Ethical investing is becoming a lot more popular these days. The market for ESG investments increased over $120 billion last year alone.
Many ethical investors are placing trades online. But how can new traders make these decisions?
Overview of Online Investing and Eco-Friendly Options
Before the era of online trading, traders had to call and place an ‘buy’ and ‘sell’ order at their trading firms in order to trade for them. It was a very tedious process, and understandably it caused a lot of problems. Surprisingly, there are a few investors who are still accustomed to trading offline even today.
However, with the advent of the internet in this digital age, most traders have moved to online trading platforms. You can place ‘buy’ and ‘sell’ orders, set market limits, set stop losses, check order status, read news about companies, view collateral lists currently stored in the dashboard, etc. and have it. access to all of your previous investment statements. Online trading has also reduced costs for both traders and investors.
The time you make money online through trading may be short but is certainly a profitable one. With the increased popularity of online trading, regulatory bodies are becoming wary and more strict towards the rampant dealing that has been happen with no proper methods of regulation. The need for these stringent regulations is necessary as internet-based traders are today’s most likely to end up victim to fraudsters, hackers and scam artists alike.
As the internet has grown, so has the number of trading platforms. Currently, it is estimated that over 32 million individual traders are trading stocks, foreign exchange (forex), commodities and more from their home. The number of people who trade online is expected to increase in 2017.
The proliferation of online trading has led to niche markets, which has helped grow the demand for ethical investing. A number of specialized platforms have emerged, which focus on eco-friendly and other forms of ethical investing. The Good Trade has a list of ethical investing platforms that is worth checking out. Some of these platforms include:
- OpenInvest is a platform that is dedicated to making ethical investing available to everyone. It allows traders to customize their portfolios to match their values. They can focus entirely in eco-friendly investments. They can even specialize in plastic-free companies if they like.
- EarthFolio is a platform that invests entirely in ESGs. It is also dedicated to cost-effectiveness, so investors can still get a lot of value for their efforts.
- SVX invests in a lot of non-traditional investments that have been vetted for their ethical practices. It has a lot of assets that focus on sustainability, social inclusion and other positive goals.
As more people become interested in ethical and sustainable investing, demand for these platforms should rise. ESG platforms like these are especially popular with younger investors.
Benefits of Online Platforms for Ethical Investors
Trading online offers many benefits for traders; it is cheaper than other types of trading, there are no geographical limitations, you can trade any time or day with no schedule on anything that you would like to trade on.
The article will reveal why trading online had been so popular until now. We will also talk about the implications of such unregulated trade practices, as well as some measures being taken by regulatory bodies in order to protect consumers from getting cheated out of their hard-earned money via fraudulent websites and apps.
You can’t afford to ignore these issues as an eco-friendly or ethical investors. You want to invest in assets that are good for the planet and contribute to social justice. However, you still have to make profitability a priority too.
The reason why online trading had been so popular until now is that investors can attain profits from it pretty easily. The simplest form of online trading is binary options trading where a trader needs only to decide whether the price of a particular asset will go up or down by the end of a specific time frame. If it does, a trader gets rewarded with fixed percentage profit. If it does not increase, then he or she will get nothing or possibly lose their initial investment.
However, investors do not have to be geniuses to understand that with such an easy-to-master and time-honored method of trading, most people would love to partake in it. Your opportunities to make money as an ethical investor might seem more limited. Nevertheless, you can definitely take advantage of online trading. Many companies that are green or focused on human rights issues are doing very well.
US News has a list of eco-friendly and ethical stocks that are performing very well. Ginkgo Bioworks Holdings Inc. and Beyond Meat, two environmentally friendly food companies, are on the list.
The Growth of the Internet Creates a Larger Market for ESG Investors
The other reason that online trading had been so popular until now is due to the high number of internet users. Nowadays, almost everyone has access to the internet which makes it pretty easy for them to trade online. That said, with this quick-spread technology that allows people from all walks of life to access information on their own terms, some unscrupulous individuals would also be tempted in making misappropriations towards investing money online.
This is going to have a lot of benefits for ESG investing. More ethical investors are going to flock to platforms that make it easier to make ethical investment decisions. However, ethical investors will have to contend with some of the changes like everyone else.
Regulatory bodies are becoming more stringent in their responsibilities towards the traders. Ethical investors have to deal with these as well. One of the ways they want to protect consumers is by regulating computer software applications and websites which are used by traders to buy and sell trade goods with each other. It is also one of these measures that has contributed in reducing most of the fraudulent trading practices.
The other measure regulatory bodies have taken is by making it difficult for traders to access trading platforms via accounts which have not been verified by their own agencies. By verifying traders’ accounts, the regulatory authorities make sure that none are likely to cheat on any customers again or engage in any form of fraudulent practices.
The costs of trading stocks are higher than trading forex or other commodities. The costs of trading financial instruments are usually very expensive, especially if one wants to buy a large amount of stocks. In the past, many people have wanted to buy shares in a company which does not offer share classes for a decent price. This has made people trade online so they can save on the costs and get better deals because all their assets are right there at their disposal and in their accounts all the time.
Real estate and intellectual property can be traded online as well as there is no need to buy or sell anything on a certain day or time. As internet trading gives access to all assets, the costs are lower and prices are closer to the market value.
How do ethical investors make trades online?
There are a lot of great opportunities to place trades as an ethical investor. However, they are going to need to understand the process.
When you buy or sell stock on an online trade, you order it to be issued in seconds. However, in these moments many activities are unfamiliar, such as:
- Your order has been registered.
- Your order has been placed on a website
- It searches for the seller and when both buyer and seller are matched, a confirmation message is sent to both parties.
- Order and price are reported to the governing bodies. These regulatory agencies monitor all trading activities and are disclosed to all investors.
- Your trading records are kept in case the regulators want to learn what you have done in the past.
- The contract is sent to your stockbroker and to the broker you bought it from.
- After all this, traders have 3 days to exchange cash with shares called a settlement.
- After this process, the money or shares are officially in your account.
These processes are going to be similar whether you are investing in a traditional platform or an ethical one like OpenInvest.
How do ethical investors trade online?
There are a lot of great ethical investments that you can make. However, you have to be pragmatic with your investing decisions. Here is the process that you should follow:
- Research and Stock Selection: You should do quantitative research, technical analysis, try to identify patterns and understand short sales.
- Choosing a Brokerage Partner: You can see this article to learn how to choose the best broker.
- Look at eco-friendly trading advisors: You want to make sure the stocks you choose are actually green and align with your ethical goals.
- Learning to Trading Stocks: You can learn to trade with a trading account and a demo account easily.
- Making Wise Investment Decisions: Try to determine what stocks you can sell, split your portfolio, research before investing and buy good stocks at low prices.
There are a lot of great reasons to invest in ethical stocks. Green energy stocks are particularly attractive. Just make sure you do your research first.