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Start Impact Investing For As Little As $50 (And Get Another $50 For Free)

Start investing for your future today

No matter where you are on your financial journey, it’s crucial to set up good money habits now. This includes investing in your future. Even if you have debt, consider paying yourself too (even if it’s a small amount to start). In a few months, you’ll be surprised at how much you’ve been able to accumulate.

The trick is to start with small steps. While you are paying down your consumer debt, set aside a little bit for your own future, too. Doing this small yet crucial step will create a positive mental shift. It will also set you up to win the money game in the long run. The added bonus: now you can invest while also having positive impact on our communities and the environment. All of this is doable. Here’s now.

A $50 Gift to Get You Started

Our partners at Swell Investing are giving all WellWallet readers $50 to start impact investing. Open your account and invest a minimum of $50, and Swell will match another $50. That means $100 to invest in your future with impact. Use the code WELLWALLET when you set up your account.

First, let’s take a look at impact investing and the options available.

A Bit of History:  Impact investing was limited to the wealthy

We’ve heard it before. In order to create a prosperous future, we must invest. And the sooner we start, the better (hooray for compound interest!) But for most of us, money has been a hurdle. How can we afford to invest when there’s hardly anything left at the end of the month? On top of it all, investing in companies that are actually doing good in the world has not been easy to do. This type of investing is called impact investing.

The result? The very people who should be investing aren’t able to. It used to be that if you wanted to impact invest in socially responsible companies, you only had two choices:  

  1. buy individual stocks from companies that do good, or
  2. buy into a socially responsible mutual fund 

…and it took a lot of work

The first option, buying individual stocks, requires you to open an account with a broker. That means you are subject to trading and other fees charged by the broker.

It also requires you to do a ton of research on lots of companies. Researching both a company’s impact and financial outlook is no easy task. Also, if you don’t balance your risk among various companies, you are putting all of your eggs in one basket. That’s risky.

Mutual funds will balance risk for you, so you don’t have to do as much research. But there are hundreds of impact funds and socially responsible funds. Plus, they come with a variety of fees (and some of these fees are hidden). Finally, because many factors affect a mutual fund’s fees, it can be difficult to determine whether you’re getting an investment that will grow over time, or whether you’re just running in place. Expenses are no joke and they impact lower budget investors most of all.

Not to mention those fees…

  • There are 337 socially responsible mutual funds (including impact funds), according to Morningstar. The expense ratio for socially responsible mutual funds ranges from 0.45% to 3.38%. That means that for every $1,000 you invest in these funds, it will cost you between $4.50 and $33.80.
  • On top of that, you’ll pay a trading commission fee every time you buy or sell into most of these funds. Not fun. These fees take a big chunk out of your assets over time.
  • To add insult to injury, the minimum investment amount for these mutual funds is $2,500. Some minimums are $5,000, $10,000, $25,000 or even higher. No wonder people find it difficult to invest in socially responsible funds.

So, for everyday people who don’t have a ton of time to research and don’t have a bunch of cash laying around, socially responsible and impact investing has been out of reach.

But things are changing.

Impact investing is now available to everyone

Lower cost options, such as socially responsible ETFs (exchange-traded funds) are now available. And although ETFs also have expense ratio fees, they are generally lower than those of mutual funds. 

In addition, the introduction of robo advisors has made investing accessible to everyone. Robo advisors use computer algorithms (a set of specified rules) to manage a portfolio of companies or funds. Robo advisors allow you to set up customized, diverse portfolios. They can also give you access to wealth management services previously only accessible to the wealthy, like rebalancing. 

When you combine robo advisors with impact investing platforms, you get the best of both worlds:  a chance to invest for your own prosperity, and a chance to create prosperity in the world.

There are a handful of robo advisor platforms out there, including Wealthfront, Betterment, and Wealthsimple. And some have recently introduced social responsibility portfolios. But not all socially responsible robo advisors are the same. Products, fees, and trading policies can differ greatly. That’s one of the reasons why we think Swell Investing is looking pretty good.

Why we like Swell Investing

Care about creating a greener world? Now invest in it.

Swell Investing is one of the most successful sustainable investing platforms around today. Anyone can join for $50. And they will give you another $50 for joining.

You own the companies in the portfolio

Swell uses SMAs (Separately Managed Accounts) for investors to create a customized portfolio of companies, across a variety of socially responsible themes, based on Swell’s rigorous criteria for performance and impact.

