Socially Responsible Investments for Retirement Accounts

Socially responsible investments allow you to put money into a cause that you believe in. If you are planning for retirement, it might make sense for you to put some of your money into socially responsible investments. Here are the basics of using socially responsible investments for retirement accounts.

Socially Responsible Investments

A socially responsible investment is one in which you put money into a company that is acting socially responsible. This means that the company is trying to benefit society and some type of way. The company might be investing a large portion of their resources into discovering forms of alternative energy. You might also invest in a company that is making an effort to help the environment through reducing emissions or recycling. You could also choose to invest in companies that adhere to human rights policies with their workforce.

Investing in a socially responsible investment does not necessarily mean that you have to invest in a green company. You could simply choose to invest in a company that is the best in their particular category. For example, you might choose to invest in a retail company that has made the most effort to use renewable energy.

By choosing socially responsible investments, you support businesses with your investment dollars. You know that your money is not going to go towards anything that would hurt the environment or society as a whole.

Types of Investments

When you are choosing investments for your retirement portfolio, you will need to consider several different options. First, you could choose to invest directly in companies by purchasing their stock. This will allow you to benefit directly from increases in the company's value.

You could also choose to invest in socially responsible mutual funds. This is perhaps the best route to take because it allows you to get a piece of a diversified portfolio of socially responsible companies. This way, you will not have to worry about fluctuations in an individual company's stock price. Your entire portfolio is not going to be tied to one or two stocks.

You might also decide to put money into socially responsible corporate bonds. This way, you will be able to lower the amount of risk in your portfolio and you will receive regular interest payments from a company.

Retirement Accounts

If you want to invest in socially responsible investments for your retirement, you will want to make sure that you consider doing so through a retirement account. By utilizing a retirement account, you will be able to take advantage of certain tax benefits that have been provided to you as an investor. For example, you could choose to invest in these securities through a Roth IRA and you would not have to ever pay any taxes on the money that you earn. You could also choose to invest through a traditional IRA or 401(k) so that you can invest with pretax dollars.

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