"Doing good" and "doing well" does not have to be exclusive concepts. In fact, through impact investing, it's possible that you can utilise your investment as an expression of your beliefs and values. You can support projects that you believe in and provide a positive benefit to society. A prime example of this would be to invest in a short interest stock for a solar energy company. The concept of impact investment has been trending as more and more people strive to help other people work toward a goal they believe benefits the entire human race.
How can you help others by investing?
Back in the day, the single purpose of investing was to accumulate wealth. However, statistics show that a vast amount of people believe that the act of increasing their net worth alone is not enough. More and more people want to use their investments to give a significant contribution to the world itself.
The concept of impact investment was something that was first used by the Rockefeller Foundation back in 2007. They initially used the term to describe socially responsible investing. It's important to note that impact investors aim to increase their revenues, but they want to do it in a way that is beneficial to the human race such as to donate to a philanthropic organisation that is having a difficult time accomplishing their goals.
A report that was released by JPMorgan back in 2013 demonstrated that the size of the market surrounding impact investment is expected to grow from $600 billion to $2 trillion by 2030. Impact investment options for adults can found in:
- Education - Provide access to education to students who were not able to go to classes as a result of cost-prohibitive fees as well as to address the needs of students who did not live within close proximity of a competent educational establishment
- Energy - Provide access to energy, by supporting companies that aim to build the necessary infrastructure in impoverished nations
- Water - Provide access to at least 25 litres of waters to households who lack the necessary infrastructure to provide them an adequate amount
- Housing - Ensuring that people are able to get housing at an affordable rate which does not put them in the predicament of deciding whether they have to pay for rent, food, clothing, or medical care
- Healthcare - Support companies who aim to provide medical care to people who are not able to afford it, as well as to people who live in rural areas in which doctors are not able to address the needs of the entire population
- Renewable Energy - Invest in projects that are related to the development of electricity and heat to renewable energy sources such as the ocean, wind, solar geothermal resources, or hydropower
- Microfinance - Projects that aim to provide savings, insurances, and credit to impoverished individuals or businesses that are not being served by financial institutions
By investing your money wisely in one of the aforementioned categories of projects, you can increase your net worth while doing your part to make the world a better place.
Impact investments can increase your ability to donate
While the concept of donating money to a charitable organisation upfront seems like a good idea, it might be more ideal for you to partake in an impact investment opportunity beforehand. For starters, let's say you have £40,000 that you donate to a charitable organisation. Once that money runs out, you will not be able to continue to support other people. But, if you were to invest £10,000 in a renewable energy project and receive a return on investment further down the line, you might be able to donate much more than £40,000.
The beautiful thing about impact investments is that they are more stable than other forms of investment and since you will get a return on investment as the world shifts to renewable energy, improved access to health care and housing, you can then use that profit to donate to charitable organisations.
Donations make the world a better place
It goes without saying that the world is filled with pain from multiple people and businesses who face unimaginable obstacles. Charitable organisations, no matter the underlying goal, all aim to uplift people and businesses that face significant obstacles. Some prime examples of how donations make the world a better place include:
- Giving shelter to homeless, orphaned children
- Help businesses in impoverished communities to expand and compete with well-established companies
- Removing women and children from dangerous and sometimes deadly domestic violence situations
- Give food to children in a country that sees a high death rate related to starvation
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