We created Invested Interests with the goal of helping our clients invest their money in companies that stand to grow based on important social issues and companies that believe in the power of diversity. And considering that goal, we have a real responsibility to lead our business, family, and community in an impactful response to the recent events in Minneapolis. Our home.
We are having hard conversations, we are researching the best ways our company can impact our community. We are committed and we will not let this moment pass without us being part of a positive change.
Vote. Learn. Start hard conversations. Challenge the status quo. Challenge yourself. Support our community.
We at Invested Interests stand in solidarity with #BlackLivesMatter. We at Invested Interests stand with those that want to fundamentally change our police forces. We at Invested Interests are financially supporting organizations with plans for real change.
At Invested Interests, we have always believed investing is voting with your money. Today, we ask that you also contribute, with us, to organizations that need our support. Today we ask that you commit to learning about candidates that will support meaningful change this November.
You can find more about the organizations we’re choosing to support here:
DONATE to Black Vison Collective, an organization in the state of Minnesota that is dedicated to Black liberation and works towards a world in which ALL Black Lives Matter.
You can also DONATE to other organizations.
Vote with your wallet. SUPPORT black-owned businesses in your community.
Be part of the change. Participate in local and national elections and VOTE.
Start having conversations about racial injustice with the people around you. Check out these RESOURCES.
For this month’s blog, I immersed myself in learning more about how previously established inequalities are already having an impact on who’s getting hit the most. This blog outlines the financial, physical, and emotional health-related impacts of COVID-19 on women and minority communities and provides resources for help at the bottom.
Financial Health
As reported in the Harvard Business Review layoffs disproportionately affect women and minorities. Why? Because companies tend to make cuts to roles that women and minorities usually have, they usually see these roles as expendable, functions that are important but usually not seen as the core of the business.
Women and minorities also have less cushion to absorb on downturns. According to the 2018 U.S. census data, women are 36% more likely to be poor than men! Women also take more responsibility for childcare and eldercare, which makes the logistics of returning to their job, post crises, all the more difficult.
The most at-risk sectors in this downturn are accommodation, food services, retail, manufacturing, and administrative services – industries that have higher than average employment among minorities and women. Women are on the front lines of this pandemic due to their higher employment rates in at-risk occupations like nursing, flight crew, and teachers.
Physical Health
African Americans in the U.S are currently accounting for higher rates of hospital visits and mortality related to COVID-19. One of the reasons put forth has been that African Americans are a disproportionately higher percentage of the prison population and that the risk of contracting COVID-19 is much higher in prison.
Domestic Violence and Community
Women that have been or are currently victims of domestic abuse are being confined to their homes with their abusive partners during the COVID-19 pandemic. Add to this the overall anxiety of lost employment and uncertain health, too many women are finding themselves in dangerous situations.
What You Can do to Help — or Get Help
You can also sign a petition for the Paycheck Fairness Act. Paid discrimination is a problem that we face on a daily basis that needs to be addressed, and why not now?
The Families First Coronavirus Response Act expands some Medicaid provisions and sick leave provisions and may help you even if you weren’t qualified before.
If you want to help and can afford to, consider donating. A few places to start are the Sylvia Rivera Law Project, the One Fair Wage Emergency Fund.
If you are or know someone that is in a Violent Domestic Relationship and need help, visit the National Domestic Violence Hotline.
Remember, you’re not alone. We’re in this together.
It would be foolish to pretend that the world is the same as it was last month. We are simultaneously dealing with a pandemic/health crisis and a potential financial crisis. One of these issues alone would create challenges but dealing with both at the same time creates an added level of complexity. To make matters worse, it is very difficult to gauge what effect COVID-19 will have on the overall economy over the short and medium-term. All of these crosscurrents are creating extreme volatility and uncertainty in the markets.
What are policymakers doing?
