Impact investing may be the new “it” thing to do in the world of investing, but in truth, impact investing dates back to the 1960s. At that time, the focus was on women’s rights, civil rights, and anti-war agendas. Sadly, many of those same causes are still at the forefront of impact investing today.
By definition, impact investing or socially responsible investing (SRI) refers to the practice of utilizing an investing strategy that considers both financial return AND a socially-conscious effort to promote positive change. Impact investing is once again making a big splash in the investing world with social causes having a great platform and following than ever before – due largely to social media. Individuals use this platform to align themselves with their personal values, and this translates into their investment decisions.
The Start of Invested Interests
Invested Interests began back in 2003 working with the Sudan Divestment Task Force. The Task Force led universities, endowments, and individual investors to divest from companies supporting the Sudan regime accused of genocide against its own people in the Darfur region.
We worked with the Task Force to make their targeted divestment list into a portfolio for investors. Divesting in specific companies like Schlumberger Limited and Petro China, had a significant impact on the region.
Does it work?
The initiative started in 2003. By 2008:
- 27 States had adopted divestment policies from Sudan.
- The United States government approved the Sudan Accountability and Divestment Act which prohibited federal contracts with companies that operate in Sudan’s oil, power, mineral and military sectors.
- 61 Universities have adopted Sudan divestment policies allowing their schools to make conscionable, genocide-free investments.
- 13 Companies ceased operations in Sudan or significantly changed their behavior in the country. These include Siemens, Rolls Royce, Petrofac, and many others.
And, while human rights still remains a pressing issue in Sudan, significant progress has been made for the rights of the individuals there.
Make money. And make an impact.
As we’ve mentioned, impact investing is an investment strategy that considers both financial returns and social responsibility.
In other words, it’ isn’t just the right thing to do, it’s the smart thing to do.
While investments are never guaranteed, the MSCI KLD Index is the socially responsible version of the S&P 500 Index. It has outperformed traditional investments over the last 20 years.
Change has to start somewhere. The most effective way to get corporations to make a change is to move money away from the bad and into the hands of companies that are doing the right thing and making an impact.
Want to learn more about impact investing and how you use your money for good? Get in touch.
11.3 million children in need of humanitarian assistance.
400,000 children under 5 suffering Severe Acute Malnutrition.
16.4 million people in need of basic health care.
In January 2019.
How does this happen in 2019, when human rights are one of the core principles of society? Ensuring that individuals, especially those in vulnerable situations, have basic essentials like food, water, clothing, shelter, and medical care is at the core of humanitarian programs across the world. And yet, the same country that is helping to organize much-needed humanitarian assistance in Yemen is also the same country that is profiting off of the war that put its citizens in this place to begin with.
For the last three years, the United States has supported a coalition led by Saudi Arabia in Yemen to incite war in order to overthrow the rebel Houthi government. As part of the coalition, the United States is selling U.S. made bombs and weapons to the Saudi-led effort, helping them choose Yemeni targets, and even refueling planes.
However, without a Congressional act, there is (and was) technically no U.S.-led war efforts in Yemen. Just recently, on December 19, 2018, a bipartisan group of U.S. Senators did approve a resolution to the end all military support. After an estimated 50,000 people have died and another 12 million on reported to be on the verge of starvation.
This is not a political discussion, however. It’s a profit discussion.
Before the war, Yemen was the Middle East’s poorest state. Most of the country relied on imports and humanitarian efforts to feed the population. Now, after much of the population was blockaded by the coalition for years on end, it faces famine, disease, and unquantifiable hardships.
The United Nations describes the situation in Yemen as the world’s worst humanitarian crisis.
Meanwhile, U.S. weapons manufacturers have made billions. Yes, billions – by selling mainly bombs – and other weapons to forces in Saudi Arabia.
What makes this a further investment and profit discussion? Your 401(k) and investments could be funding, and likely are, the manufacturers of these weapons. Most 401(k) funds do not support ESG (economic, social and governance) rated social investments rather than on social responsibility.
What can I do? Two things:
- Donate to humanitarian efforts to help the current, deteriorating crisis in Yemen. Charity Navigator provides an excellent guide to ensure your money is being spent directly.
- Review your investments. Help ensure profit doesn’t occur at the expense of human rights, and join us in our efforts to #investinwhatmatters: https://investedinterests.com/portfolio-builder/
Want to learn more about impact investing and how you use your money for good? Get in touch.
