How to Invest Your Money and Make a Difference in the World
In this article, learn about how to make your money work for you while doing good for the world by joining Public.com. Public is the community for investors to build their portfolios with any amount of money and share insights with each other.
The American stock market is one of the biggest generators of wealth, often averaging annual returns of 10%. That’s better than bonds and high-yield savings accounts. And yet, according to a 2021 Gallup poll, almost half of the country does not own stocks.
At Public.com, we believe that many people don’t invest due three reasons:
A lack of financial literacy
Costly and complex financial products
Expensive share prices requiring thousands of dollars for just one stock
We’ve built our product to address these factors. We make it easy to get started investing, but you might be wondering where exactly that starting point is. To that, we answer with a saying we have: Put your money where your heart is.
How does the stock market work?
To understand why we’re suggesting you invest in companies you love, let’s take a step back to talk about the stock market.
Stocks represent ownership of a publicly traded company that chose to make its shares available to investors. When you buy a share, you own a small part of the company and get to share in its success. The original idea of the stock market was to drive companies to make good decisions. People invest in companies that they think will do well. When more people buy a company’s stock, its share price goes up. Reversely, if a company or CEO makes what people believe is a poor business decision, share prices may go down.
If you like what a company’s doing, why not invest in it?
What is social impact investing?
There are many investing strategies out there. Recently, one investing strategy that’s become increasingly popular is called social impact investing. Social impact investing seeks to own shares in companies that are not only doing well but also committed to making a positive impact. A 2020 survey found that more than 88% of people who identified as social impact investors said their portfolios were performing well.
Sustainable investments consider the impact to three factors: environment, social, and governance (ESG). Environmental impact includes renewable and sustainable energy, enhancing energy efficiency, reducing or eliminating hazardous materials in the production process, limiting waste, and prioritizing recycling. Social impact focuses on healthy working conditions, wealth inequality, diversity, and showing commitment to charitable endeavors or philanthropy. Lastly, governance addresses conflicts of interests among stakeholders. An independent board and audit committee protects shareholders against a company’s management.
How do you invest in sustainable companies?
Figure out how much you can invest.
Before you invest, make sure you’ve budgeted enough money for general life expenses. Money you invest will often not be readily available once deposited to invest. More importantly, all investing carries some risk of financial loss.
One popular method of budgeting is called the 20/30/50 rule. A person manages their budget by spending 50% of their income on needs, 30% on wants, and 20% go to savings. It’s also important to ensure that you’re keeping up with your debts and focusing on paying those off.
Figure out when you can invest.
The best time to invest was yesterday. The second best time is now. Historically speaking, the market trends upwards over time. Combine long-term investing with regular intervals of investing deposits, and you’ll see the power of compound interest.
If you invest $100/month for the next 10 years in a market with an annual return of 6%, you’ll have $33,000 at the end. Growing the initial investment typically makes it easier in general for the money to grow bigger and faster. That’s the power of compounding.
Figure out where you can invest.
Shares can cost thousands of dollars for a single stock. Public lets you invest in stocks with any amount of money. With just $1, you can buy stock from companies making a positive impact. Best of all, Public doesn’t charge commission fees on standard trades.
How do you know which companies are making a positive impact?
On Public, you can choose from thousands of stocks and ETFs. There are zero commission fees on standard trades, and we don’t sell your trades to third parties. But with so many choices, it could be overwhelming to decide which to add to your portfolio.
We’ve organized the stock market into Themes, which are curated selections of stocks. You’ll find Themes like Combat Carbon (companies actively working to reduce their carbon footprint) and Diverse Leadership.
Research, research, research.
If you look at basically any guide to investing, the number one advice you’ll hear is to do your own research.
Talk to others.
Public makes the stock market social. You can see who else is invested in certain stocks and what’s inside people’s portfolios. Got a question? Ask others about their experience with specific stocks. Share insights and exchange ideas.
Study the stock.
Check out Stock Pages on the app. Each page has dozens of metrics, including company value, all-time highs, earnings, and more. When a share price moves past a threshold, you’ll even get a possible explanation for why a stock trends a certain direction.
Ask questions.
Remember earlier how people invest on whether a CEO makes a good decision or not? Wouldn’t it be great if you could ask the CEO what they were thinking? For a long time, the everyday investor didn’t have access to business leaders of their favorite companies. But thanks to Town Halls, you can ask those questions directly and watch them get answered live in the app.
Listen up.
Before, people would have to turn on their TVs or read the business section of the newspaper to catch up on the latest market news. It was never in real-time. With Public Live, you can listen to business experts give live analysis on the latest breaking events and trends in the market. Log onto Public at 9:15 AM ET every weekday to catch the Open, dedicated programming that gives you everything you need to know before the market opens in 15 minutes.
#Tag, you’re it.
#Tags help people find other investors like them and ideas they want to learn more about. Invest in plant-based meat alternatives? There’s a community for that (#PlantBasedonPublic). Add #tags to your posts and profile, or tap into them to explore.
Diversify your causes.
You may have heard people say “diversify your portfolio” before. Diversification is a fundamental principle of investing because it helps grow your portfolio while reducing risk at the same time. In the most basic terms, diversification can be boiled down to “don’t put all your eggs in one basket.”
This practice is all about spreading out your money across different types of investments. No matter how safe you think something is, remember that every investment carries some kind of risk, and there is always a chance you could lose all the money you put in.
Time in the market beats timing the market.
Get started investing today with Public.com. Build a portfolio that feels right for you. Buy stocks with just $1.
We know Financial Gym members are serious about building wealth and preparing for tomorrow. At Public, we are too. Download the Public app with this code to choose a free stock and start investing.
Disclosure: Offer valid for U.S. residents 18+ and subject to account approval. Open To The Public Investing is a member of FINRA & SIPC. Regulatory and firm fees apply. See Public.com/disclosures/.