The Fed cut interest rates to 0% and launched a plan to buy $700 billion in US Treasury bonds and mortgage-backed securities. This buying program is called quantitative easing, and it’s intended to add money directly into the economy. How? Interest rates affect the cost of borrowing and savings rates. When interest rates are cut, the cost of borrowing goes down — mortgages, credit card borrowing, and auto loans become less expensive. At the same time, the benefits of saving go down, because the interest earned on savings accounts and certificates of deposit (CDs) is lower. Both of these effects create an environment where people are motived to spend/invest more and save less.
What should I do?
For a brief moment, let us be your expert reminder on how to handle anxiety regarding your investments. If you had invested in the stock market from 1998-2018, your investment would have tripled. If you had missed the best 10 days you would have had half as much and if you had missed the best 20 days you would have LOST money! And many of the best days happen immediately after the worst days. Don’t panic, you are invested for the long term and doing it the right way. Our commitment to you is that we will continue to work to create value for you in this unique environment.
If you have any questions about your investments, the current market situation, or want to start investing? Reach out to us HERE
Humans are not rational investors
While strategies like analyzing historical stock trends, technical analysis, and financial ratios help us make more informed decisions, the average investor still underperforms when compared to the market.
According to research conducted by MagnifyMoney, most investors second guess their earlier decisions around investing.
People tend to invest with their emotions, and often fall short because of this.
But the good news is that each one of us can learn to make more intelligent decisions and avoid the common investing pitfalls. The answer lies in Emotional Intelligence.
What is Emotional Intelligence?
Emotional intelligence (EI) represents the ability to understand and manage one’s own feelings and emotions. Emotionally intelligent people excel at managing relationships with others and making favorable decisions under pressure. Prominent psychologist Daniel Goleman further explains EI by breaking it into five core components:
- Self-Awareness– the ability to understand your own moods, and how that affects others around you
- Self-Regulation– the ability to control certain impulses and moods
- Internal-Motivation– the vision to pursue goals with energy and creativity
- Empathy– the ability to understand what others are feeling and thinking, as well as their emotions
- Social Skills– the ability to manage relationships and build rapport
While all five components play a part in intelligent investing, we pay special attention to both self-awareness and self-regulation. Investors who exhibit high self-awareness recognize when their emotions begin to overtake rational decision-making. Likewise, those with self-regulation can keep their emotions in check and avoid rash decisions they’d be likely to regret.
By properly understanding ourselves through our emotions, our behavior, and our natural response to fear, we can begin to invest more intelligently.
For example, if I know that my natural “fight or flight” instinct kicks in every time a stock performs poorly, I can begin to curb my response. Instead of hastily selling the stock, as I may have done in the past, my self-awareness teaches me that I often make impulsive gut decisions. So, I can take a step back, breathe, and rationally remind myself that investing is a long-term process. Then I proceed with my options from there.
EI > IQ
With regards to investing, emotional intelligence remains even more important than IQ. While IQ enables you to analyze complex investment strategies, EI provides you with the qualities of patience, discipline and perspective; three vital skills for responding to the volatility of the stock market.
What made Warren Buffett such a great investor was not just superior intellect, but emotional fortitude to stay true to his strategy during deep drawdowns.
By pairing a phenomenal strategy with the emotional resilience necessary to follow it, Warren Buffet has become one of the most successful investors ever. Period.
So, by pairing even a decent strategy with the emotional resilience to follow it, you will be further ahead of those of us still falling into those tricky behavioral biases.
An important tool for impactful investing
Not only does EI benefit our investments, but it remains important to everyday life by allowing us to better communicate and connect with our fellow human beings. And humans are very emotional creatures, whether we like to admit it or not.
Ultimately, emotional intelligence proves especially relevant to the realm of impact investing, which revolves around investing in socially responsible causes. And we often select these causes, such as #MeTooMovement, Renewable Energy, and Fair and Equal Working Conditions by using rational means tied to how we feel about each cause.
