Purpose Centric Finance: Beyond Socially Responsible Investing
Where are you going? Does it matter? What’s your purpose? We believe our purpose is not about our money, rather our resources are a tool to accomplish our goals in life. Your long-term purpose may be to create societal change, start a business, build a non-profit or provide for your family. Your resources represent your life’s work and are a powerful tool to use in accomplishing this purpose. How does Capital Stewards think about purpose?
The largest and most successful investors in the world have a clear purpose that drives financial decision making. Their success is enabled by clarity. University endowments have specific goals to support the current operating expenses and to grow the long-term scholarship capacity of the institution. Because the endowment has a clear purpose, it can invest the long-term portion of the portfolio in private investments that are locked in for 5-10 years but have excellent returns. Large pension funds have specific cash flows needs each year. Investment portfolios are built to generate the specific amount of cash flow required to make payments to pensioners each year.
Investing with purpose is broader than Socially Responsible Investing (SRI) or Impact Investing. Clear purpose and objectives increase the likelihood that you will be able to use your resources to accomplish your purpose. You can literally change the world with your assets. Alleviate poverty, change the environment, build a local charity, contribute to your church, support your family. That’s investing with real purpose and impact. Focus on the goal first. Once you have a portfolio designed to accomplish your goals, then take a look at how to optimize the underlying assets to ensure they share your values on ESG (Environment, Social, Governance) issues. If you do not accomplish your purpose, the ESG factors will matter little.
Do you have specific, clear purpose driven objectives? Or are you just invested to “make as much money as possible?” . You have a much higher chance of investment success if you clearly define your purpose, and then align your finances accordingly. Will your asset allocation enable you to accomplish your purpose? What about your underlying assets? Do you own investments that don’t align with your purpose? If you haven’t documented the purpose of your investments, schedule a call with us and we can walk you through process of clarifying your purpose and documenting objectives to give you the best possible chance at success.
© 2021 Capital Stewards, LLC. All rights reserved. Capital Stewards, LLC is a registered investment advisor. Any commentary is provided for general information and educational purposes only and should not be construed as specific investment, tax or legal advice. Instead, readers should make an independent assessment of the information and determine if any content mentioned is appropriate for their personal situation. Past performance of market results is no assurance of future performance. This information has been obtained from reliable sources but is not guaranteed.