159 Views 30 Comments by Andrei Jikh August 26, 2022, 4:49 am inInspiring Videos

How To Invest In The Future – My Best Stock

How to invest in your future with my best performing environmentally conscious stock

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Today we’re talking about the stock market, what’s going on, and how we can potentially invest in your future by buying green companies with socially responsible investing.

If we all agreed on something regarding the challenges we might face in the future, how would we invest and let our money vote for us? Enter ESG. It stands for environmental, social, and governance integration. Those are some really big words, but it’s really easy to understand.

When we invest, the goal is to combine the normal methods of value investing while also keeping in mind the ESG rating of which there are 3 major ones. There’s something called laggard which is CCC or B rated, and it means it’s lagging the industry because it’s careless about almost all aspects of ethics with corporate profits being the #1 priority. Next up at #2 is “Average” rated from double B, triple B, and A. This means it’s kind of unexceptional – A rating is on the higher end of that spectrum. Lastly there are the “leaders” of the industry, companies that are rated double A or triple A, and they are very socially aware of their affects on the world.

Here’s how the rating works. For example, E stands for Environmental, which looks for how the company affects the earth. The research involves climate change policy, greenhouse gas emissions, carbon footprint, water related goals, renewable energy incorporation, recycling and safe practices, how good their relationship with the EPA is, and of course how transparent and open the company is about sharing this information with us.

S stands for social which is more geared toward employees and their overall culture. How it treats people, how much it pays, the benefits, the turnover rates, the diversity of the people they hire ethnically speaking, if there’s a mission for a higher purpose than just making money. For example, Elon Musk and Tesla want to help humanity travel farther and more sustainably.

The G stands for corporate governance which is how the company treats long term business growth, vs short term, if executives get what’s called the golden parachute which is a massive multimillion dollar bonus for retiring from the company, whether chairman and CEO are separate roles meaning shareholder value is sometimes more important than the company goal and their relationship with the SEC.

ESG is a pretty diverse model to judge a company’s ethics, and of course no company is perfect. It’s impossible to know for sure which company to invest in specifically because it’s difficult to guess which technology will shape the future. But I did promise a stock and there is one stock that I like. It’s an ETF with the ticker symbol – ESGV.

ESGV is Vanguard’s exchange traded fund that tracks small, medium, and large sized companies using the ESG criteria. It excludes companies that doesn’t follow those guidelines. Specifically it does not include stocks or companies in adult entertainment, alcohol, tobacco, weapons, fossil fuels, gambling, and nuclear energy. But it has some great companies, most of which I own because the top 10 holdings of this ETF are Apple, Microsoft, Amazon, Google, Facebook, Tesla, Visa, Protecter and Gamble, Mastercard, Nvidia, and Home Depot.

Compared to the golden standard of index investing which is stock ticker symbol VTI, it’s performing better than VTI this year. In the last year, VTI has increased 14.73%, meanwhile, ESGV has increased 20.36%. By owning one share of ESGV, you would own 1,478 stocks. Both VTI and ESGV have an identical ESG rating of A.

*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

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