Last Updated on January 23, 2020
When you’re worried about germs and the flu, the single biggest weapon you have is washing your hands with soap and water. Why are we less concerned with what our money touches? Not physically, but the energy of our money has great reach. And to make a difference in the world it’s up to us to see what our money is touching.
If you are eligible to establish a Solo 401k, learn how you can make a difference with your investments. Social impact investing is also known as socially responsible investing (SRI), and it is growing in popularity, especially among Millennials.
How to Make a Difference with Solo 401k Investments
A Solo 401k allows you the ability to invest in causes, ideas, and investments that matter to you. Whereas a corporate 401k account gives you only limited control over what you’re money is actually investing in. A major advantage of self-directing your retirement plan with a passive custodian, like IRA Financial Trust are your (practically) unlimited investment choices.
Many investors like the Solo 401k because they can make investments outside of Wall Street. Many investors have rebounded from the Great Recession of 2008, but it took the market crash to open their eyes on the importance of investment diversification. So, rather than putting all of their funds into Wall Street and traditional investments, they began to see the benefits of alternative investments, like real estate and even cryptocurrency.
However, the Solo 401k (and all self-directed retirement plans!) is also a useful retirement vehicle for social responsible investments, too.
Don’t want to support a company that influences government policy you disapprove of? You don’t have to.
Social Impact Investing is on the Rise
Socially responsible investing isn’t for everyone, but it’s an investment trend that is growing in popularity. According to an article by Go Banking Rate, in just two years (2014-2016), SRI increased by 33 percent, revealing that individuals want to make a difference with their investments. And you most certainly can with the Solo 401k. You can make any IRS approved investment, which are so plentiful that the IRS does not tell you what you can purchase with your funds, as it is much easier to ell you what you cannot purchase. Pretty impressive.
Support Good Companies
And don’t forget, when you invest in a company that is making a difference for the better, you are helping that business grow and expand their work. You will likely generate a nice profit, and as your investment grows, you can feel good about what your money is backing. Furthermore, social impact investing has opportunities for all types of investors.
Companies are starting to have investment opportunities that they call more socially aware but are their values aligned with yours?
For instance, if you don’t like a corporation for their policy of deforestation, you don’t, in a corporate environment, have the ability to divest away from that corporation in your investment portfolio. But with a Solo 401k you can choose the corporate stocks you buy, thus directing the energy of your money toward something you support not just with your heart but with your wallet.