Impact Investing – Is It Better than Traditional Investments?
Impact investing is a great way to enhance the life of the individual. They work for the betterment of society and environment with keeping their profit aside. There are many organizations whose intention is to create an inclusive environment so that the whole world gets an equal amount of opportunities to access to the domains of life.
Difference between Traditional Investment and Impact Investment
Talking about traditional entrepreneur it is much risk as compared to impact investment. The main objective of the traditional business is to undertake the business for the sake of financial gain. There is no problem if the business suffocates the economy with nonbiodegradable materials like Chinese plastics and all which pollute the river and result in the environmental degradation. These types of business not only pollute the environment but also threaten our health as well as our children. It doesn’t matter whether it is the business related to tobacco or addicted video games or may be electronic gadgets the main intention is to earn a certain amount of profit.
However in case of impact investment which looks mainly at bottom line numbers. During the last few year, most of the people are getting on with impact entrepreneurship as well as impact investing because it is right and does not harm the environment. It is the most moral thing to do and it focuses mainly on the future of the planet. It is considered to be the new black in the financial world; this means investing with the intention of achieving socio and economic goals as well as making financial profits.
Aim of Impact Investing
The main appeal of the investors is to do something that will help in the benefit of the society. But it is more deliberate as it is essentially positive in nature. There are different products in which the funded will never replicate the levels of the government while spending on programs related to social development.
There is no sort of the inclusion of direct investment which is often favored by various family offices who are interested in philanthropy rather it concentrates on various product available to the wholesale.
Investor under this category possesses greater transparency for the portfolio decisions this is because sustainability can be subjective. Due to transparency, it allows the manager for making suitable adjustments in order to maximize return.
Difference with Collaborative Entrepreneurship
When compared with both of the investment both of the strategies are different, collaborative entrepreneurship is a great way for dealing with the business by collaborating with other small entrepreneurs in order to get high returns. But there are certain things to be taken into consideration before collaborating with the other entrepreneur.
In order to grow the business you may collaborate with the other but in case if you hold the hand of a wrong person who has no idea you may end up getting g losses in your business. However, this is not the case with impact type investment as it is believed by the people that the organization is doing something for the benefit of their living which is not the case with collaborative entrepreneurship.