, as well as ETFs that exclude companies involved in controversial industries such as fossil fuels, weapons, and tobacco. This approach allows investors to support companies that align with their values while maintaining a diversified investment portfolio.
Benefits of Socially Responsible Investing
There are several benefits to incorporating socially responsible investing into your investment strategy:
- Alignment with personal values: SRI allows investors to support companies that align with their personal values and make a positive impact on society and the environment.
- Long-term performance: Studies have shown that companies with strong ESG practices tend to outperform their peers over the long term. By investing in these companies, investors may benefit from their financial success.
- Risk management: SRI can help investors mitigate certain risks associated with industries that have negative social or environmental impacts. By avoiding these industries, investors can reduce their exposure to potential controversies or regulatory changes.
- Positive influence: By investing in companies with strong ESG practices, investors can encourage other companies to improve their sustainability and social responsibility efforts.
Getting Started with Betterment's Socially Responsible Investing
If you're interested in incorporating socially responsible investing into your investment strategy, here's a beginner's blueprint to get started with Betterment:
- Educate yourself: Take the time to learn about socially responsible investing and the specific ESG criteria that are important to you. Understand the impact of different industries and consider which issues are most important to you.
- Assess your risk tolerance: Determine your risk tolerance and investment goals. Betterment offers a questionnaire to help you assess your risk tolerance and recommend an appropriate portfolio allocation.
- Open a Betterment account: Visit Betterment's website and open an account. Provide the necessary information and complete the account setup process.
- Select the socially responsible investing portfolio: Once your account is set up, choose the socially responsible investing portfolio option. Betterment will recommend a portfolio allocation based on your risk tolerance and investment goals.
- Set up automatic deposits: Set up automatic deposits to regularly contribute to your Betterment account. This will help you stay disciplined and continue investing over time.
- Monitor and rebalance: Regularly monitor your portfolio and make adjustments as needed. Betterment offers automatic rebalancing to ensure your portfolio stays aligned with your target allocation.
Conclusion
Socially responsible investing is a powerful way to align your financial goals with your personal values. Betterment's socially responsible investing portfolio offers a beginner-friendly blueprint for those interested in incorporating SRI into their investment strategy. By investing in companies that prioritize ESG factors, individuals can make a positive impact on society and the environment while potentially achieving long-term financial success. Whether you're a seasoned investor or just starting out, consider exploring Betterment's socially responsible investing options and join the movement towards a more sustainable and socially responsible future.
