Socially Responsible Investments to Make With Your SDIRA
The primary goal of investing money is to generate a financial return, and the primary goal of investing in your Self-Directed IRA is to save up a considerable amount of money so you can retire comfortably and diversify your portfolio. A growing number of individuals are also supporting causes they believe in by investing their money in ways that align with their views about social causes and issues.
Socially responsible investing or impact investing enables you to invest in businesses that support causes that you believe in. You can also make conscious decisions not to invest in businesses that produce products or provide services that are involved in activities that conflict with your beliefs.
Today, we will be discussing socially responsible investments that you can make with your Self-Directed IRA so you can make a positive impact on society while also positively impacting your investment portfolio. If you already have a chosen custodian and a Self-Directed IRA, then speak with our non-recourse loan lenders to discuss how you can leverage your assets to invest in real estate. We look forward to meeting with you and discussing your goals.
Green Energy
You can use your Self-Directed IRA to invest in all sorts of alternative energy solutions, from wind turbines and hydro-technology to nuclear energy. Investing in these growing sectors is a great way to help the environment while still making an investment for your future. You aren’t limited to the typical investments either — renewable energy is another growing sector. This leaves you with a number of different options and companies to consider when thinking about investing in green energy.
Clean Energy Bonds
These bonds may be issued by companies looking to complete alternative energy projects through municipalities or other public sources. Clean energy bonds can also be issued by alternative energy consulting firms looking for a cost-effective way to raise capital for various projects.
Raw Land and Energy Efficient Real Estate
You can invest in raw land or energy-efficient properties to get your foot in a rising real estate market without contributing to a rising carbon footprint. More buyers and renters are taking eco-consciousness into account when picking a home, so those options are on their way to becoming standard. You can choose between buying space to develop, updating an existing property, or investing in a pre-existing eco-property.
Address the Needs of Existing Real Estate and Communities
There are communities across the United States that are severely underfunded, lacking the support and funds to develop better buildings and amenities that are tailored to the specific needs and unique assets of that community.
Urban Juncture
Urban Juncture is “working to develop commercial real estate and related enterprises that address the needs of under-served communities.” Putting your money towards start-ups that have the mission of providing job opportunities to residents, quality goods and services to serve existing and secure new residents, and unique events and attractions to attract visitors, can be an extremely impactful way to invest your money.
Kachuwa Impact Fund
Kachuwa Impact Fund describes itself on its website as “an investment cooperative and public benefit corporation focused on owning and operating “impact real estate” and investing in privately-held “impact companies.” Additionally, the fund states that it “is similar to a Real Estate Investment Trust (REIT) combined with a mutual fund whose diversified holdings have a positive impact on society and the environment.
Private Placements/LLCs
You can use your self-directed IRA to invest in companies with a sustainable mission you believe in. Eco-investments are no longer limited to just green energy, though, as there are tons of companies developing technology and working towards a sustainable future in every sector. If you have a personal interest like clean water access for all or biodegradable plastics, there are more than a handful of choices out there.
Terracycle
Terracycle is developing some innovative programs and products to help address the issue revolving around the U.S. scrambling to deal with recyclable materials piling up. Terracycle claims to be a social enterprise that “reuses, upcycles, and recycles waste instead of incinerating or landfilling it.” They state that by doing so, the company is “moving waste from a linear system to a circular one, allowing it to keep cycling in our economy.”
Why Choose Impact Investing?
Impact investing has grown dramatically in the past decade. The amount of money held in ESG — Environmental, Social, and Governance — assets increased by 274% between 2021 and 2018, rising from $3.1 trillion to $11.6 trillion during that time. More than half (57 percent) of U.S. investors now believe that the impact of their investments on society is either very or somewhat important.
The growth of impact investing is driven largely by Millennials and members of Generation Z who want to make a difference in the world with their investment dollars. According to the American Century Investments study, 65 percent of Millennials in the U.S. have shown heightened interest in impact investing, compared to the 55 percent of Generation Xers and the 47 percent of Baby Boomers.
Basically, these findings reaffirm that impact investing continues to be on an upward trajectory across all age groups, but tell us that Millennials are leading the way in impact investing.
Impact Investing With Self-Directed IRAs
A Self-Directed IRA can be a great vehicle for building your retirement savings in a tax-advantaged environment while making a meaningful difference. Typical IRAs with a brokerage firm, bank, or mutual fund company offer a limited and indirect way to choose ESG funds, but self-directed IRAs open up more ways for socially conscious investors to channel an impact in causes and issues that matter.
Get Started With First Western
Responsible investing drives better outcomes for investors, our communities, and the planet. By embedding ESG factors into investment research, you can diversify your portfolio, contribute to a better tomorrow, and help bolster your retirement savings. To learn more about how you can leverage your Self-Directed IRA with a non-recourse loan, get in touch with our non-recourse loan lenders to learn more.