Young Investors Care More About Using Money for Good

It turns out that people born after 1980 care more about investing in companies that make the world better than investing in companies that don’t. Traditionally investors were told to only care about one thing: profit. Younger investors have seen that way of thinking not work out given the ongoing lame economic performance of that attitude and the environmental destruction it wrought.

It’s good to see money going to places that can make the world a better place.

Another reason why it’s anticipated that Millennials could increase demand for impact investing is they indicate less interest in traditional style equity investing. A study by U.S. Trust found that 51% of Millennials feel that investing in equities is overrated, and are also hesitant about investing in the stock market due to fears of losing money. However, they are still interested in investing, as 81% believe that buying investments and holding them over the long term is the best way to grow money over time.

One way that Millennials are putting fears aside and putting their money to work is investing in good causes. As seen below, they are more willing than older generations to take on higher risk and lower returns in order to invest in companies that positively affect society or the environment.

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When Investing, Millennials Care More Than Previous Generations

Millennials are savvy investors who care about the planet and social justice. Previous generations have treated their investments as risky and didn’t care about the environment or other important issues. Some financial advisors are shocked to find out that not only are young investors interested in creating a better world, but that they are risk-adverse due to the economic disasters previous generations created.

The financial advisers at British firm deVere Group recently surveyed baby boomer, Generation X and millennial investors to get a sense of their priorities. The group discovered that while all three were scared away from risk by the recent financial crisis, millennials want more out of their investments than just an unending stream of payouts. Social responsibility matters, and that may not be millennials’ youthful ideals talking.

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No Strings Attached: Giving Cash to Poor People

GiveDirectly is a charity that just gives money to poor people in Kenya. There isn’t anything complicated about the idea: it’s just straight up handing out cash with no deliverables. The NPR recently investigated the operation.

Planet Money reporters David Kestenbaum and Jacob Goldstein went to Kenya to see the work of a charity called GiveDirectly in action. Instead of funding schools or wells or livestock, GiveDirectly has decided to just give money directly to the poor people who need it, and let them decide how to spend it. David and Jacob explain whether this method of charity works, and why some people think it’s a terrible idea. (28 minutes)

Listen to it here.

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Time + Money ≠ Happiness

Trying to make a decision about your life and how to spend the time you have? Well don’t thinking about spending time, in fact don’t let the idea of money- as-time factor into your decision at all.

Professor DeVoe and PhD student Julian House based their conclusions on three experiments. In each, a sub-group of participants was primed, through survey questions, to think about their time in terms of money. This group subsequently showed greater impatience and lower satisfaction during leisure activities introduced during the experiments. However, they also reported more enjoyment and less impatience when they were paid during one of those activities, which was listening to music.

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