By the time you reach your thirties or forties, you likely have at least a few 401(k) accounts floating around from previous employers. Not only is it important to take stock (pun intended) of these accounts for retirement planning, but it’s also important to know crucial things like balance fees, the diversity of your portfolio, and who you are funding with your money. During this deep dive into your accounts, one of the decisions you can make is to hold on to this account or roll it over into a new IRA account.
Things to Know About Your 401(k)
- A 401(k) is an employer-sponsored retirement account.
- You contribute to your 401(k) pre-tax, meaning before you receive your paycheck with tax dollars removed
- If your employer offers a match, you should always take it. It’s free money.
- With a 401(k) plan, you get no say in where your money goes or who it funds: oil companies, tobacco manufacturers, and gun stock companies are all part of the five major funds that make up popular employer-sponsored plans, as well as many other companies that may, or may not, align with your values.
What is an IRA?
An IRA stands for an Individual Retirement Account. There are many types of IRAs that can be set up in addition to yearly 401(k) contributions or that can be created from a 401(k) rollover.
- Traditional IRA: A long-term strategy, a traditional IRA allows you to contribute with pre-tax dollars now and pay taxes when you withdraw your money, at age 59 ½ or later.
- Roth IRA: This popular type of account allows you to contribute with already-taxed dollars now and pay no taxes when you withdraw from your account. You can remove money at any time, but will pay taxes on any growth unless you wait until age 59 ½.
- SEP IRA: Also known as a Simplified Employee Pension, a SEP IRA is for self-employed individuals and small business owners. It operates similar to a traditional IRA but allows for higher contribution limits as it’s not designed to act in conjunction with an employee-sponsored 401(k).
After six years, the U.S. Treasury Department has announced inflation-adjusted figures that will allow retirement savers to put away even more!
2019 annual limits for a new IRA are now $6,000 or $7,000 if 50+.
The 2019 limit for a SEP IRA is $56,000.
There is no limit to the amount you can roll over from a 401(k) account to an IRA, though you may be subject to taxation depending on the account type.
Why Choose a Socially Responsible IRA
One of the best reasons to either start a new IRA or rollover your 401(k) into a new IRA account, is the flexibility of your investment choices. You can choose to invest, or divest, from companies and funds that don’t meet your personal values.
- Want to promote peace, eliminate armed conflicts, and avoid gun manufacturers? Consider our Peace Portfolio.
- Support the #MeToo movement and diversity initiatives in the workplace? Check out our Equality & Diversity Portfolio.
- Want to help end climate change and embrace green tech? Our Environment Portfolio may be for you!
- Global human rights on your mind? Take steps to end poverty, human rights violations, and humanitarian crises like those currently in Yemen and Venezuela with our Human Rights Portfolio.
Last week, the federal government released the latest (4th) report in the national climate assessment. Much overlooked by the current administration, the report focused on the science of climate change as well as the current and future impacts on the United States.
Current Impacts of Climate Change
Impacts of climate change are already being felt across the country. From the devastating wildfires in California to the overwhelming destruction caused by hurricanes in the 2017 and 2018 seasons, more frequent and extreme weather events have occurred. In addition to the cost of human lives which can never be quantified, the impact on communities, the economy, and infrastructure may take months, if not years, to repair.
Future Impacts of Climate Change
In the immediate years ahead, we can expect these events to worsen and will see their toll not only in communities, but in our current natural and manufactured ecosystems, human health and safety, and in our national and global economy. The following impacts are also highlighted within the report:
- Stress on water supplies and availability in the United States due to rising air and water temperatures, intense droughts, and decreasing surface water quality
- Increased exposure to waterborne and foodborne diseases
- Increased natural disasters, including fires, flooding and eroding shorelines which create vulnerable infrastructure in every U.S. region. This includes access to roads, viability of bridges, and safety of pipelines.
- Increased frequency and severity of asthma and allergies
- Substantial net damage to the U.S. economy, including annual losses in some sectors in the hundreds of billions of dollars.
And these are just the top 5 impacts we took away. The entire report has many, many more national consequences.
Global Prioritization of Climate Change
“Communities, governments, and businesses are working to reduce risks from and costs associated with climate change by taking action to lower greenhouse gas emissions and implement adaptation strategies. While mitigation and adaptation efforts have expanded substantially in the last four years, they do not yet approach the scale considered necessary to avoid substantial damages to the economy, environment, and human health over the coming decades”
Transformations in Law
This is a conversation that needs to happen at a global level. Working in a bipartisan fashion and alongside the broader global community, our lawmakers need to place climate change among top-priorities in their everyday decision making. Through development methods, military planning, and disaster management, each government department can either perpetuate or halt decisions made regarding climate change and its current and future impacts.
