Reasons why you should consider impact investing
Impact investments are the type of investments that generate both financial and environmental or social benefits. This was an investment niche that was only considered to belong to well-capitalized financiers, but that is not the case anymore. Today, there are several organizations that can’t be considered to be well-capitalized that are adding impact investment on their portfolios.
So, why are many investors like Bo Parfet pouring into impact investment, you might ask. Well, it is simply because it makes more sense to invest in ventures that make our planet a healthier place to live. Impact investment directly shapes the life of future generations. Bo Parfet, Elon Musk, and many other philanthropists are changing the human story and what is even better is that they are making a fortune while at it. Everybody is free to take part in this new bold era of investment.
In this article, I will explore some of the reasons why impact investment is something you should consider seriously.
Meet global challenges
The world is ailing on so many fronts such as limited access to education and healthcare, extreme poverty, climate change, insecurity, and dictatorial leaderships among many others. The many problems that the modern world faces cannot be solved by government grants alone and don’t get me wrong. I don’t mean that government grants are not important, just that they are not adequate and individual efforts are always needed. For example, it is estimated that in order to meet sustainable development in developing countries, the budget needed is about $2.5 trillion. There is a huge gap between the resources available and the target that needs to be achieved and for that, private capital is needed a lot. Your philanthropic contribution will go a long way in solving some of these problems.
Achieve market-rate returns
Making impact investment project does not only solve global problems at a community level, but also offers a handsome return for investors. Global challenges are global opportunities and they offer you a chance to make money while doing some good like Bo Parfet does. Providing solutions to today’s problems through philanthropic contributions makes you a financial winner of tomorrow. There is a lot of research data available regarding impact investment and most of it indicates that impact investment produces returns at market rate.
Stabilize your portfolio
As an investor, there is always need to diversify your portfolio so that you have every base covered. Today, nothing does better for your portfolio than diversifying into impact investment. Making impact investments ensures that you are covered in case there is volatility in the global economy since research indicates that social impact funds tend to have lower volatility on average when compared to non-impact funds.
Also, since there is a very positive trend in impact investment, you stand to gain a lot if your specific sector where you made impact investment takes a turn for the best. People have reaped a lot from diversifying their portfolios into impact investment.