Effective financial resolutions for the new year
As we do every year, we set ambitious New Year’s resolutions towards the end of December. Exercise more, cut down on sweets, ride your bike more often, have a better work-life balance. But how about setting good New Year’s resolutions for our finances and making sure we invest our money not only profitably, but also sustainably? To help make that happen, we’ve put together a few simple resolutions.
Switch to a sustainable bank
Call money account, current account, savings account: the offers with which we can store our money in the bank are manifold. However, they all have one thing in common. We have no active control over what happens there with our money. Many banks are still massively supporting the fossil fuel, factory farming and armaments industries with the money they deposit, and in the process are unwittingly making us complicit in climate change. Banks such as Tomorrow, the GLS Bank or the Ethikbank show that there is another way. Here your money is invested responsibly and environmentally conscious. You can get an overview of the fairness of the banks at the Fairfinanceguide.
Develop an investment strategy
Switching to a sustainable bank should always be just the first step. The amount of money that lies unused in German bank accounts is enormous and not only offers its owners great financial potential, but – properly invested – has the power to bring about much positive change in the world. Therefore, you should always consider investing some of your money. Before starting your own investment career, however, it is important to be clear about your own goals and options. How much can you afford to invest? How quickly must the invested money be available again? Are you prepared to accept a higher risk for a higher return or would you prefer to invest at lower interest rates but with less risk of default? What do you want to achieve with your investments? You should answer all of these questions for yourself to help you determine your personal investment strategy and monthly investment budget.
On the stock market: Investing in sustainable ETFs
When you start investing, ETFs are often the first choice in the stock market. These replicate a share index and are therefore subject to fewer fluctuations than individual shares. If you want to invest sustainably, you now have countless options here as well. Some ETFs only exclude unsustainable industry sectors, others only include companies that have been screened for social responsibility, and still others specialize in companies from forward-looking and climate-friendly industries, such as the renewable energy sector. For an overview of sustainable European ETFs, click here. Sagefund and Coolerfuture make investing in the green kind of ETFs as easy as possible.
Sustainable investments in solar projects
Even though ETFs are popular with many investors, they lack the necessary transparency. It is true that you have a certain amount of control over which companies are invested in. However, the actual direct, positive impact of your investment remains elusive. Project investments in solar plants are different. Here you have full control over which project your money goes to. No middleman at all. In addition, you can accurately track the CO2 savings achieved through your investments and understand the global impact your investments are having. So, invest in the new year now and then and from as little as 100€ in sustainable solar projects in emerging countries and do something good for yourself and the planet.
Diversify your portfolio
The golden rule of investing: spread out your investments and never put all your money on one horse. This applies to individual areas (invest in multiple ETFs and promote multiple solar installations with a wide variety of bid terms) as well as your overall strategy. In addition to ETFs and sustainable projects, you can also use crowdinvesting to invest in young companies or promote electromobility projects and thus diversify your portfolio even further. This helps you to spread the investment risk and ensure the long-term success of your investment strategy.
In addition to diversifying your portfolio, it is equally important that your money is making a positive difference not only for you, but for the planet as a whole. Use the start of the new year to critically examine your current investments and switch to sustainable alternatives. In addition, it is advisable to carefully consider investment opportunities advertised as ‘sustainable’ and their impact. This way, you can make sure that your money is actually helping to save the planet while benefiting you financially.
It’s in your hands: make 2022 your year and get your finances in shape!
Disclaimer: ecoligo and the author of this article are not financial advisors. All investments should be made on a discretionary basis, taking into account the risks involved in making an investment. Investments may result in a loss of the capital invested.
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