Get ready to pull out your notebooks, cause we’ve planned to teach a concept of investing that has needed some explanation for a long while. I would’ve liked to insert a drumroll here, but you’ve already read the title, so you already know we’re tackling market sectors today.
What are Market Sectors?
When it comes to creating an investment plan – especially if yours includes stocks – it’s helpful to know what a sector is to make sure your interests are represented accurately. It’s not common knowledge that the economy is broken up into eleven different market sectors, and each sector has its own unique amount of industries that live inside of it. So basically, a sector is its own grouping of related industries, and knowing what sectors you’re interested in can help guide you into choosing the right investments for your goals.
What do the Market Sectors look like?
To give you a quick overview, we’ve listed out all eleven sectors and attached which of the sixty-nine industries belong to them. Once you’ve looked through them all and figured out which ones catch your eye you can then choose to invest in individual stocks within a sector or look for a sector mutual fund to invest in.
Communication services – 5 industries
Diversified Telecommunication Services, Entertainment, Interactive Media & Services, Media, and Wireless Telecommunication Services.
Consumer discretionary – 11 industries
Auto Components Industry, Automobile Industry, Distributor Industry, Diversified Consumer Services, Household durable goods, Textiles, Apparel, Hotels & Restaurants, Leisure equipment, Internet and Catalog Retail, and Multiline Retail.
Consumer staples – 6 industries
Beverages, Food and staples retailing, Food products, Household products, Personal products, and Tobacco.
Energy – 2 industries
Energy Equipment & Services Industry and the Oil, Gas & Consumable Fuels Industry.
Financials – 7 industries
Banking Industry, Capital Markets Industry, Consumer Finance Industry, Diversified Financial Services Industry, Insurance Industry, Mortgage Real Estate Investment Trusts (REITs) Industry, and Thrifts & Mortgage Finance Industry.
Healthcare – 6 industries
Biotechnology Industry, Health Care Equipment & Supplies Industry, Health Care Providers & Services Industry, HealthCare Technology Industry, Life Sciences Tools & Services Industry, and the Pharmaceuticals Industry.
Industrials – 14 industries
Aerospace & Defense Industry, Air Freight & Logistics Industry, Airlines Industry, Building Products Industry, Commercial Services & Supplies Industry, Construction & Engineering Industry, Electrical Equipment Industry, Industrial Conglomerates Industry, Machinery Industry, Marine Industry, Professional Services Industry, Road & Rail Industry, Trading Companies & Distributors Industry, and the Transportation Infrastructure Industry.
Information technology – 6 industries
Communications Equipment Industry, Electronic Equipment, Instruments & Components Industry, IT Services Industry, Semiconductors & Semiconductor Equipment Industry, Software Industry, Technology Hardware, and the Storage & Peripherals Industry.
Materials – 5 industries
Chemicals Industry, Construction Materials Industry, Containers & Packaging Industry, Metals & Mining Industry, and the Paper & Forest Products Industry.
Real estate – 2 industries
Equity Real Estate Investment Trusts, and the Real Estate Management & Development.
Utilities – 5 industries
Electric Utilities Industry, Gas Utilities Industry, Independent Power and Renewable Electricity Producers Industry, Multi-Utilities Industry, and the Water Utilities Industry.
Pitting the Market Sector’s Against Each Other
Now, because not everything in our world is fair, and we live in a free-market society, not all sectors perform the same, and not all of the sectors are the same size. We’ve relisted the sectors and included their overall value and stats on how well they’ve performed in the prior year.
Communication services +76.58%, $5.50 trillion
Consumer discretionary +324.02%, $5.85 trillion
Consumer staples +136.13%, $4.06 trillion
Energy + 1.56%, $3.25 trillion
Financials +154.81%, $7.53 trillion
Healthcare +224.66%, $6.26 trillion
Industrials +179.82%, $4.58 trillion
Information technology +357.78%, $9.58 trillion
Materials +87.38%, $1.99 trillion
Real estate +29.18% (3-year return), $1.42 trillion
Utilities +114.00%, $1.56 trillion
Overview & Our advice
We know that was a lot, but hopefully, it’s given you a little bit more insight into where you’d like to place your investments. And don’t fret! Who says you have to stick to one sector? Not us. Diversifying your portfolio by investing in multiple market sectors and across different industries helps you balance risk if one sector underperforms. We believe in creating investment portfolios that reflect your interests and your values no matter what sectors they might include.