Swell investors legally own the companies listed in their portfolio. By comparison, investments in mutual funds and ETFs are actually investments in an organization which, in turn, owns the securities in the fund.

No expense ratio or trading fees

Because you own the stocks in the SMA, there are no expense ratio fees like you find with ETFs and mutual funds.

Swell offers thematic, active management that fully integrates ESG and impact concepts. That means you don’t have to do the research needed for buying individual stocks AND they are less expensive than the typical mutual fund.

You don’t have to have a separate brokerage account to trade, either. Trading is all included on their impact platform.

Rigorous selection criteria

To be part of Swell’s impact investing portfolios, companies have to pass two strict tests:

  1. They have to get through strict criteria selected to prove environmental and social performance.
  2. They have to score high on financial potential.

Investors can choose from 6 different themes today (one-year performance as of August 10, 2018):  

  • Green Technology (+10.63%) – Think electric cars and LED lights.
  • Renewable Energy (+8.06%) – Think wind turbines and solar panels.
  • Zero Waste (+14.56) – Think recycling and repurposing.
  • Clean Water (+15.29%) – Think water filters and pipe repairs.
  • Disease Eradication (+16.70) – Think immunizations and research.
  • Healthy Living (+31.39%) – Think nutritious foods and health centers.

Swell also lets you allocate across themes. For example, if you are interested in Green Tech and Renewable Energy, you can allocate whatever percentage you choose to each. And you can change your percentage “mix”  anytime you want, at no cost.

Broad diversification

Swell Investing has now also launched their Swell Impact 400 portfolio. Now you can diversify across 400 companies. Every one of these companies follows the 17 UN SDGs. Every company also includes at least one woman or minority on the board or in the C-suite. Every market sector (except for telecom) is represented, giving you broad market coverage with a single click.

Very easy to set up

Setting up an account with Swell Investing is much like downloading a favorite app. It is super easy to set up, fund and start investing. This consumer-friendly technology is making impact investing accessible to everyone. We tried it out and even took screenshots of their set-up process. Check it out.

Performance

All seven portfolios have shown solid growth since inception. As of August 8, 2018, four of their seven portfolios have outperformed the S&P 500 index. The rest have also seen impressive returns (see above).

In addition, Swell reinvests dividends over $1 and applies smart tax lot allocations, so your investment grows over time. You can also set up an automatic investing plan that moves as little as $20 per month directly from your bank account, so you can let your money grow for profit and for good.

Chart of SP500 v MSCI KLD Social Index over 25 years

Your investments are insured

Although Swell may seem like a newcomer to the investment scene, they are backed by Pacific Life, which has been around since 1868. Swell’s brokerage services are provided by Folio Investments, a well known and regarded broker-dealer.

Both Folio and Swell are registered with the Securities and Exchange Commission. Folio is also a member of FINRA, (Financial Industry Regulation Authority,) and SIPC, (Securities Investor Protection Corporation) – the major insurer of U.S. brokerage accounts.

Thus, each brokerage account at Swell Investing is protected up to $500,000, which includes a $250,000 limit for cash.

How Swell compares to other impact investing options

Swell’s fee at 0.75% is a little higher than ETFs, but it compares favorably with most mutual funds in the SRI space. And Swell does not charge an expense ratio that you’d typically find with ETFs and mutual funds.

Therefore… no surprises. This is how Swell’s fees compare to other impact investing options.

Betterment Motif Wealthfront    Wealthsimple   SRI Mutual Funds

Swell

Minimum

Investment

Requirement

$0 $300 $5,000 $0 $2,500 – $25,000 $50

Average

Expense

Ratio

0.14%-0.22% for ETFs $0
(not applicable)
0.12%
For ETFs
0.20%
For ETFs
0.45% – 3.38% $0
(not applicable)

Management

Fees

0.25%-0.40%

 

$9.95

Per month

0.25% 0.50% Varies 0.75%

Trade

Commissions

$0

 

$4.95-$19.95

Per trade

$0 $0 Depends on broker
$4.95 – $14.99
$0
Products ETFs  Stocks
(in SMAs)
ETFs ETFs Mutual Funds Stocks
(in SMAs)

In addition, there are no extra fees for trading.

They recently lowered their minimum investment requirement to $50, plus they’ll give you another $50 to get started. So you can take them for a trial run for less than a decent dinner out. Plus, they’ll give WellWallet readers another $50 for signing up. Just enter the code WELLWALLET when you open your account.

