Purpose-driven Investing: Challenging the Status Quo

The greatest use of capital is not merely to make money, but to invest money to make this world a better place to live in.

We all want to invest in our values

According to a recent survey conducted among 3,800 investors 25 and older with at least $1 million in investable assets split across 15 global markets by Swiss investment bank UBS, 9 in 10 investors want their investments to align with their values.

79% of respondents said the pandemic had prompted them to reassess what was important. 50% planned to increase their charitable giving and nearly 60% reported being more interested in sustainable investing than they were before the outbreak.

People want it

... but don't know how to get it

It is a well known fact that a lot of people invest like headless chickens running around. They invest in a mutual fund company, in a bank, in real estate or directly in the stock market. But when you ask them why they are investing and for what particular purpose or life event, chances are, you get the vaguest, most irrational answers.

"I invest to make moolah and enjoy life."

Money for what? For a house or a car? For a dream vacation? Or to pursue a hobby?

“I invest because I care for my family's future.”

Do you already have an emergency fund? Have you thought about your retirement? Or your child’s education?

"I invest because I want to live in a world I want."

Do you want to breathe clean air? Do you believe in social justice? Or gender equality and equal rights?

Those are some interesting set of answers beset with an undertone of "isn't it ironic?" A lot of investors pick the hot tips from their friends, stockbrokers, and experts and fall into the get rich quick schemes and memes.

What is purpose-driven investing?

Descartes proclaims: “Divide each difficulty into as many parts as is feasible and necessary to resolve it.” Let’s get a little wild and creative here and visualize Descartes’ maxim as an actual problem-solving tool for purpose-driven investing. Let's try this one:

"I want to get rich and I care about the world."

Well, that statement is too generic, and not really a goal, but here's the translation that comes out of Descartes' maxim:

I worry about my kids' education. I want a nice home. I haven’t taken a nice vacation in at least two years. My mother has cancer and needs my help, but can I afford it? Hey, I love crypto. I want my kids to grow up in a world with social justice. How about some clean air and water? But man, I don’t handle losses well.

Now that the problem is broken down in its simpler, digestible components or "blocks", one can start to see resolutions, perhaps something like:

Okay, I need to invest in a 529 plan. I need to save for my retirement. I want to support companies engaged in carbon neutrality and social justice. I am stressed, and I need to put my dollars to work in a risk controlled fashion. Man I need hedges to protect my wealth.

What you’re doing in this exercise, as you may have gathered, is asking “Why?” over and over and over. By breaking down what you really care about and how you are going to find solutions, you are really trying to get behind the "purpose" for your very existence. And that, is the crux of purpose-based investing.

Purpose-Driven Investing satisfies your need for a purpose and gratification by thinking of each of your goals as a separate “block”. Purpose-Driven Investing simplifies investing so you don’t feel confused or overwhelmed.

Knowing the why

... is the path to determining the what and the how

Our investment goals are driven by our desire to support and provide for our loved ones. Taking this a step further, at it's core, it’s not even the returns or the money that matters. It’s the decisions we make today that we hope will make a positive impact on the world and in turn our families is what truly matters. That’s the ultimate goal.

When I was a kid, I'd write my goals down on an envelope, and keep adding money into it until I had enough to achieve them.

When our investment purpose is clear, our what and how become even clearer. It’s all fine and dandy to want a 10% return in perpetuity to retire on, but when you know why you need the 10% and how it will improve your and your loved ones lives, it becomes a lot clearer on how and what to invest in.

What it means in the real world

Crystallizing it even further, it means that we need single investment "blocks" for every one of our goals, values and interests. This is where 99rises is paving the way to help you invest with a purpose. For example, if one of your goals is to support carbon neutrality, investing in a separate block, called the “ZeroCarbon” is the way to go.

This block or basket of stocks contains investments in companies that are working toward that one goal that you care about. Every penny in the account is for a zero carbon world — not for retirement, a new car, your emergency fund, your kids’ college tuitions, or any other goal. What was once just a plain investment account is now a larger dream than one's self — a real goal based on your values that you are committed to achieving.

Last word

Think about this. Mere investment account statements will be transformed from boring pieces of paper into exciting maps that help you invest in your goals, values and interests!

Purpose-driven investing will immediately feel a lot more natural than what you’ve been doing because it recognizes that we may have dozens of goals at any one time, and that each of those goals has their own time frame and priority.

99rises was created with the sole purpose to help you reach your goals by investing in your values without sacrificing returns.