One of the biggest questions we get about our investment portfolios centers around how one person’s investments are actually significant enough to impact monumental social causes. As individuals, we have a tendency to doubt our importance and settle into the fact that our choices might only trigger consequences in our own lives. Since we don’t value our ability to change the world we live in, we often don’t make choices that impact the change we want to see. Instead, we wait around for someone else to do it.
We see the same thinking applied to those who choose not to vote in general elections because they have lost faith in our political process and have settled into the false belief that their one vote doesn’t matter. That their opinion, in the scope of the entire nation, doesn’t matter. When you paint the picture of this altered thinking using only red and blue, it becomes a little more difficult to justify. The urgency you have right now to uplift these non-voters and shout their importance from the rooftops is the same urgency our team finds lurking within us when you tell us that your investment portfolio doesn’t really impact much.
Just because you believe you are small, doesn’t mean you aren’t capable of creating big waves.
The frequency in which we’ve been receiving these kinds of responses has, to be frank, disheartened our team. So, in hopes of turning some of our readers into full-fledged believers, we’ve decided to bring back one of our favorite articles from many moons ago.
Research on Small Wins
“Small Wins and Feeling Good” was an article published in 2011, by two wonderful writers at the Harvard Business Review. The article reflects on the research and writing done by Karl Weick, a psychologist from the University of Michigan, who analyzed small wins.
“A small win is a concrete, complete, implemented outcome of moderate importance. By itself, one small win may seem unimportant. A series of wins at small but significant tasks, however, reveals a pattern that may attract allies, deter opponents, and lower resistance to subsequent proposals. Small wins are controllable opportunities that produce visible results.”
Karl Weick, Small Wins: Redefining the Scale of Social Problems
The article details the importance of celebrating small victories whether it’s in a professional setting or your personal life. A small win is just what it sounds like, it’s looking at a larger goal and acknowledging each small step you take that gets you closer to completing it.
One particular point that we love to revisit is embodied in this quote: “large social problems are best broken down into smaller ones with concrete achievable goals.” Take for example the concept of saving the planet from the effects of climate change. So many factors go into that mission, from water conservation to fossil fuels, it seems like too daunting of a task to take on as your personal mission. However, if you take the opportunity to contribute in small ways, like donating to conservation efforts, minimizing your own carbon footprint, or investing in the companies who share your values, saving the earth seems a bit more tangible.
Portfolios, Impacts, and Wins
At Invested Interests, we ensure that the funds we include in our portfolios meet the necessary ESG or SRI standards required. Essentially, we vet the companies you’ll be investing in so that you don’t have to. No matter what your personal mission is, we’re confident that we can create a portfolio that supports it. Currently, our main portfolios focus on the environment, peace efforts, or human rights and diversity. However, we have no problem combining or adding to one of those selections to really encapsulate what matters to you.
When you invest with our team, you can celebrate the fact that your hard-earned money is not only working for you, but it is also contributing to companies who have a passion to change the world in the same way you do. So, if you feel like you’re needing to increase how many small wins you’re celebrating our monthly investment updates might be the solution to your problem.
Whether you’re ready to start saving for retirement, or you’ve decided towards investing for another purpose, we’d love to get to know your story and help you reach your goals. To learn more about our portfolios, who we are, and how your investments create impact please reach out to us at (612) 260 2203. We’re excited to hear from you!
Now, this is a topic we can sink our teeth into.
Maybe it was a result of the national stay-at-home order, or maybe it was just the collective impact of people deciding to do a little more with their time, but we’ve finally started to normalize side hustles. Yes, the name sounds a little suspicious but in reality, it is only terrifyingly ambitious.
You see, a proper side hustle is something you embark on apart of your current profession at the risk of braving your passions for the world to see, and hopefully, compensate you for. Proper examples are things like selling artwork, publishing books, diving into real estate, and so many more things. Truly any passion project that you can convert into added income qualifies for the title of the side hustle.
Our favorite kind of side hustles, however, are those that you can turn into passive income. That’s right, passive, as incomplete it – forget about it – and still reap benefits from it. According to a bunch of money gurus, passive income is the holy grail of finance, and it’s something everyone should at least consider.
“Even if you love your job, I’m willing to bet you wouldn’t mind earning some extra income without the blood, sweat, tears, and time commitment of another job.”
- Dave Ramesy
The specific reason that we find them so appealing, and decided they were worth talking about, is that this added income can fuel your current investment contributions. Imagine, not having to dip into your weekly pay to add to your retirement fund, and instead, add money to your future from a fountain of forgotten wealth. So to get those wheels in your brain turning as to how you could incorporate a side hustle into your investment journey, we’ve listed three of our favorite ideas.
