Meaning, Types, and Benefits of Sustainable Investment
What is Sustainable Investment?
3 Types of Sustainable Investments
Benefits and Risks of Sustainable Investing
How to Choose the Right Sustainable Investment
- Setting Goals
- Finding Suitable Investment Products
- Conducting Direct Analysis
- Growing Investment Proceeds
Mutual Funds are among the right instruments for sustainable investments. This type of investment not only focuses on maximizing profits but also considers other aspects. From the environment, social, and good governance to create balance.
What is Sustainable Investment?
Perhaps not many people understand sustainable investments as most investors tend to focus on the profits. Sustainable investment itself is an investment system that does not only focus on increasing the value of money. But it also pays attention to other aspects such as social, environmental, and financial governance that includes Environment, Social, and Governance (ESG). Through its implementation, investors will only invest in instruments or companies that have a positive impact on social governance and environmental conservation.
The goal of sustainable investment is to create a financially stable future while supporting social welfare and preserving the environment. Thus, you are not only preparing for personal interests but also helping to develop the environment or social in the long term.
3 Types of Sustainable Investments
The sustainable investment system can be divided into 3 types, each distinguished based on its benefits. To understand better, make sure you don't miss the following explanation:
- Green Equities
Green equities investment is an investment product (stocks) that focuses on capital investment in environmentally friendly companies. By investing in companies that support environmental preservation, you indirectly contribute to environmental preservation.
How do you choose companies that support environmental sustainability? You cannot choose them based only on their programs and business plans, but also direct actions in preserving the environment.
This investment not only offers profit potential, but also has a positive impact on environmental preservation. Here are examples of businesses that fall into the green equities category:
- Wind power electricity producers
- Electric car manufacturers
- Plastic recycling companies
- Green Bonds
This type of sustainable investment is an investment in Bonds issued by companies that support environmental sustainability. The concept of green bonds is very different from green equities because investors act as lenders.
The Bond products issued are the same as general debt securities, only the issuers are companies that support sustainable projects.
For example, you buy Bonds issued by electric motorcycle manufacturers and other companies that support go green programs.
- Green Funds
If you are not ready to invest directly in stocks at environmentally friendly companies, you can choose green funds investments. This investment is not in the form of stocks or Bonds but Mutual Funds.
The Investment Manager will place investor funds in companies that carry out nature preservation and community welfare programs.
For example, by choosing companies that are also involved in projects distributing water or wind power electricity to remote areas. Thus, you not only get profits but also have the opportunity to support social programs and go green.
Benefits and Risks of Sustainable Investing
All forms of investment have their advantages and disadvantages, which is why you should understand them before you start. Here are the benefits and risks of sustainable investing that you need to know.
- Preserving the Environment
Investment profits are not only about monetary value growth. Sustainable investments can have a positive impact on nature if many people get involved in it.
Global warming is an important issue that requires concrete steps from both national and international companies.
If most people are aware of the importance of environmental sustainability, they will prefer to invest in environmentally friendly companies.
When this happens, other companies will inevitably follow the trend and seek ways to find new innovations that are more environmentally friendly.
- Supporting Social Activities
Sustainable investments not only have a good influence on the environment. But it also contributes to the social welfare of the community to prevent significant economic disparity.
Investing in companies that handle projects in the social sector is a proper step to help others. In other words, investors are not only chasing material profits but also positive actions that are beneficial to society.
When investing, do not only look at the positive side, but also consider the risks that you might face. Here are the risks of sustainable investments that must be understood.
- Uncertain Returns
Sustainable investment is a good deed, but you also need to consider the potential for profit. Before considering environmental sustainability and community welfare, make sure to secure your financial health first.
Sustainable investment does not guarantee huge profits. Because this investment is not carried out based on the revenue results of top-ranked companies, but from social projects and environmental sustainability.
Therefore, you need to consider carefully before diving into it. If you want to gain a large profit potential, you should choose well
-known global companies that are professionals in the ESG field.
- Minimal Supervision
When you decide to dive into sustainable investment, it means you are ready to enter into a company's long-term big plan.
The plan can be in the form of environmental preservation projects and social programs. Although it sounds promising, long-term projects are quite complicated, plus you cannot supervise them all the time.
Therefore, you must think deeply and weigh carefully before starting this investment.
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How to Choose the Right Sustainable Investment
Maybe you are still unsure about choosing the right investment product to support environmental sustainability and social welfare. Then the following ways will help you determine the right investment choice:
- Setting Goals
Unlike conventional investments which tend to refer to financial goals, sustainable investments are quite different. In addition to material profits, the main goal is positive things related to social welfare and environmental sustainability.
For example, wanting to increase tree planting in urban areas, improving air quality, finding fossil fuel alternatives, and others.
- Finding Suitable Investment Products
Mutual Funds that support social movements or projects and environmental sustainability are the right choice for those who are new to sustainable investments.
Through this investment product, you do not need to sort out which companies support these aspects. Because the Investment Manager will direct investor funds to companies that have social projects and environmental preservation.
- Conducting Direct Analysis
Before deciding to invest, make sure the company or Investment Manager really aims at the goal you want.
Conduct research and analysis directly to ensure its accuracy because currently, many companies label themselves with fake environmental preservation and social projects.
- Growing Investment Proceeds
If you want to maximize your profits, do not immediately spend the investment proceeds for consumptive purchases. It is better to reinvest the money to generate higher profits.
Investing using Mutual Funds products that support environmental and social preservation is one of the right actions of sustainable investment. The way to start is by making DBS Treasures priority banking as an investment partner.
Do not hesitate! Investment management is carried out by leading Investment Managers. You can minimize risks, because there is diversification of fund distribution to various other types of investment assets. In addition, you will gain investment knowledge in Mutual Funds from a team of financial experts.
You will be supported by curated market analysis from a team of financial experts who will communicate it. Seize the latest opportunities that have been tailored to your risk profile and portfolio needs, driven by Artificial Intelligence/Machine Learning (AI-ML). This insight is equipped with curated solutions related to investment (Grow) and insurance (Protect), so you can quickly and confidently invest through your preferred media.
It does not stop there! You can use the digibank by DBS Application to carry out all investment activities. Starting from selling, buying, switching, and even the SID (Single Investor Identification) registration process.
Are you interested in engaging in sustainable investment with Mutual Funds instruments? If so, then start investing now with DBS Treasures. More information can be found here!
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