My last apartment was across the street from one of my favorite fast-food restaurants. In the summer, when the windows were open, the smell of french fries and chicken filled the whole apartment. The easy access and constant reminders of their food made it difficult to avoid spending money there.
I needed to defund my fast food habit.
Now, cutting back on fast food didn’t mean I should stop spending on food altogether. Rather, that it would be in my best interest to reallocate my funds towards healthier food options.
Using the same line of thinking, defunding the police means the government needs to reallocate funds towards more beneficial means of public safety.
Obviously, the city budget is a lot more complex than my own. There are more people whose needs have to be considered, more diverse expenses, and a lot more money.
But the analogy can still be useful to get a better understanding of the reasoning behind “defund the police.”
When activists and protesters use “defund the police,” it isn’t a call to end public safety. The movement is meant to address the problems with our current view of safety and create a new system that works better for all people.
Right now, policing is the most prominent form of public safety. However, policing does not serve and protect all Americans equally. Neighborhoods of color are disproportionately policed. Black and Latinx Americans are disproportionately arrested and incarcerated.
In an effort to better serve myself, I had to think critically about my dinner plans. Similarly, in an effort to better serve our communities, we have to reimagine public safety.
What does a world without police look like? In the words of Congresswoman Alexandra Ocasio Cortez, “A suburb.”
In a wealthy suburb, the government meets the community’s needs. Schools are well funded. Residents have access to quality healthcare. People aren’t forced to decide whether to spend money on rent or food.
A suburb (for my Minnesotans, think Edina, Wayzata, or Minnetonka) is a safe place to walk around without a large police presence. In other words, the police are not the key to public safety in places like the suburbs.
Building safe communities is not a simple task. It will require better budgeting, more impactful community programs and services, fuller enfranchisement for all people, and a lot more.
Our communities are worth the investment.
Well folks we’ve got a long-awaited topic to tackle today. Out of all of the questions that come across our desks there is one to rule them all, “Does impact investing lead to lower returns?”. It’s a really good question, so believe me we aren’t knocking you for asking, honestly, it’s something we’d be asking too if we weren’t so immersed in what we do for forty hours a week. The short answer is no, absolutely not. Now at this point you could just take our word for it and carry on with the rest of your beautiful Sunday plans, but if you’d like us to put our money where our mouth is we’ve done that too.
What is impact investing?
Impact Investing as a term has taken on a variety of definitions, but essentially it is a type of investment strategy that includes intentional investments that generate positive, measurable social and environmental impact alongside a financial return. That’s right, read that again, alongside, not instead of, meaning that by definition you can expect to see returns.
“It turns out that investing in solutions to social problems can be profitable.” – Alex Lamb, partner with New Summit Investments in Manchester, Massachusetts, a fund-of-funds manager of private market impact funds.
You can become an impact investor by opening one of many investment accounts available to you from an IRA for retirement to joint investment accounts or individual investment accounts. Now the reasons why people chose to become an impact investor varies from person to person. Sometimes people are tired of not knowing where their money is going, they want more control over the impact they make, or they are just curious to see what we’re all about.
Where did it come from?
The term impact investing was coined back in 2008 by the Rockefeller foundation when the conversation started to emerge about how to use capital differently. Around the same time, we began to see new terms around the same concept come to life from socially responsible investing, to ESG Funds, and ethical investing. Although these terms are distinct from each other, they all work to serve the same purpose – aligning your financial growth with the impact you want to make on the world around you.
How is Impact Investing doing today?
Research shows that socially responsible investing funds have done better in the last 20 years than traditional investing funds. So why don’t more people talk about it? Well, most financial advisors have been taught or have worked with the understanding that investing should only be about making money, which at a fundamental level isn’t a bad way of thinking. However, times are changing and in the world, we currently live in you no longer have to settle for making money or doing good things for the world. As an impact investor, you can have it all (if you have the right coaches helping you along the way).
If you’re more of a numbers person, here are some stats that we hope soothe your worries.
- The MSCI KLD 400 Social Index is composed 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.
- A review by the German investment fund DWS and the University of Hamburg of more than 2,000 studies, for example, found that 63% showed a strong correlation between ESG performance and positive returns, while 10% showed a negative effect.
- In its August 2019 report Sustainable Reality, Morgan Stanley concludes: “We found that sustainable funds provided returns in line with comparable traditional funds while reducing downside risk. What’s more, during a period of extreme volatility, we saw strong statistical evidence that sustainable funds are more stable. Incorporating environmental, social, and governance (ESG) criteria into investment portfolios may help to limit market risk.
