Investing with impact is becoming increasingly popular as more and more people look for ways to make a difference in the world while also achieving financial returns. Impact investing allows you to have a positive and lasting effect on society, the environment, and communities around the world. But before jumping in, there are some important things to know about impact investing. Here are 10 key points to consider when exploring impact investing.

1. What is Impact Investing?

Impact investing is an investment approach that seeks to generate positive social impact, as well as a financial return. It typically involves investing in businesses or organizations whose primary mission is to make a positive impact on the world. Examples of impact investments include investing in renewable energy, affordable housing and small businesses that promote economic development. Impact investors can measure the impact their investment has made by using impact metrics such as carbon reduction, job creation, improved access to education or health care services.

2. The Benefits & Challenges of Impact Investing

Impact investing is a wonderful way to make money while making an impact. However, like any other type of investment, impact investing also carries certain risks. For example, investments may be subject to higher levels of volatility and liquidity risk than traditional investments. Additionally, impact investments may require a longer time horizon for returns than traditional investments.

When done responsibly, impact investing can provide investors with strong financial returns as well as positive social and environmental impact. By aligning your investment strategy with the impact you wish to make in the world, you can maximize both your return and impact potential.

3. Approaches to Impact Investing

There are a variety of impact investing approaches, depending on the investor’s objectives. Some investors may choose to focus specifically on environmental or social impact, while others may take a more holistic approach and invest in impact-oriented businesses across multiple sectors. Impact investments can be made in public markets or private markets, and can include equity, debt, impact funds, and venture capital investments.

Investors may also choose to invest through impact-focused mutual funds that are managed by traditional asset managers with a social impact focus. These impact-driven funds typically have higher upfront costs than traditional mutual funds.