Self-Awareness leads us to understand that impact investing leverages a significant market opportunity. Self-Regulation keeps us on track when the regular market trends affect our holdings. Internal-Motivation helps us fight the good fight by prioritizing innovation over the old ways of doing things. Empathy creates a bond between us and the companies prioritizing impact along with profit. Social skills allow us to spread the word without being preachy.
In summary, it is extremely important to stay in tune with our emotions, and to understand how they will affect our investment decisions. By learning how to cultivate your emotional intelligence skill set, you will follow in the footsteps of the great investors and enhance your skills as an investor.
Ready to start investing? Reach out to us HERE
What takes 5 minutes and will change your financial life? Setting up recurring investments. How can one little thing make such a big difference? Here are the basics of recurring investments and a comparison of investments saving accounts.
What are recurring investments?
Recurring investments are just what they sound like: Investments you make at a regular tempo into your portfolio. When you remove the human factor and make your investing automatic, you set yourself up for success.
How do they work?
It’s not so much how they work as why they work. When you remove the human element of temptation to spend from your saving and investment strategy, you’re bound to be more successful overall. Think of recurring investments as the personal trainer of your finances. Sure, you could do it on your own, but you’ll be in a better place in the long run if you’ve got it on automatic – it’s all taken care of for you. You still have to do a little work, but the gains will be worth it.
How are savings accounts different then investment accounts?
Savings accounts definitely have a time and a place, that’s for sure, but it isn’t planning for your long-term goals. Savings accounts are great for little emergency funds or saving for your vacation next year, but not so much for your far away future. The average savings account pays interest at under 1%, but the stock market has returned around 7% on average for the past few decades. When you’re ready to make big money moves, you invest.
So while the methodology isn’t so different, the results are – and dramatically so. Consider this:
Contributing $100 per month to a savings account will get you to $12,613.20 after ten years.
Investing that same amount in the same decade will get you to $17,409.45.
Yep. By investing rather than saving, you will have earned just under $5,000.
And the question is…how do you get started?
The first step is to start investing. There are a lot of options when it comes to investing, but not all of them are as transparent as you’d like. Choose with your values in mind as well as your financial future.
The next step is simple: Set up a recurring monthly investment that falls within your budget. Need help finding the right portfolio that aligns with your values and goals, and figuring out how much you should be investing? Reach out to us @ https://investedinterests.com/contact/ and we can help you get started!
Impact Investing refers to investments “made into companies with the intention to generate a measurable, beneficial, social or environmental impact alongside a financial return.” There are two primary reasons that you might choose Impact Investing. One, you are conscious about how your money impacts the world, and two, you want to use your dollars to support social change.
Performance: Will I have to sacrifice returns?
Not at all. You absolutely can make an impact without sacrificing returns. The MSCI KLD 400 Social Index is comprised of companies with high ESG ratings and avoids companies incompatible with specific values-based criteria. This index, which is the oldest ESG index in the US, has shown that ESG can create added value – by outperforming the S&P 500 for the last 25 years.
Measuring Impact : What impact are the companies making?
One advantage of investing with an impact-focused company, such as Invested Interests, is that we and the funds we work with do the heavy lifting for you. We identify the funds that have screened companies that are both making an impact and are poised for growth, and include them in your portfolios. This marriage of purpose and profit sits at the heart of Impact Investing.
When you’re ready to invest your money, you’ll want to do it the right way.
Managing your own investments may not be right for you, and perhaps you don’t want to work with a big company either. Companies, like Invested Interests, are making it easier for people to invest with their values, and not only that, but our only focus is Impact Investing, which gives us the opportunity to give our clients all the attention they deserve.
Dip your toe into Impact Investing with $100 or $10,000, whatever feels right to you. Low fees and diversified portfolios make it nice and easy to dive in and make a difference.
Do you want to start the New Year with aligning your investments with your values?! Reach out to us to get started!!
And finally, a happy and safe Holiday to everyone!!