Investing with Impact:Why Finance is a Force for Good
Investing at its simplest form is when you can give up pleasant pleasure for future benefits. Investing doesn’t only mean stock market or forex trading. It can be the way you spend your time and the way you spend your money. When people are investing, they tend to focus on just one thing. The short-term return on investment. People tend to be focused on the ROI and only invest in things with a high ROI. However, millennials should have a different approach to investing according to Jeremy K. Balkin. He explains the 6 things that you should focus on when you are investing.
First off, you should look at what the employment. The business should either directly or indirectly create jobs. As more and more people are employed, it allows technology and innovation to keep developing resulting in more skilled and higher-paid employment.
This helps the economy prosper and and has a positive impact on the world, therefore it is one important trait of a impact investment.
Next is empowerment which is linked to the robust diversity of company stakeholders. In the financial crisis, majority of the chief executives were overwhelmingly male, Caucasian, and Ivy League educated, but relying on just one stream of talent pool constrains the ability to generate innovative ideas and holds back the success of an organization. The diversity of an organization allows more creative ideas to develop and helps with the growth and the more diverse board positively affects the company financial performance. Businesses should strive to have a wide variety of stake holders, the government shouldn’t require companies to have increased diversity as it has a positive social effect and the stake holders.
Education is concerned with measuring the cost of compliance and continuous improvement of the company. Education doesn’t mean learning history dates at work. It means the proactive, continuous improvement to make the workplace a more productive and highly educated which allows scarce public resources to be allocated more efficiently to meet the greatest public needs.
Ethics are the moral principles that the company follows. The executives of the firm usually determine how ethical the company is as they lead the company. If the executives are focused on the short-term profit, the company might stumble and fall if they become too greedy. This harms the society and your investment. On the other hand, if the company is motivated in a long-term business success, it allows you to receive a steady amount of return without having to worry about your investment and these investments tend to have a positive effect on the society. For companies that are unethical, you should avoid these companies from polluting the society by not allocating your capital in it. As the old saying goes, “You vote with your checkbook.”
Next is environment which is concerned with the company’s impact on the planet. If the company is polluting the world, with carbon dioxide emissions and high energy which results in air pollution, waste, and resource depletion. The biggest downside to these investments are that companies have to pay fines if they are harming the environment resulting in lower ROI and ruining the environment.
The last E is economics. Economics is how the calculation of the value of the company share price. The two ways to evaluate a stock is fundamental analysis and technical analysis. Fundamental analysis is calculating what a stock price should be in the future by looking at their cashflow and their revenue. Technical analysis is predicting the stock price by looking at the history of the stock price and predicts the future price. In order to make a good investment, it both forms of analysis should be done in order to evaluate a stock correctly.
Impact investing is something that we should all consider when investing our money as it benefits the society and you are able to get a good return on our investment. There are many opportunities to make an impact investing, so instead of investing in companies like McDonalds that are making people obese, impact investing would be in companies that are delivering value to customers and doing the society good. This is just a small part of the book. This book has a lot of thoughtful insights and I highly recommend you to read this book.
Stay strong!
Investing at its simplest form is when you can give up pleasant pleasure for future benefits. Investing doesn’t only mean stock market or forex trading. It can be the way you spend your time and the way you spend your money. When people are investing, they tend to focus on just one thing. The short-term return on investment. People tend to be focused on the ROI and only invest in things with a high ROI. However, millennials should have a different approach to investing according to Jeremy K. Balkin. He explains the 6 things that you should focus on when you are investing.
First off, you should look at what the employment. The business should either directly or indirectly create jobs. As more and more people are employed, it allows technology and innovation to keep developing resulting in more skilled and higher-paid employment.
This helps the economy prosper and and has a positive impact on the world, therefore it is one important trait of a impact investment.
Next is empowerment which is linked to the robust diversity of company stakeholders. In the financial crisis, majority of the chief executives were overwhelmingly male, Caucasian, and Ivy League educated, but relying on just one stream of talent pool constrains the ability to generate innovative ideas and holds back the success of an organization. The diversity of an organization allows more creative ideas to develop and helps with the growth and the more diverse board positively affects the company financial performance. Businesses should strive to have a wide variety of stake holders, the government shouldn’t require companies to have increased diversity as it has a positive social effect and the stake holders.
Education is concerned with measuring the cost of compliance and continuous improvement of the company. Education doesn’t mean learning history dates at work. It means the proactive, continuous improvement to make the workplace a more productive and highly educated which allows scarce public resources to be allocated more efficiently to meet the greatest public needs.
Ethics are the moral principles that the company follows. The executives of the firm usually determine how ethical the company is as they lead the company. If the executives are focused on the short-term profit, the company might stumble and fall if they become too greedy. This harms the society and your investment. On the other hand, if the company is motivated in a long-term business success, it allows you to receive a steady amount of return without having to worry about your investment and these investments tend to have a positive effect on the society. For companies that are unethical, you should avoid these companies from polluting the society by not allocating your capital in it. As the old saying goes, “You vote with your checkbook.”
Next is environment which is concerned with the company’s impact on the planet. If the company is polluting the world, with carbon dioxide emissions and high energy which results in air pollution, waste, and resource depletion. The biggest downside to these investments are that companies have to pay fines if they are harming the environment resulting in lower ROI and ruining the environment.
The last E is economics. Economics is how the calculation of the value of the company share price. The two ways to evaluate a stock is fundamental analysis and technical analysis. Fundamental analysis is calculating what a stock price should be in the future by looking at their cashflow and their revenue. Technical analysis is predicting the stock price by looking at the history of the stock price and predicts the future price. In order to make a good investment, it both forms of analysis should be done in order to evaluate a stock correctly.
Impact investing is something that we should all consider when investing our money as it benefits the society and you are able to get a good return on our investment. There are many opportunities to make an impact investing, so instead of investing in companies like McDonalds that are making people obese, impact investing would be in companies that are delivering value to customers and doing the society good. This is just a small part of the book. This book has a lot of thoughtful insights and I highly recommend you to read this book.
Stay strong!