Investors increasingly want more from their money: “They want an impact,” says Michael Katchen, founder and CEO of WealthSimple, a Toronto-based online investing company.
“They want to know, not only is my money making money long term but it also aligns with my values,” he said Monday on CNBC’s “Power Lunch.”
While Wall Street may be focused on the bottom line, socially responsible investors put their money where their morals are, whether that’s investing in social justice, environmental sustainability or local economic initiatives.
Katchen said more than 50 percent of his customers are socially responsible investors, many of them millennials. And, he said, socially responsible investors tend to make more money over the long haul.
“Socially responsible investors often outperform their peers because they’re more disciplined,” Katchen said. “By introducing something other than just returns and chasing returns, they’re less likely to panic when the market goes down, more likely to stick to a plan.”
With fears of trade wars and continued uncertainty in the tech sector, investors have panicked more than once this year. Only one quarter in, and both the Dow Jones industrial average and the S&P 500 have fallen into correction territory. The market also moved plus or minus 1 percent 28 times during the first quarter, compared with only eight times in all of 2018.
With so much volatility, now might be the perfect time to adopt the slow-but-steady investing style of socially responsible investors, Katchen said.
“One of the things that gets investors into trouble, they like to find things that are exciting or fun,” he said. “They jump into bitcoin when it’s at market highs. … And the key to being successful is contributing regularly to your portfolio plan [and] sticking to it over the long term.”