Whenever I hear about stocks or exchange traded funds (ETFs), anything stock market related really, I feel this sense of anxiety tense up within my body and I immediately withdraw from the conversation. It almost feels like a foreign language that I cannot understand even if I tried to. In the last year, I recognized how investing in the stock market can not only benefit me financially, but also benefit the planet.

Exchange Traded Funds (ETFs)

Exchange traded funds (ETFs) are groups of companies that you can invest in with one transaction. When you buy an ETF, the fund company receives your money and purchases a stock from the companies associated with the ETF. When purchasing an ETF, it is important to keep in mind that the companies that the ETF owns can change. This is why keeping up-to-date with the ETFs you invest in is crucial. Even looking at this information once a month is sufficient. ETFs are great for new investors (such as myself) and can be more affordable than purchasing the stocks individually. There is a small fee built into the price of the ETF which is an annual management fee, usually this is under one per cent.

ETFs to invest in

Index ETFs are a great way to start! Indexes are very large groups of stocks that track an entire country’s stock market.

VEGN

One example is VEGN, the Vegan Climate ETF. This ETF invests in many companies that are against the suffering of animals and the obstruction of the environment. The top three companies that VEGN gives you exposure to are Tesla Inc. at 6.26 per cent, Mastercard Incorporated at 4.60 per cent, and Microsoft Corporation at 4.49 per cent. 

ICLN

iShares Global Clean Energy (ICLN) ETF gives you exposure to innovative energy generation and storage companies that aim to revolutionize the way we move around, power our devices and temperature control our buildings. Many of the companies in these ETFs offer an alternative to fossil fuels. Plug Power at 9.5 per cent and Siemens 4.5 per cent are two of the largest holdings within this ETF.

ARKF

ARK Fintech Innovation ETF gives you exposure to financial technology companies that are innovating within the industry. This ETF also gives you exposure to cryptocurrency or bitcoin to be specific. Some of the top companies they invest in are SQUARE at 10.40 per cent, and PAYPAL holdings INC at 5.42 per cent.

Equities (stocks)

Equities, also known as stocks, are small pieces of companies that the public (us) can own. Stocks are riskier to invest in because they fluctuate in price more frequently than ETFs. Before buying any stock, it is important to do some research and know the company well before buying any shares of the company. Just an FYI, shares mean the same thing as stocks or equities. Three terms for one meaning! It almost makes me think this lingo is made to confuse people and keep them out of the stock market. I know for me, I only recently learned about all of these terms. Equities of larger companies can also pay dividends which are cash distributions to the cash component of your investing account.

Stocks to invest in

Let’s check out some Canadian based stocks to invest in.

EATS

EATS Beyond Inc., is an investment company that invests in plant-based product companies ranging from food to packaging companies. The current director, Don Robinson, has leadership experience with industry titans including Mars Inc., CARA Operations Ltd., and Kraft/Nabisco. EATS has also received celebrity investments from actors and athletes including LeBron James’ athletic trainer Mike Mancias. 

Fun Fact: Did you know that 43 per cent of Canadians are taking initiative to incorporate plant based foods into their diet!

GDNP

This is one of my favourites! GDNP otherwise known as Good Natured Products, a company that uses BPA-free plant-based packaging. They make their products from renewable materials, ensuring they work just as well if not better than petroleum-based products, and sell their products at budget-friendly prices. When we invest in companies like GDNP, it shows the market that investors want to support sustainable companies thus making it easier for green companies to raise money in the future.

Fixed Income

Fixed income is a way to lend money to a company and earn an interest rate in return. This can be in the form of corporate bonds (loans that corporations make to fund business operations), or preferred shares (loans the company makes with slightly different rights). A regular bond gives the bondholder a claim to be paid back and usually has legal rights to assets if they cannot be paid back with money. Whereas preferred shares gives the preferred shareholder a right to the income instead. Dividends or ‘coupons’ (what the investor pays to you in cash) must be paid to preferred shareholders first before paying the regular or “common” shareholders. Fixed income investments usually are less risky and fluctuate less than stocks.

GRNB

VanEck Vectors Green Bond (GRNB) ETF takes money invested into it and lends it to companies by purchasing company bonds (loans), which will fund company initiatives that are intended for climate change goals. For example, one of the holdings of this ETF are bonds issued by Apple Inc. These bonds pay an interest rate and pay coupons to VanEck which holds the bonds in the ETF portfolio. Apple issued these bonds to fund the construction of sustainable buildings that are powered by renewable energy and use eco-friendly construction materials.

When building a portfolio here are some principles to keep in mind.

1. Stay diversified. Make sure ETFs you own do not have too many of the same companies, otherwise it defeats the purpose of buying ETFs.
2. Know what you buy. Always do your homework, otherwise you will panic sell when the market fluctuates in a downward direction.
3. When you are young, your portfolio should consist of more equities than fixed income. As you get older, you will add more fixed income investments and reduce equity exposure in order to reduce portfolio risk as you age.

I hope this blog helped to ease some of the anxiety you may have surrounding the stock market! I believe it is important to research and learn about these companies and initiatives because it is another way we can not only invest in ourselves, but also the planet we live on. If we continue to invest in green companies, there is more demand for these companies to expand and thrive which influences other companies to follow in their footsteps. There is power in where we choose to put our money. Let’s put our money where it matters—in green investments!