- Socially responsible investing is the fastest-growing segment of the investment management world.
Final thoughts
You absolutely can make an impact without sacrificing returns. If any of this has piqued your interest, we’d love to sit down with you and discuss how this investment strategy can fit into your life. Whether you’re passionate about impacting the environment, global peace efforts, or human rights & diversity efforts we’ve got a portfolio for you. Our team can help you get started on your impact investment journey in just five minutes, so reach out to us! We’re excited to coach you through the next great step in your financial future.
Why do bad things have seemingly good names? Sugar-coated titles are deviously clever and while I understand where this one in particular, comes from, I’m not a fan. For those who’ve never heard the sickeningly sweet name before, The Pink Tax is “a phenomenon often attributed as a form of gender-based price discrimination” which is a very awful thing. I mean, it’s 2020, we’re about to have a female Vice President, #girlboss is on every kind of merchandise that you can buy, and yet women are still finding new ways they have been discriminated against. While The Pink Tax is nothing new, we think it’s important to keep the conversation going until we see some real change.
What is the Pink Tax?
The Pink Tax isn’t another name for the wage gap, although it has a similar effect. Essentially, The Pink Tax is the extra amount of money women pay for the same products and services that men use. Some people call it price discrimination or gender pricing, which are far more informative names but they aren’t as catchy.
To put it into a practical context, think about deodorant. Whether you’re male or female, we’re willing to bet that you sweat and therefore you buy deodorant. Now in a perfect world how much you sweat should impact what kind of deodorant you buy. There would be different products that catered to the amount of sweat you produce (moderate, extreme control, etc.) but that’s not how the aisles at the drugstore look. Instead, there are lines of men’s deodorant and women’s deodorant catering to the different sexes with different smells and packaging designs, but as many women know the men’s deodorant tends to work better – and it’s cheaper. Blogger Shay Marie of Bellatory depicts this reality in one of her popular articles.
“Brands like to jack up the price of women’s products. They sell virtually the same products to men—minus some girly colors and some stuffy granny scents—for vastly lower prices. I was spending anywhere from $5 to $6 for my antiperspirant, and now that I use a man product, I spend $1 to $2 less per stick.”
So Why would any woman buy a product that we don’t think works that well, and costs us more money? Personally, I think it’s because we don’t realize we’re being treated unfairly. It wasn’t until my freshman year of college that I realized it was often cheaper to buy men’s razors, deodorant, and sometimes even clothes. The sad thing is, I didn’t question the fact that women were having to pay more. It seemed to fall right in line with the fact that our government has continuously had shortcomings in regards to female equality. I do wonder though, how many women haven’t noticed the price disparity between these common products and have simply continued to spend nearly 1,300 dollars more a year just for selecting the products specifically marketed toward women. If you’re curious as to what the estimated price increase is by product type, here’s a quick breakdown.
- 7% more for toys and accessories
- 4% more for children’s clothing
- 8% more for adult clothing
- 13% more for personal care products
- 8% more for senior/home health care products
The Pink Tax Repeal Act.
Now, we bring good news and bad news. The good news is that there are officials in our government that notice this “phenomenon” and clearly see what’s wrong with it. Congressman Jackie Speier first introduced The Pink Tax Repeal Act back on Jul 8, 2016, and again on April 10, 2018, unfortunately, the bill is still currently up for debate. According to Govtrack.com, the odds of passing this time around are as follows “The bill has 51 bipartisan cosponsors, 49 Democrats and two Republicans: Reps. Brian Fitzpatrick (R-PA1) and Tom Reed (R-NY23). It awaits a potential vote in the House Energy and Commerce Committee. Two previous versions introduced by Rep. Speier in 2018 and in 2016 never received a vote, although the House was controlled by Republicans both times.”
Now we know what you’re thinking. What on Earth is taking so long? At first glance, it seems like a no brainer, men and women should pay equally for the same product, but there are more nuances once you talk about actually implementing changes. Those who oppose the bill have the following concerns:
- “Most goods cannot be readily identified as ‘male’ or ‘female’ products,” a California Judiciary Committee report wrote in summarizing both the arguments for and against a state-level version. “With the exception of undergarments or goods clearly labeled ‘for men” or ‘for women,’ retailers will often be required to engage in gender stereotyping in order to identify a product as inherently associated with one gender or the other.”
- “The Chamber [of Commerce] asks, for example: ‘Is a pink shirt a female shirt just because of the color? Comparatively, is a blue or teal razor a male razor just because of its color?’ The Chamber notes that for many products, especially children’s toys, manufacturers and retailers are moving away from targeting toys specifically to boys or girls.”