Write a book
Have people told you your life could be a movie or that you give amazing advice? Maybe you have crazy dreams that would make a great fiction piece? No matter the genre, if you dabble in the written word taking the time to sit down and put your thoughts to paper might be beneficial. Plus, we live in a time where you don’t necessarily need to beg a publisher to like your stuff. Thanks to things like Kindle Direct Publishing, you can now be empowered to upload your own stuff. How is this passive? Every time someone pays to download your e-book, you’ll receive some compensation, the more downloads the more income, and the more money you can put towards retirement.
Create a podcast
So maybe your grammar isn’t where you’d like it to be, or maybe you just hate the idea of having to type your thoughts and edit your own words? Well, podcasting might be for you. This conversational medium still allows you to share your life, advice, and view with the world without having to worry about all the technicalities of writing mechanics. Sure, you’ll have to pitch in a little money to buy the equipment you might not have, and you’ll have to be strict about your uploading schedule, but depending on how popular your content gets you could end up in a situation where you’re generating revenue from episodes you recorded months ago. Podcasts also have the potential to gain sponsorships and brand deals if your audience becomes substantial enough.
Teach an online course
Maybe you aren’t a written person, and you don’t like the idea of people only hearing your voice? Maybe you’re a jack of all trades with a lifetime of hands-on experience? Creating and teaching an online course might be the right kind of passive side hustle you need. Given the state of the pandemic, people have been turning to the internet for things they usually seek out in person. Traditional academics, workout classes, and even book clubs have been moved online thanks to COVID-19, and while we miss the scheduled socialization these outlets provided us with, there is a light at the end of the tunnel. People are bored and in order to fill the new holes in their schedule, they are more likely to pick up new hobbies and focus on other methods of self-care or personal growth. So, that leaves room for you to create a course on something you know better than most people, and rake in a little extra cash for it. Popular platforms for this kind of thing are Skillshare or Thinkful, but of course, use whatever hosting service makes the most sense for you.
At the end of the day, your time is valuable and we aren’t trying to push you into thinking you’re being wasteful with it. We just want to be as helpful as we can in encouraging you to not give up on starting a retirement fund because you aren’t currently in a position to part with any of your weekly pay. The sooner you start contributing to your future, the better off you’ll be when that time comes around. Plus, we know how creative and ambitious you are and if starting some form of passive income was already on your radar, please take this as a sign to dive into it headfirst. So, when your side hustle starts booming and you’re ready to open the investment account of your dreams, we’ll be waiting. Just promise you won’t forget who encouraged you to do it in the first place.
You know it and we know it, Impact Investing is on the rise but….why? Speaking in a general sense the popularity of anything in life fades pretty erratically. Now with the colossal amount of media influencers, financial gurus, and other random strangers shouting at you, it’s hard to pick one thing and stick to it. Granted, investing strategies aren’t as easy to pick up and put down as your favorite tie-dye t-shirt, but there has been a noticeable surge in the number of people flocking to impact investing.
Generational (and other) factors
You’re probably asking yourself who specifically is sprinting to catch the impact investing train, and while we won’t throw a blanket statement over our audience, we think it’s safe to say that the majority of impact investors have been young and predominantly they are women. When we say young we’re talking mid millennial and lower, so about 18-28. However, that doesn’t mean other generations are turning a blind eye to this new investment strategy. In a study conducted by TDAmeritrade, they found that 33% of Gen X’s and 25% Baby Boomers expressed an interest in sustainable investments, which is great! But, when you compare it to the 43% that came from millennials, it’s clear to see where the generational gap lies.
Now, when it comes to dividing this new audience in terms of biological sex (because gender is something completely different) Morgan Stanley conducted a survey that provided us all with some compelling information. Their study found that of those who were interested in some type of sustainable investing (impact investing, SRI, ESG, etc.) 84% of women said yes, while only 67% of men claimed to be interested.
So now that we have a vague idea of who’s keeping us in business, let’s dive into some of the motivations behind why impact investing peaks their interest.
Karma points
That’s my simple answer for the very complex fact that people like to know something they are doing is benefiting the greater good and if that means they don’t have to actively do anything other than open an investment account (which already comes with benefits to the owner) the deal sounds pretty sweet. Spoiler alert, it actually is an incredibly sweet deal. Aside from using impact investing to increase your Good Place points, it also serves a deeply meaningful purpose that resonates with a lot of passionate clients.
