With the help of Impact Investing, individuals and businesses find they are able to boost their social impact bonds. However, many are still unfamiliar with this investment option and how it will fit into their overall financial portfolio. Furthermore, they aren’t aware of the benefits of impact investing. Now is the time to clear up any misconceptions people have to ensure those who wish to make use of this investment option can do so with ease.
What Is Impact Investing?
People want to know what is impact investing? Impact investing is a technique in which a person puts their money into a business that focuses on generating not only financial returns, but also is concerned about having a positive social and environmental impact on their community or world. Impact Investing dedicates itself to finding those businesses that will provide an attractive financial return alongside a concrete social return.
Who Makes Use of This Investing Technique?
Investors who want to play a role in this environmental or social movement choose to make use of Impact Investing to do so. They purposely allocate their capital to support companies of this type while expecting to obtain a return on the money they invest. They do so with the intent to engender a positive impact on the planet either socially or environmentally. At this time, Impact Investing is limited to a small group of investors, yet they are very socially minded and passionate with regard to their investments.
Others are beginning to take notice of impact investors. This includes groups such as insurance companies, endowments, foundations and pension funds. Individuals are also starting to make use of this option when they go to invest their money as they recognize doing so makes financial sense. They learn they can make money while also doing good in the world.
The Benefits and Drawbacks of Impact Investing
With the help of Impact Investing, businesses and individuals find they are able to accelerate justice, of concern to many. You can see higher environmental, social and governance standards often in companies that impact investors choose to put their money in, and this benefits the investor. A company looking to improve in these areas tends to witness lower capital costs, higher operational efficiency and stock prices. This benefits not only the investor, but the planet as well.
Impact Investing doesn’t tend to provide the same returns as traditional investing, however, when you consider tangible money. Nevertheless, impact investors need to consider the social impact of their investment to truly determine the value of this option. Those who do so tend to feel confident putting their money into a company committed to improving the world.
How Impact Investing Affects Businesses
Businesses must ensure any tax-exempt foundations they run are putting a minimum of five percent of their endowment each year on charitable purposes. By making use of Impact Investing they can ensure their dollars benefit the community and the planet as a whole. Furthermore, they are able to maximize the funds they are investing by choosing this option.
Many investors now emphasize social entrepreneurship when they talk about where they want to put their funds. Impact investing is a major part of this, and more people need to be aware this option is available. Fortunately, more financial advisors are offering this option to their clients and this is expected to continue in the future. People love to obtain a good return on investment when they are providing funds, but they want more now.
Impact investing allows them to obtain both in one investment when they choose wisely. This is one option every person and business should consider now and in the future.