Add some green to your money management
THESE days many of our actions and attitudes are shaped by environmental concerns. That's a good thing for the planet - and taking an eco-friendly approach to money matters can be good for your hip pocket too.
'Green' investing for example, is getting hotter than global warming. Also known as 'ethical' investing, green investing is all about putting your money into environmentally or socially responsible industries like alternate energies, while shunning those investments that can cause harm to people or the planet.
A common criticism of ethical investing in the past is that it meant sacrificing returns for investing more responsibly. However a 2013 report by the Responsible Investment Association Australasia put that view to the bullet (not that they're pro guns).
The report found that managed funds adopting a responsible approach dished up returns around 3% higher than both regular Australian and international share funds, over the past 10 years.
For investors wishing to match their investment with personal ethics, it's good to know there are responsible financial products offered across virtually every asset class.
You can choose to invest directly in companies taking an eco-aware approach. Or there are plenty of specialist managed funds available. The website of the Responsible Investment Association (www.responsibleinvestment.org) provides more details.
Many mainstream fund managers also offer a selection of socially responsible and ethical funds.
Interestingly, a number of superannuation funds also offer sustainable investment options. So it's possible to extend a responsible approach to your retirement nest egg also.
As with all managed funds, the key is to check the principles underpinning any fund you invest in to make sure they accord with your own views. It's also worth checking out how different fund managers define 'ethical' investing - you will find variations, there is no hard and fast definition.
There are other areas where an eco-aware approach can deliver financial benefits.
As a guide, a number of lenders offer 'green' car loans.
Victoria Teachers Mutual Bank and Community First Credit Union are among the financial institutions that provide discounted rates for borrowers buying a car with low emissions.
For information about emission ratings across a broad spectrum of makes and models check out the government's Green Vehicle Guide at www.greenvehicleguide.gov.au.
If you're planning some eco-friendly home improvements, bankmecu offers a rate discount on its Home Improvements Personal Loan. The regular rate of 8.64% is reduced to 8.14% if you're making environmentally sustainable renovations.
Home improvements like adding a water tank or solar panels may cost a bit upfront but they will help you save on utility bills over time. Increasingly these sorts of features are sought after by buyers, so they can add to the value of your property.
The bottom line is that rising fuel and energy prices are encouraging more of us to actively look at ways to cut these costs. It's great to see financial institutions coming on board to provide options that allow everyday Australians to both save - and make - money in environmentally sustainable ways.
Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.