There’s a new-to-many term floating around the investing world—impact investing, a sort of investing in which individuals invest in groups that advertise a specific cause, be it social or environmental. There’s still a financial return, but investors are left with a warm and fuzzy feeling because they’ve given money for the good of society by seeking investment alternatives to traditional assets. Impact investing goes beyond the desire to not do harm by way of investments, actively searching for opportunities that provide a measurable benefit to society.

The trend is catching on—just three years ago, investments didn’t reflect a trend toward social consciousness. Some speculate that this is because investors are weary of traditional forms of investments after repeated Wall Street misbehavior and years of scams, after a clear decrease in natural resources and widening income gap. Whatever the reason, impact investing seems here to stay.

Measuring Return on Investment

Because impact investing is a relatively new idea, it leans heavily in favor of private equity or long-term funds, so many investments have yet to show a return. The returns are often difficult to measure, so they remain vague. Think about it this way—while it is easier to measure the number of jobs provided or products produced, it is difficult (especially in the short term) to demonstrate or measure a drop in homelessness or crime.

A new kind of bond, meant to measure social impact, attempts to show how these impact investments work. To provide an example—if a bond is used to fund healthy school lunches, it would pay out if childhood obesity at a school dropped. This could change depending on a lot of factors, but the idea remains the same.

As impact investing becomes even more popular, experts expect that benefits will become more measurable. Before you choose a form of impact investing, make sure that there is at least some way to measure the success of your investment. This will also ensure that you’re giving money to a worth and reputable cause.

So, while you’re making sound financial decisions by investing in assets of your choosing, you receive the added benefit of feeling good about yourself—worth undoubtedly more than the money you’ve put forth. There are many companies that specialize in impact investing, and while it won’t make you immediately rich, it can be, as Jason Hartman recommends, part of your diverse investment portfolio. (http://www.flickr.com/photos/coast_guard/5740442332/)

* Read more from Jetsetter

Caring for Elderly Family Members

Lack of Financial Literacy Linked to Veteran Homelessness

The Jetsetter Show

Tags: impact investing, Jason Hartman, return on investments, social impact, The Jetsetter Show