Transformations in Energy
Consumer habits are slowly starting to trend toward renewable energy. If enough momentum continues, companies and governments alike can focus on increasing renewable energy products and contributing policy actions to make it accessible on a broader and more affordable scale. By reducing our reliance on coal and other natural resources, we can avoid serious consequences and shortfalls on the horizon.
Transformations in Investments
As a consumer, one of the greatest impacts you can make is in your investment choices. Do you know where your 401k investments are held and who they are funding? Most traditional 401ks do not support ESG (economic, social and governance) rated social investments. Rather, most focus on the very large-scale businesses that are contributing to climate change with non-sustainable business practices.
Our environmental portfolio is made up of companies addressing their long-term environmental impacts, focusing on sustainable business practices, and prioritizing their effect on the surrounding environment – at a local and national level.
At Invested Interests, we believe that a national conversation regarding the truth about climate change needs to be brought to light, across party lines, for the good of our lives and the lives of future generations.
1. What is Socially Responsible or Impact Investing?
By definition, socially responsible investing refers to the practice of utilizing an investment strategy that considers both financial return as well as a socially-conscious effort to promote positive change.
You may have heard of socially responsible investing (SRI) referred to as many different things including sustainable investing, responsible investing, socially conscious, green, or even ethical investing. Another term, impact investing, refers to the devotion of creating a social impact based on investment choices.
2. What can I invest in?
At Invested Interests, we offer four main portfolio options including:
- Peace: promote peace, invest in conflict resolution, and avoid armed conflicts. Think avoiding regions of conflict and gun manufacturers. learn more…
- Equality & Diversity: support gender and racial diversity. Invest in companies that embrace diversity initiatives, have women on corporate boards, and support the #MeToo movement. learn more…
- Environment: go green by investing in environmental and sustainability efforts. Think alternative energy, companies investing in climate change, and avoiding fossil fuels. learn more…
- Human Rights: invest in companies promoting human rights and equality globally. Think Sudan Darfur and avoiding sweatshops. learn more…
3. Why should I choose Impact Investing over standard Investing?
Impact investing allows you to make a conscious investment decision – knowing exactly where your money is and what causes it is supporting. While impact investing still invests in large companies and corporations focused on profit, you get to choose which of those companies are making decisions at a high-level that align with your values.
4. Am I sacrificing performance?
That’s the best part! Research shows that social responsibility funds have done better in the last 20 years than traditional investment funds! Take a look. The MSCI KLD 400 Social Index is the socially responsible screened version of the S&P 500.
5. Your portfolios sound great, but I have other interests I’d like to invest in. What other social issues are available?
Invested Interests has access to investment research on over 18 social issues including environment, abortion, adult entertainment, alcohol, animal testing, BP, corporate governance, defense, gambling, human rights practices, labor relations, minority diversity, involvement in nuclear power, discriminatory sexual orientation practices, business ties to the Sudan, ties to terrorism, tobacco, and weapons. If you have something specific in mind, get in touch. We’re always open to building new portfolios in the future!
6. What services do you offer?
We provide investment advice and planning to clients like you! All of our investment services incorporate social issues. Our services range from a selection of mutual funds to planning for retirement and college expenses. Our advisors have years of experience and are qualified and licensed to offer financial advice.
7. Can I invest my retirement account or do a rollover?
Yes! All investment accounts can be transferred or opened at Invested Interests including IRA, Roth IRA, SEP, 401(k), 403(b), UTMA, individual, unqualified, and more!
8. What fees do I pay?
Invested Interests is an investment advisor. We do not charge transaction fees or commissions. Our fee is simply a % based on the size of the account. Traditionally, advisor fees are offered on large accounts. However, Invested Interests does not have a minimum investment. Please contact us for more information about our fees.
9. Is Invested Interests a mutual fund?
No, each of our portfolios are separate accounts made up of mutual funds selected by our portfolio investment team. When you invest in a portfolio, you are investing in socially responsible mutual funds made up of companies that fit with the impact standards for each portfolio.
10. Who can open an account with Invested Interests?
Anyone looking to make an impact through their investment decisions! As long as you are 18 years of age and a resident of the United States, you are able to open a flexible investment or retirement account.