I figured that I would start a blog about donations, impact investing, and various other finance related ways to do good in the world. There are very few finance inclined people involved in effective altruism, and as a result there doesn't seem to be a lot of guidance surrounding how to structure your donations.
Donating money to the most effective causes is the same as losing money in the most effective way. There are many discussions about how to gain capital, and there are many discussions about how to avoid losing capital, but there are not many discussions about how to best lose capital. In order to make any sort of impact on the world, you will have to part with capital. Donations are a great way to lose money, but impact investing and ESG allocations are others. Whenever you exclude potential investments from your opportunity set, you at the very least lose out on diversification. Generally, you are left with a sub-optimal portfolio in regards to risk and return. This is fairly obvious to everyone involved in empirical finance, but the marketing dollars spent by various interested groups has made this unfortunately controversial. In my opinion, it is very unlikely that a portfolio that contributes positively to the world (as the starting goal) will end up being the most optimal portfolio. That is not a problem! If doing good in the world is a goal, then losing out some diversification or some expected returns should not dissuade any investor. If it does, then you actually don't care about doing good in the world.
So, what are the best ways to lose money? Hopefully, together we will find out.
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