When it comes to building your wealth, further down the line, you want the money to work for you, and not the other way around. That’s why investing is an option you need to consider if you’re building your fortune for later years.
Today, sustainable investing and environmental, social, and governance (ESG) issues are stealing the spotlight in the investing world. Seeing as they’re new players in the game, they carry some misconceptions and myths with them.
When it comes to investing in a new sector, getting the best financial advice is crucial to see if the road you’re about to take is suited for your current financial situation and goals.
Looking back at sustainable investing, if this is something you’re interested in, it pays to know the different myths so you can change your perception and shift gears. Below are some of the common sustainable investing myths, and our team of experts have debunked them all. Let’s take a look!
Myth #1: You Get Lower Returns in Sustainable Investing
Many people think that sustainable investing is great for values, but it isn’t suitable for added value. While this misconception is understandable, especially with the growth of organic food, it may seem that it costs more. People think that sustainability is heavier on the wallet but provides lower returns, which is obviously far from the truth.
Myth #2: Sustainable Investing Only Works on Equities
While the evidence of the outperformance of sustainable investing strategies is evident and mostly sourced from equity markets, it’s only because equities are the most popular and liquid asset class.
For example, green bonds space—proceeds go to eco-friendly project funding—is a market that has seen exponential growth. Though they’re relatively new, it outperforms the benchmark index.
On the other hand, sustainable investing can be considered as a private equity space, but regulatory requirements are less strict, meaning you can ensure that ESG risks have greater importance. With that said, there’s no doubt sustainable investing strategies will expand to more asset classes.
Myth #3: The Target of Sustainable Investing are Millenials and Institutional Investors
Because “change” has always been associated with the younger generation, many believe that only you are interested in sustainable investment. However, many also believe that institutional investors are only interested in marketing purposes.
While many millennials are interested in sustainable investing, the number of ESG funds shows that institutional interest has been even higher, making it a fair game for both sectors.
Myth #4: Sustainable Investing is a Fad
It’s easy to think that because something is new, it’s only a fad that people will hop on to and forget about eventually. But with more people pouring into ESG funds and younger generations showing support, sustainable investing is far from being a fad. Of course, it’s better to get the best financial advice to see if sustainable investments are something you can add to your investment portfolio.
The Bottom Line: Should You Consider Sustainable Investing?
Many are interested in sustainable investing because it demonstrates long-term success, and its historical returns have shown outperformance. Not to mention, the present material investment risks are part of an even more intricate investment analysis process, tapping on different issues, such as climate damage and more.
If you’re looking to get into sustainable investing, it’s ideal for getting the best financial advice to ensure you’re heading in the right direction. And as sustainability continues to hold importance in the investing world, it’s only right that you join in on funding change.
How Can We Help You?
Whether you need to build your wealth through sustainable investments or other finance tips and tricks, New Wave Financial Planning can give the best financial advice on the Gold Coast.
Get in touch with our financial advisers today at 07 5504 1999! Our team of experts can help you achieve financial wellness.
