Around the world, people currently have $30.3 trillion invested in sustainable assets, a sign that investing with the planet and its people in mind is no longer a fringe pursuit. Meanwhile, most retail investors — aka average folks investing in stocks and funds for their individual or family’s future — invest through trustworthy professionals or services rather than taking a fully DIY approach.
That’s a part of the reason why financial technology (fintech) has gained so much traction in recent years. More than a third of U.S. adults have used what’s called a robo-advisor at some point, with about half of them sticking with it over the long haul.
Robo-advisors are platforms that replace in-person financial advisors by automating the investment process.
On a robo-advisor, a user selects their preferences (e.g. how long they want to invest, what categories they want to invest in, and how risky they’re willing to be) and the technology adjusts the portfolio accordingly over time. While there are generally humans behind the scenes directing the algorithm, fees tend to be lower because of the automated services. However, their services may be less personalized than a trusted financial advisor.
Robo-advisors are just one type of fintech platform, but they’re a good way to get started with sustainable investing for those who are unfamiliar with the process. Here are three robo-advisors that help people invest sustainably and what you should know about them before diving in.
Friendly reminder that this is not financial advice, but a resource for you to make your own educated decision.
1. Betterment
Betterment automated investing continually monitors your investments, rebalances your portfolio, and reinvests your dividends as they roll in. They also have a feature to help minimize tax responsibilities.
Sustainable investing options: Betterment offers a Social Impact Portfolio, which “maintains a diversified, relatively low-cost approach to help customers investing for the long-term save towards their goals while expressing their socially-conscious values.”
Cost: Betterment’s investing plan costs $4 per month or a 0.25% annual fee.
2. Wealthfront
Automated index investing through Wealthfront automatically rebalanced portfolios consistent with investment plans. They enable deep asset customization by risk and category, but have standard automated portfolios for those who want to set it and forget it.
Sustainable investing options: Wealthfront’s Socially Responsible Portfolio is diversified around sustainability, diversity, and equity. You can also add and remove investments to cater to your individual preferences.
Cost: Wealthfront’s annual advisory fee is 0.25%.
3. Ellevest
Ellevest offers automated investing for women. As the website states, “Our gender-aware investing platform takes into account women’s realities — like the fact that women earn 21% less income over a lifetime than men, even though we live, on average, longer.”
Sustainable investing options: Users can select an Impact Portfolio, which is designed to help investors make a positive impact. While there are additional personalization options, more than half of an impact portfolio invests with ESG and gender lenses in ETFs and mutual funds that help advance women’s rights and equity.
Cost: Ellevest plans start at $12 per month, or $144 per year.
While these options are just a starting point, use this information to direct your research, and maybe even try your favorite out for yourself. Like people, robo-advisors are not perfect, but they’re a good way to manage your assets with sustainability in mind.
Full disclosure: I’m self-employed, and I take a DIY approach to my retirement savings. However, I have a special investing account through a sustainable robo-advisor portfolio that I’m using to save up for a cabin in the woods one day. We all have our dreams! After five years, I’m up 25% on my cost basis (aka the cash I’ve put in before considering any increase in value). Better yet, I don’t have to do a thing and the platform automatically pulls money from my checking account each month. What’s your dream — and how can sustainable investing help you achieve it?
Rachel Curry is a journalist based in Lancaster, Pennsylvania, contributing to publications like CNBC and LNP. Her work focuses on finance and technology on a global scale, as well as local issues impacting her community. See more of her work at www.writingsofrachel.com, and contact her at hi@writingsofrachel.com or linkedin.com/in/rachelcurry95.
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