How to invest in eco-friendly companies

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If you want to do well by doing good, you may want to start with your stock portfolio. Bestselling personal finance author David Bach says there's lots of green to be made by investing in green companies.

How to invest in eco-friendly companies If you’re looking for another way to go green, try ‘greening’ your wallet. Here’s how—and why—to invest in companies that are socially and environmentally responsible.
  • Investing green (in socially- and environmentally-friendly companies) is the biggest trend of our lifetime.
  • There’s a lot of money to be made in clean, green technology. A huge boom is expected in the next 20 years.
  • The U.S. is 15 years behind the rest of the world in green technology. Billions are being made by investors abroad.
  • Socially responsible funds have been available for years, but it’s been a small segment of the market.
  • Ask your HR department to put a socially responsible investment fund in your 401K plan, like Calvert Funds (calvertgroup.com) or sector-specific funds (try ishares.com to find one).
  • Investing in green technologies will help make the planet a better place, in addition to increasing your personal wealth.
  • One small thing you can do to start ‘going green’ is next time you’re at the grocery store, replace one product with a green product.
Transcript

DENISE: Hi, there. I’m Denise Richardson for howdini.com. So you’re looking for ways to be a little kinder to the environment. Did you know that one great way to go green is with you wallet? Investing in socially and environmentally friendlier companies is becoming much more popular for the eco-conscious set. But New York Times Bestselling author David Bach is here to tell us, it can also be very profitable. It's so good to see you.

DAVID: Thank you! It’s good to be here!

DENISE: Why is green going to be profitable for us?

DAVID: Well, it’s really simple. This is the biggest trend, and when I say trend, really, transformation taking place around the globe that’s ever happened in our lifetime. So if you’re to compare this to the Internet, or computers. If I had said to you in the early eighties, you really should be investing in computer stocks because we’re going to all have computer, we’re going to all have be attached to the Internet. People were saying in the mid-eighties, no, it’s too late, you missed it. Well, we know the last twenty years we’ve seen this huge boom. And when you look at the investors out there, the private equity guys, the really smart money. What the really smart money believes right now, is that the internet and technology is small in comparison to how much money is going to be made in clean, green technology.

DENISE: You say clean, green technology, and there’s a side of it that sounds sort of like a fad to me. Am I wrong?

DAVID: I don’t want to say you’re wrong, but yeah. The U.S. is fifteen years behind all of our global counterparts.

DENISE:  For sure.

DAVID: We are so far behind on this issue, going green, its actually stunning. And what’s happening is that the world is going green and we’re just finding out about it. So billions and billions are being made abroad.

DENISE:  Well people are now going green in their 401Ks.

DAVID: You know, over in Europe, they’ve been investing in socially responsible investment funds for two decades. We’ve had them for two decades, but it’s been a very small asset class. And what’s happening right now is people are really waking up to wanting to be green, and wanting to invest socially responsible, and it’s becoming a much bigger category. So what you can do at work is ask your human resource people to put a socially responsible investment fund in your 401K plan. Because chances are right now, you don’t have that option.

DENISE:  What is some of your picks for socially responsible investments?

DAVID: I think the first place to look is at mutual fund companies that do this a lot. So Calvert Funds is probably the largest fund company that has been doing socially responsible investing in the U.S. So I’d look at Calvert Funds, go to calvertfunds.com, that’s a great place to start. Check out their funds. I would also look at some of the exchange trading mutual funds that have just come out. Now those are what are called sector-specific. Like today, those are literally mutual funds on every category. From wind technology to clean energy. But you can find those by going, for instance, to ishares.com and looking for a clean energy portfolio. Winslowgreen.com, they have two green mutual funds out there. And those have had, really, a really great track – one of them has been around over five years, it’s had a great track record. Again, you just have to realize: we’re so behind, but now we’re starting to wake up to this and it’s all, what’s going to move us towards more green, and a healthier planet, quite honestly is money. It’s entrepreneurship, it’s people realizing, wow, I can make a fortune in this opportunity. And, you know, you like to think we’re all doing this to save the planet, but the truth is many people are doing it so they can make money, and it’s good for the planet.

DENISE: And go green, live rich, tell people one thing they can do as soon as they’re through watching you.

DAVID: Simplest thing you can do this week: when you go to the grocery store, you’re going to replace a product in your home. A cleaning product, toilet paper, replace it green. Don’t buy toilet paper where they cut down fresh trees for toilet paper. Buy toilet paper from recycled paper. Buy a cleaning product that’s environmentally good versus toxic. It’s a great place to start.

DENISE:  Go green, live rich. David Bach, thank you so much. I’m Denise Richardson for howdini.com.

meet theexpert
  • David Bach

    David Bach Financial Expert and Bestselling Author David Bach is the author of seven consecutive national bestsellers, including the #1 New York Times bestseller The Automatic Millionaire. He has appeared frequently on The Oprah Winfrey Show and is a featured columnist on Yahoo! Finance. more about this expert »

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