“Many investors have and will continue to turn to impact investing to contribute to social and environmental solutions,” Amit Bouri, CEO of the GIIN, said in a statement.”
Social change, and being a warrior of it, is a defining vein in today’s history. More and more we see younger generations wanting to make their mark and fix the issues they see in their everyday life. For example, some are starting non-profit organizations to improve social issues. The Buddy Project is an organization that serves as mental health support and advocates for those struggling with mental health disorders and their CEO and Founder Gabby Frost is only twenty-three.
Others are more politically drawn and are taking the steps necessary to be a part of their local governments, volunteer to work elections, and study to one day take their place on capitol hill. Serving as a wonderful example of this motivation in action is Alexandria Ocasio-Cortez, popularly known as AOC, who took office at only 29 making her the youngest woman to ever serve in US Congress.
And finally let’s not forget about the social activists, marching for causes they feel are unjust. From the Women’s March back in 2017 to the countless protests in connection to the BlackLivesMatter movement, it’s clear that our younger generations are no longer content with being complacent in the midst of injustice. Impact Investing simply provides them another platform to advocate with.
The returns
This one might seem obvious, but it’s important to note. Some people might be willing to receive a little less if it means their actions would have a greater impact, but when it comes to money that number gets astonishingly smaller. Guess it’s a good thing that impact investors don’t have to sacrifice returns.
“In terms of financial performance, 88% of respondents reported meeting or exceeding their financial expectations, GIIN reported. Meanwhile, 99% of respondents said they met or exceeded expectations since inception.”
We wrote a whole other post explaining why you don’t have to worry about losing money when you opt for an impact investment strategy over a traditional investment plan, so we won’t bore you with all of the details. The important thing to realize is that this is one less thing new investors have to worry about and therefore one more item on the good side of their pros and cons list.
Final thoughts
Impact Investing is the all you can eat buffet of investing strategies. It tells you that you can have everything you want, sacrifice nothing, and do it all at the same time with the same account. While we aren’t hating on the investors who prefer a more rigid 5-course meal kind of investment strategy, we believe that flexibility and options only make the investing experience better. At Invested Interests, we offer three main portfolios to cover the three biggest areas of change that impact investing targets. However, if there is a cause that you value that correlates to a financial fund, we aren’t opposed to customizing our plans to align with what means the most to you. So hey, no pressure from us, but if you feel like hopping on this trendy bandwagon we want to be the ones to help you get there. Connect with us today to schedule your initial conversation with a member of our team and learn how impact investing can help you reach your financial goals.
Hey now, it’s still January, which means you still have time to set a resolution for the new year. Our suggestion? Make 2021 the year that you start investing! Although it sounds daunting, making the decision to invest can have you reaping in benefits for years to come. Unfortunately, there are five common excuses or investing misconceptions, that often scare smart individuals like yourself away from their investment journeys. We’ve gone ahead and debunked the five investing misconceptions that are likely to be holding you back.
I need a lot of money to get started.
Wrong. If everyone who ever decided to invest their money already had heaping piles of it to start with, there would be very little motivation to invest in anything at all. The point of investing your money is taking a sum from your savings, that you’re comfortable with and that isn’t doing you any good by sitting dormant, and placing it somewhere where it can grow into a mountain you’re able to stand on. As a company, we understand that it’s hard to see such a large chunk of money leave the safety of your saving account, so we’re not opposed to starting off with lower sums! We operate with a no-minimum investment policy and are committed to helping turn your financial molehills into mountains.
I don’t have enough time.
This one will stop you every time. In today’s face-paced world it is so easy to look at your color-blocked calendar and never-ending to-do list and say “I’m booked”. This mentality won’t just stop you from investing, but it can put you in a rut of only doing what you are obligated to do, and never scheduling in time for what you want to do. Your goals matter and they deserve to occupy some of your time. At Invested Interests, we try to make this process a bit easier by breaking down the process into smaller increments of time. For example, to get things started with us, all we need is a 5-minute phone call.
I can just start later.
Eh okay, technically this isn’t untrue, but it’s not our favorite mentality. You can start investing today, tomorrow, or five years from now, but depending on what stage of life you’re in – waiting around for tomorrow to come might not do you any good. The more time you have to let your investments mature, the better. So, by putting off your start day you could be seriously impacting the quality of your returns.