We recognize that there is a lot of grey area present when it comes to gender-specific products, and navigating those unknowns is going to take a lot of time. However, it’s clear that the bill aims to correct serious economic discrimination against women. Supporters of the bill have said the following:
- “The Pink Tax is not a one-time injustice. It’s an insidious form of institutionalized discrimination that affects women across the country from the cradle to the grave,” Rep. Speier said in a press release. This predatory practice is unacceptable, un-American, and it will end with the passage of my bipartisan bill.”
- “The Pink Tax also compounds the damage wrought by the gender wage gap, which sees women paid less for doing the same work as their male colleagues, losing on average more than $400,000 over the course of their lifetimes,” Rep. Speier continued. “That financial hit is even more catastrophic for women of color and can extend into the millions of dollars.”
Our hope for the future.
If you didn’t already guess, we are really excited about January 20th, 2021. With the upcoming presidential term comes the first term with a female vice president which we hope will help push issues pertaining to women’s rights to the forefront of political conversations. For now, the best way to make your opinion known is to get in contact with your state representatives and voice your support! Not only for The Pink Tax Repeal Act but for all issues pertaining to gender equality and women’s rights.
If you’re looking to make immediate changes to avoid The Pink Tax, keep your eyes out for the brands that have opted to utilize gender-neutral marketing and packaging practices. Dollar Shave Club has addressed The Pink Tax issue head-on, and other companies like Public Goods have stayed away from the gender-stereotyped designs as a whole and we’re slowly starting to see more companies follow those footsteps. Our hope is that one day, economic discrimination won’t be as blatant nor as tolerated as it is today, until then, we’ve got work to do.
At long last, we’ve come to kick start your 2021 investing resolutions! Whether you’ve never opened an investment account before, or you’re a seasoned pro looking to try your hand at a new type of investment, we want to help you get started. I don’t know about you, but my life is much simpler when I have multiple lists. Grocery lists. To-Do lists. You name it, I’ll take it. So, for all you list lovers out there we’ve created a pre-investing checklist that you’re welcome to use as is, or adapt to fit your needs. Without further ado, here is our recommended roadmap for starting a new investment.
Nail down your values & goals
This seems pretty self-explanatory at first glance, but it’s more than just identifying your financial goals. If you don’t already have a clear list of what you value from a company, and from life in general, this could be a good exercise in self-reflection. Once you’re more familiar you are with what you hold valuable, you’ll be able to make better decisions down the road.
Remember, you don’t have to settle for any company, investment strategy, or financial plan that doesn’t align with what you hold valuable EVEN if those things seem like the only option to reach your goals. I promise there are other options out there, which brings us to step two.
Research types of investments and strategies
It’s hard to choose the best options when you don’t know what all of the options are. Good news for you, In the world of investing, the options are almost limitless and there is always something new to learn. Now that you have your values and goals clearly defined, it’s time to research the investment options that align with what’s important to you.
There are many different investment account options out there, from IRA’s to mutual funds, micro-investing, and major stock market stalking. If you already have one of these accounts, great! You have some frame of knowledge to work off of and can now decide where or not you want to change course this time around. If you have none of these accounts, that’s also great! It means you’re about to make a really smart decision for your financial future.
No matter where you’re standing on your investor timeline, researching the options you have is crucial to having confidence in your new account. Once you know what kind of investment you’re looking to make, it’s time to get your ducks in a row.
Determine your starting amount
By ducks, we mean your dollars. This is the not so fun part for a lot of people, especially first-time investors. We get it. You’ve worked hard to save up all of this money and now it feels like you’re losing it because you don’t see any instant gratification and you might have to wait a bit longer for results depending on the investment route you’ve chosen.
But making an investment is not the same as making a purchase. Yes, you’re going to have some risk, but in most cases, you have a say in how much risk you’re okay with. And if you’re working with smart people who know how to manage your money well, you’ll gain far more than you feel to have lost, but we’ll elaborate on that later.
For most investment accounts, you’ll need to have a reasonable amount of cash ready to play with. Now the exact numerical value is dependent on a lot of factors, so we won’t give you a magic number to meet, but unless you’re looking to micro invest, you’re probably going to want to have an amount with more than two digits.
Select a management company
This is the exciting part because it’s kind of like dating. You know what you value, what you want your financial future to look like, you’re prepared to make the leap, and now you’re looking for the right partner to support you and help you grow in the right direction.
