Impact Investing Through a Self-Directed Retirement Plan

Impact Investing Through a Self-Directed Retirement Plan

Younger investors are changing the investing landscape as they start putting more of their dollars into sustainable investments. This category of investments includes those that consider environmental, social, or government practices.

More and more, millennial investors want to include investments that align with their values within their retirement plans—including their self-directed IRAs.

According to the Morgan Stanley Institute for Sustainable Investing, interest in sustainable investing (SI) has grown among the general population and even more so among millennial investors in recent years.

To name a few ways that social impact investing is showing up in self-directed retirement plans, investors have been including assets such as organic farmland, FINtech, innovative startups, or renewable energy. Popular target investments cited in the Morgan Stanley report were those related to plastic reduction and climate change.

The social impact side of this is important to investors – a majority (83% of the general population and 89% of millennials) said they believed their sustainable investments could create economic growth and reduce poverty. Around one-third of these investors (33% of the general population and 36% of millennials) are also screening investments in order to avoid putting money behind something they object to.

Sustainable investments in a self-directed IRA
Given that self-directed investors have more options in terms of the types of investments their plans can include, it’s no surprise that those interested in supporting environmental and social causes, innovations, and companies are including organic farmland, renewable energy resources, or innovative startups within those plans.

Some other examples of social impact and sustainable investing are:

Self-directed investors make all their own investments decisions – usually based on experience with assets they already know and understand. Self-direction can be a powerful way to put what moves investors most into their retirement plans because it can give investors better control over their earnings. Added benefits of self-direction include portfolio diversification for investors who also wish to continue investing traditionally, and a hedge against stock market volatility.

If you’d like to learn more about the many options available through self-direction as a retirement strategy, register for one of Next Generation’s complimentary educational sessions. Alternatively, you can contact our team directly by phone at 1-888-857-8058 or by email at NewAccounts@NextGenerationTrust.com.