I won’t get a say in where my money goes…
We are so honored to be the first to tell you that this is not the case anymore, especially not when you work with us. Impact investing not only allows you to decide where you put your money, but it also clarifies the impact that your money can have on specific causes that matter to you. Whether you’re interested in the environment, human rights & diversity, or peacekeeping efforts we have a portfolio ready and waiting for you.
I don’t know enough to get started.
That’s why we’re here. We understand that financial knowledge is something you adapt and evolve over time, so not everyone has the same stuff stored in their brain when it comes time for them to start out. Our team has zero predetermined expectations for you when we meet. You tell us what your goals are, and we lay out a few ways to help make them happen. So don’t fret! This is a judgment-free zone.
Aside from helping our clients get great results and make bigger impacts, we are also passionate about educating our online audience about different investing strategies, trends, and terminology. If you’re looking to increase your financial or investment knowledge, check out our other blog posts and follow us on social media!
Misconceptions managed.
So there you have it, these 5 investing misconceptions no longer stand in your way! Give us a call today if you’ve decided that you’re ready to invest, Our team is looking forward to getting to know your values and financial goals.
Well folks we’ve got a long-awaited topic to tackle today. Out of all of the questions that come across our desks there is one to rule them all, “Does impact investing lead to lower returns?”. It’s a really good question, so believe me we aren’t knocking you for asking, honestly, it’s something we’d be asking too if we weren’t so immersed in what we do for forty hours a week. The short answer is no, absolutely not. Now at this point you could just take our word for it and carry on with the rest of your beautiful Sunday plans, but if you’d like us to put our money where our mouth is we’ve done that too.
What is impact investing?
Impact Investing as a term has taken on a variety of definitions, but essentially it is a type of investment strategy that includes intentional investments that generate positive, measurable social and environmental impact alongside a financial return. That’s right, read that again, alongside, not instead of, meaning that by definition you can expect to see returns.
“It turns out that investing in solutions to social problems can be profitable.” – Alex Lamb, partner with New Summit Investments in Manchester, Massachusetts, a fund-of-funds manager of private market impact funds.
You can become an impact investor by opening one of many investment accounts available to you from an IRA for retirement to joint investment accounts or individual investment accounts. Now the reasons why people chose to become an impact investor varies from person to person. Sometimes people are tired of not knowing where their money is going, they want more control over the impact they make, or they are just curious to see what we’re all about.
Where did it come from?
The term impact investing was coined back in 2008 by the Rockefeller foundation when the conversation started to emerge about how to use capital differently. Around the same time, we began to see new terms around the same concept come to life from socially responsible investing, to ESG Funds, and ethical investing. Although these terms are distinct from each other, they all work to serve the same purpose – aligning your financial growth with the impact you want to make on the world around you.
How is Impact Investing doing today?
Research shows that socially responsible investing funds have done better in the last 20 years than traditional investing funds. So why don’t more people talk about it? Well, most financial advisors have been taught or have worked with the understanding that investing should only be about making money, which at a fundamental level isn’t a bad way of thinking. However, times are changing and in the world, we currently live in you no longer have to settle for making money or doing good things for the world. As an impact investor, you can have it all (if you have the right coaches helping you along the way).
If you’re more of a numbers person, here are some stats that we hope soothe your worries.
- The MSCI KLD 400 Social Index is composed of companies with high ESG ratings and avoids companies incompatible with specific values-based criteria. This index, which is the oldest ESG index in the US, has shown that ESG can create added value – by outperforming the S&P 500 for the last 25 years.
- A review by the German investment fund DWS and the University of Hamburg of more than 2,000 studies, for example, found that 63% showed a strong correlation between ESG performance and positive returns, while 10% showed a negative effect.
- In its August 2019 report Sustainable Reality, Morgan Stanley concludes: “We found that sustainable funds provided returns in line with comparable traditional funds while reducing downside risk. What’s more, during a period of extreme volatility, we saw strong statistical evidence that sustainable funds are more stable. Incorporating environmental, social, and governance (ESG) criteria into investment portfolios may help to limit market risk.
- Socially responsible investing is the fastest-growing segment of the investment management world.
Final thoughts
You absolutely can make an impact without sacrificing returns. If any of this has piqued your interest, we’d love to sit down with you and discuss how this investment strategy can fit into your life. Whether you’re passionate about impacting the environment, global peace efforts, or human rights & diversity efforts we’ve got a portfolio for you. Our team can help you get started on your impact investment journey in just five minutes, so reach out to us! We’re excited to coach you through the next great step in your financial future.