3 tips for investing in green and sustainable funds

DDerek December 19, 2023 7:02 AM

Investing in green and sustainable funds is not just a trend, it's a smart way to grow your wealth while contributing to a healthier planet. However, it can seem daunting to navigate this sector with its various terms like 'ESG', 'impact investing', and 'sustainable investing'. So, here are three tips to help you invest wisely in this space.

Understand what you're investing in

First and foremost, make sure you understand what you're investing in. 'Green' and 'sustainable' can mean different things to different funds. Some funds only invest in companies with strong environmental practices, while others may also consider social and governance (ESG) factors. Do your homework and understand the fund's investment strategy before you invest.

Diversify your portfolio

Just like with any investment, it's important to diversify your portfolio when you're investing in green and sustainable funds. This means not putting all your eggs in one basket. Consider investing in a mix of funds that focus on different sectors or regions to spread your risk.

Be patient

Investing in green and sustainable funds is a long-term game. It can take time for companies to see the benefits of their sustainable practices, and for those benefits to be reflected in the fund's returns. So, be patient and think long-term.

Best green and sustainable funds

Now, you might be wondering which green and sustainable funds to invest in. Here are a few top-rated ones to consider:

  1. Vanguard FTSE Social Index Fund (VFTSX): This fund invests in U.S. companies that have been screened for certain social, human rights, and environmental criteria.
  2. TIAA-CREF Social Choice Equity Fund (TICRX): This fund invests in a diversified portfolio of companies that meet certain ESG criteria.
  3. Calvert Equity Fund (CSIEX): This fund invests in companies that are leaders in their industries and are committed to sustainable and responsible practices.

Before investing, remember to do your own research and consult with a financial advisor if needed.

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