Motif, a values-driven robo advisor backed by Goldman Sachs, requires a minimum investment of $300.  Motif also offers SMAs, but they will cost you if you are an average investor. For example, if you only had $500 to invest, and you made no changes to your investment portfolio, at $9.95 x 12, your fees for the year at Motif would be $119.40 (more if you made any trades).  

At Swell, you would pay $3.75 whether you made changes to your portfolio or not. Their straightforward fee is in line with their policy on transparency. There are no surprises, and you can view the impact a company is having as well as its financial performance, any time you like.

It’s your turn to become an impact investor

Swell investors get the sort of professional investment oversight that was traditionally only available to wealthy people. In addition, they do the deep analysis to find the best financial performers that are doing right by People and Planet and handle the management and maintenance required to stay on task in the long game.

Check out our interview with Swell Investing CEO Dave Fanger and CMO Teresa Orsolini. Our partner Pedram Shojai from Well.org had a great conversation with the Swell team about investing for growth and impact.

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22 Comments. Leave new

Came across this article just today.

First, when clicking on the link titled “Swell Investing” (the underlying URL is http://www.dpbolvw.net/click-8435547-12977793), I got a “Problem loading page” message. That’s because one of my security/privacy programs blocked it.

Not a good start.

Second, I am unable to locate on this page whether or not the ONLY method for both signing up for and being a customer of this firm is via an “app,” either iOS or Android. I would certainly hope that is not the case, as it would, in my opinion, exponentially increase the risk of the data ending up in the wrong hands (wireless-only access, missing device, etc.)

Clarification on this second point would be appreciated.

I look forward to someone responding.

Thanks.

Reply

    Hi Pat, thank you for your reply! Your account at Swell is accessible via Web and mobile apps (both methods). The link may have not worked because your blocker may be blocking re-directs, something that is standard these days for affiliate links and shortening long URLs. We did a review of their platform (with screenshots and all) here: https://magazinewellwa.wpengine.com/investing-fun-easy/ That means we actually tried it and signed up. It was one of the easiest investment platforms to set up that we’ve seen. Also, please feel free to reach out to their customer service with any and all additional questions here: [email protected].

    Reply
Elizabeth Morgan
December 2, 2017 7:31 pm

This all sounds wondrous and much appreciation. But can you offer avenues and options for those of us living in Australia, please?

Reply

    Hi Elizabeth, thank you for your reply! We are working on finding global partners. Stay tuned 🙂

    Reply
      John Crocker
      March 25, 2018 8:36 pm

      A similar question from me – UK citizen, living in Taiwan with savings in a UK bank account – where is the best place for me to invest? I’ve already had a brief search but without success so far. Will keep looking but would welcome your help.

      Reply
        Suzanne Leigh
        March 25, 2018 10:20 pm

        I totally understand your position, John. Being an expat and handling two financial lives in different currencies can sometimes afford us more opportunity, but also sometimes less. I’m constantly searching this space. (Live in Japan.) This may sound like a stretch, but I am really starting to believe that blockchain+fintech my provide us with more opportunities within the next few years. We will keep looking, of course. Things are changing quickly. Please share with us what you find, and we will do the same! Cheers, and thanks so much for engaging.

        Reply

We’ve always been warned not to provide a SSN online, but Swell is asking for it. I am quite skeptical now.

Reply
    Suzanne Leigh
    December 3, 2017 6:33 pm

    Hi Yolanda,

    Anytime you are investing you will need to provide a social security number so that the broker can provide you with the 1099 form you need to report your interest when you file your taxes.

    Reply

Hello, I’m a Nigerian living in Port Harcourt – Nigeria.
Please, tell me if the opportunity is open to Nigerians?
Regards.

Reply
    Suzanne Leigh
    January 6, 2018 4:12 am

    Hi Mrs. Pinnock.
    According to their website, the account must be funded by a US bank, although they do mention that they are expanding internationally. We are always on the lookout for international partners in the socially responsible space. Please stay tuned. 🙂

    Reply

Hi Yolanda we are in south africa can we invest with your company

Reply

I’m interested in up and coming investments like robo technology, laser, Tesla etc. will or do you have that kind of technology’s?

Reply
    Suzanne Leigh
    April 3, 2018 12:55 am

    Hi Jennifer,
    Swell has a variety of portfolios in areas including technology that you can choose from. You can take a more detailed look at Swell’s impact investing portfolios here.

    Reply

Can I open an account for my son (minor)?

Reply

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