Impact Investing: How to Make Money While Making a Difference

 

Introduction

Impact investing is a form of investment that aims to generate financial returns while simultaneously achieving social or environmental good. It's an increasingly popular way for individuals and organizations to invest their money, but there's often confusion about what impact investing really is. In this guide, we'll break down the basics of impact investing and help you understand how it works—and whether it might be right for you.

Impact investing is defined as the practice of investing in companies, organizations, and funds with the intention of generating financial returns while also positively impacting the world. Impact investors look at how they can make an impact on society and then choose investments accordingly. For example, if you care about environmental issues and want to invest your money wisely so that it helps solve these problems, then impact investing may be right for you.

What is an impact investment?

Impact investments are investments that generate both social and financial returns. There are two main ways to make an impact investment: through equity or debt, or through other financial instruments such as loans.

An impact investment may be made in a for-profit company, non-profit organization, or social enterprise (a business with an emphasis on creating measurable social impact).

Why do people invest in impact investing?

Investors are interested in making a difference. They want to invest their money in companies that are addressing social and environmental issues, but they also want to make money. Impact investing is the perfect solution: it's a way for investors to invest in companies that are addressing social and environmental issues, while also receiving returns on their investments.

The rise of impact investing has been fueled by several factors including increasing awareness about global warming and other pressing issues facing humanity today; growing concern about income inequality; and rising demand from Millennials who want their money invested ethically (Millennials comprise 75 percent of all consumers today).

The difference between social and environmental impact and financial returns.

Impact investing is about more than just money. It's about making a difference in the world and seeing your investments have a positive impact on society and the environment. But, it can also be financially rewarding as well.

The key difference between social impact investments and environmental impact investments lies in how they are measured: financial returns vs environmental/social metrics (e.g., number of trees planted).

Investment risks and opportunities.

Investing in impact investments has its risks, as with any investment. However, these risks can be mitigated by diversifying your portfolio and investing in companies that already have a proven track record.

Conclusion

Impact investing is a growing field that seeks to use financial returns as a way to make the world a better place. There are many ways to invest in impact, including through stocks or bonds, but the most popular method involves investing directly into companies that are doing good work in their communities and around the globe. Impact investors can choose from dozens of different types of investments depending on what they want their money used for; some people prefer projects focused on charity work while others want something more hands-on like building schools or healthcare facilities in developing countries