Choosing the right management company typically comes down to a few things. Reputation and creditability, personality and connection, and the ability to clearly communicate how they can help you succeed. You don’t want to go into business with the first management company that crosses your path simply because they were the first. Do your research, ask the tough questions, and read their customer testimonials to figure out if the company is really a good fit for you. Also, do not feel bad if you want to shop around a little bit. Some companies may offer you things you didn’t even know you wanted, like a “no asset minimum policy”, or the ability to start impact investing.
Open your investment account!
Depending on who you choose to invest with, this might take a little bit. Sure there will be some forms that need your signature, and maybe a few follow-up meetings, but after you’ve dotted your i’s and crosses your t’s you can relax! You’ve done everything you need to do to let your hard-earned money work for you, rather than letting it collect dust bunnies under your mattress.
Hopefully, this breakdown helped clarify that starting to invest isn’t as scary as it sounds and depending on the management company you choose it can take as little as 5 minutes to get started. Plus, you’d be able to say you completed your New Years’ resolution two weeks into the year, and we think that’s pretty awesome.
We believe that good investments and good companies are not exclusive of one another. How do we cater investments to align with our clients’ progressive values? Our portfolios are guided by impact investing, an approach that combines the other ethical investing tactics to ensure your dollars are working towards real change in the world.
Socially Responsible Investing
Investopedia defines SRI, or Socially Responsible Investing, as investments that are considered socially responsible due to the nature of the business the company conducts. In other words, SRI ensures you’re not investing in companies that harm our planet and our society.
SRI began in the 1960s to promote women’s rights, civil rights, and anti-war movements. With the expansion of communication and corporate transparency, socially responsible investing has grown significantly in the last 60 years.
Usually, SRI portfolios are centered around a theme. At Invested Interests, we have three portfolios that are customizable to your financial goals. They are the environment, peace, and human rights + diversity.
ESG Investing
ESG stands for environmental, social, and governance. In terms of investing, ESG means making financial decisions that promote environmental, social, and governance issues.
Environment
Environmental factors for investing include promoting sustainability and divesting from environmental harm. This could look like supporting alternative and renewable energy, like solar and wind. It also means avoiding oil and fossil fuel companies as well as companies destroying natural resources.
The funds in our portfolios invest in companies promoting sustainability and don’t sacrifice returns. Electric cars are cheaper to own than gas-powered vehicles. Wind and solar energy are already cheaper than fossil fuels. By investing in companies promoting sustainability and green solutions, you’re not just doing the right thing – you’re doing the smart thing.
Social
Social factors for investing are those that promote the wellbeing of humanity. When choosing a company to invest in, we look for those that have a strong socially responsible outlook. They may contribute back to organizations and causes either locally, nationally, or globally that help combat hunger, stop the spread of disease or other worthwhile causes that make a difference on our planet.
In our portfolios, we use funds promoting conflict resolution or international relief efforts. Additionally, these funds also avoid companies with human rights violations and war profiteering, such as weapons dealers and manufacturers.
Governance
Governance factors illustrate whether a company operates with accountability, integrity, and equality in all of its practices. To determine a company’s focus on progressive governance, an independent source can review their commitment to inclusion by looking at the diversity of their leadership, assess their work standards and code of conduct, and
explore their transparency.
At Invested Interests, the funds in our portfolios include companies with high internal standards. This can include looking at the company’s candidate backing, commitment to giving back to the community, and more.
Impact Investing
Impact Investing solves global challenges by investing in companies developing solutions to those challenges. Using SRI investing to filter companies and ESG investing to find the best in each sector, Invested Interests uses Impact Investing to make our ethical portfolios.
Two more key components of impact investing are intentionality and accountability. As impact investors, the intention behind our investments is to have a positive social or environmental impact on our world. Impact Investing is based on accountability. Ethical Investors choose to hold both themselves and the companies they invest in accountable for their actions.
Getting Started
If you’re ready to start investing, you might be asking yourself “why should I invest with Invested Interests?” Here are some of the many reasons we think we’re the best!
- Only Ethical Investing Options
We spend 100% of our time focusing on socially responsible investing. While many investment firms have some ethical investing options, few can say that’s all they do! Our team has been dedicated to impact investing since we started.
- Working with Real People
Investing with Invested Interests means that real people are managing your investments and answering your questions. With Invested Interests, there’s no fear of Robo Advisors or automated messages. Everything is managed by real people who know you and your unique financial goals!
- No Minimum Investment
We think that ethical investing should be an option for any investor. That’s why we have no minimum investment, get started with us no matter what you’re ready to invest.
Still not sure if we’re the right fit? Reach out and get to know us today!
Happy Investing!
Micro-investing, aka the latest trend to hit the investing world, has skyrocketed in popularity among millennials and gen-Zers alike. Since this investment style doesn’t seem to be disappearing anytime soon, we figured it might be beneficial to provide our opinion on the topic. To sum it up as neatly as we can, micro-investing is a form of investing that allows clients to invest super small amounts of money to buy fractions of shares. That’s right, not a full share of anything, a fraction of one share. Which when you think about it, seems like a less than worthwhile endeavor, but we gotta say it does seem to have some perks (just not as many as we’re used to seeing). In order to lay out all of the good and not-so-good aspects of this new finance fad, we’ve broken our thoughts down into two handy dandy categories.
Micro-Investing Pros
Hey, we wouldn’t openly introduce you to something if it didn’t have some potential benefits. Here are the three biggest reasons why micro-investing has become such a hot topic, and why you’re most likely to hear your friends or family talking about it.
- They are easy to start by yourself. Attention all introverts, this one might actually be for you. Sometimes contacting big investment firms or trying to find a financial advisor that you trust can be daunting, especially for those who don’t feel super confident in their financial knowledge. Being able to simply download a micro-investing app, create an account, and deposit money into it directly from your mobile device takes a lot of that social anxiety out of the equation.
- They keep costs low. Some of the leading micro-investing platforms (aka mobile apps) allow clients to start investing with as little as five dollars. Crazy right?? Even investment companies who don’t have strict minimums might look at you a little funny if that’s all you bring to the table. But, since you aren’t purchasing whole shares of anything, you can expect your costs to stay relatively low. This kind of style probably works best for those who either aren’t making a ton of extra income or have a hard time-saving money to invest later.
- They can become a passive form of investing. Another common feature of many micro-investing platforms is the ability to link to your primary checking or credit card accounts, and use the roundup method. If you have this feature enabled, your micro-investing platform will automatically take any purchase you make, say $6.52 for your morning coffee, and round that price up to the next whole dollar in order to put that extra change into your investments. So you can forget about remembering to manually add extra cash into your investment account. Oh and FYI, there are a lot of banks who offer this same roundup service in order to help their clients keep money in their savings accounts, but like many of us know, savings accounts are not the right garden for financial growth.
Micro-Investing Cons
And…here are the not so great sides of micro-investing. Now, we aren’t trying to be Debbie downers and we’re not telling you to share all of your peers who already have opted in to these services. These are just the facts, and we’re giving ‘em to ya straight.
- They won’t yield big returns: The famous Dave Ramsey said it best, “Micro investing produces micro results.” This might be all that you’re looking for, but if you’re trying to save for retirement or a downpayment on a property, this strategy won’t do you any good. Individuals who micro-invest can safely estimate that they’ll generate a few hundred dollars a year at most, depending on how much they are contributing. So, it could be an easy way to kick start a small emergency fund, but that’s about it.
- They are managed by Robo-Advisors. Yeah, if you’ve been with us for a while you’ll already know our thoughts on this one. Robo-advisors are a type of AI that uses specific, pre-programed algorithms to manage your money. They may give you the illusion of personalization by asking you a few questions upfront about your investment preferences, but these are only used to figure out what algorithm you fall under. Plus, if you ever have a problem or disagree with how your money is being managed, it’s not like you can talk face to face with a human person, the best you can hope for is a customer service representative that isn’t having a bad day.
- They aren’t deeply customizable. This one is almost a direct by-product of the robo-advisor thing. Basically, these algorithms are already lined up to package certain investments together – whether you know it or not – and they might not always give you the most in-depth reasoning why those companies are being chosen. So, say you are someone who wants to make sure your cash isn’t going to companies that you’ve decided to boycott for political or personal reasons, you might have a hard time weeding those companies out. Or flip the script and say you’re someone who only wants their money going to companies who are doing good for the environment, treating their workers fairly, or investing in global peace efforts, you’ll probably have a hard time finding a button on your app that does all of those for you.
Our final thoughts
Micro-investing isn’t a bad strategy as long as it isn’t your only strategy. We pride anyone who has made the decision to tip their toe into the investment waters, but we also want the best for you and micro-investing probably isn’t that. We know you have specific goals, values, and interests that a Robo-advisor algorithm isn’t equipped to understand. We also know that in the long run, you’ll have wished you started your retirement accounts or other financial assets way earlier than this quick fix investment strategy.