There’s a fundamental issue with investing in America: Your money might support companies that harm people and the planet, and you probably don’t even realize it.
When we buy products, say for example a smartphone — we’re essentially giving that company a ‘thumbs up’ in approval.
We’re saying, ‘Hey, I like what you’re doing, and here’s more money to keep doing it…’
Well, the same can be true for investing.
When we buy stocks, we’re saying that we approve of that company’s products and policies.
What if I told you the majority of retirement accounts and index funds invest in big oil, coal mining, and tobacco… and the list goes on and on.
Would you give these industries a ‘thumbs up?’
If we look at the state of the world, we can see we’re not always funding what’s best for the planet.
So let’s look at some crazy numbers:
In 2018, over 480,000 people died from tobacco.
We’re actively pumping 96,000 oil and gas wells on public lands for fossil fuels that create 2/3rds of our carbon emissions.
And we dump 1.5 million pounds of trash into our oceans every hour.
So, if we care about climate change, we can stop funding fossil fuels.
And if we want to prevent lung cancer, let’s stop investing in tobacco.
Look, it’s simple. If we want to see change in the world, we don’t have to wait every four years to vote.
We can vote every day by choosing what products we buy, and investing in the things that we care about. It’s called impact investing.
With impact investing, your money supports companies that solve global challenges, instead of causing them.
And if you’re wondering — Yes. Investing with impact also means good business.
Studies show that stocks of companies with high environmental and social impact have actually outperformed the market for 25 years.
So, if we don’t have to compromise our values to build our wealth, then what are we doing?
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.
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.
In the early stages of your career, you may have had the benefit of an employer-sponsored 401(k). If you were really lucky, you may have even had contributions matched by an employer or two. And while you were focused on climbing that ladder, your 401(k) sat idly in the background beginning the foundation of your future retirement accounts.
Now your focus is on planning for retirement. It’s time to tune into those accounts and see how they’re faring. You may be surprised to learn what you’re paying to hold on to them…and what your money is actually being invested into…
How to Rollover your 401(k) into an Impact Investing Account
Typically, rolling over your 401(k) means moving your retirement assets into a traditional individual retirement account, or IRA. You can also roll over into a Roth IRA, but doing so may result in a large tax bill due to the fact that your original contributions were likely made on a tax-deferred basis and are subject to tax upon withdrawal.
When rolling over into a new impact investing account, there are a variety of social responsibility portfolios we offer to accommodate your social investing interests:
Made up of a variety of known environmentally conscious companies, our environmental portfolio incorporates those willing to rethink the status quo, addressing their long-term environmental impacts, and choosing to operate on an eco-first and eco-friendly basis.
Our human rights portfolio is comprised of those companies that have corporate policies and practices focusing on promoting a fair and equitable workplace. Many of these companies have won accolades and recognition for confronting issues with employee, customer, supplier, and community interaction.
Our peace portfolio is the one that started it all for Invested Interests. The companies in our peace portfolio play a positive role in furthering peace on our place and limiting conflict. While the methods vary, we invest in companies that have taken positive steps to limit support of governments and regimes promoting violence.
Our diversity and corporate governance portfolio is made up of companies working to create a culture of inclusion, new ideas, and foster strength in their team through inclusive policies. Whether by broadening their board of directors or establishing human resources policies of inclusion and support, these companies are taking the right steps to the fair and ethical treatment of employees. Many of the companies included in our portfolio are leaders in sexual harassment training and provide information, seminars, and resources to their employees.
Reasons to Consider a 401(k) Rollover
- High Fees
There are no fees to roll over a 401(k) into a traditional or Roth IRA. In fact, you’ll likely save money on management fees over the duration of your investments. Left unmanaged, many 401(k)s end up with high management and maintenance fees. Investment opportunities and understanding has changed dramatically since the rise of online trading and robo-advisers. While these two options still have their shortcomings, they did pave the way for more aggressive fee structuring.
Most traditional 401(k)s do not support ESG (economic, social and governance) rated social investments. Rather, most focus on the very large-scale businesses that are generally focused on revenue-focused, not socially responsible business practices.
When setting up your 401(k) you likely had a choice of a few mutual funds. However, with an IRA, you have a full-selection of funds to choose from and can create a better long-term strategy based on risk management, ESG ratings, and your retirement goals.
Former employers go out of business. Their retirement options and advisors change. Whenever you change positions, you always have the option of moving your account into a new employer’s 401(k) or to an IRA. While you can sometimes leave it where it is, for most individuals, rolling over to an IRA is the best choice.
If you are like most Americans and change positions every few years, it may be time to gain control and oversight over all of your retirement accounts. Diversification is powerful. So is knowledge. Especially when it comes to retirement planning.
Considering a 401(k) rollover? Request a FREE impact investment consultation, and we’ll be in touch!
In 2017, global carbon emissions climbed to a record high. Just this month, a report was released by the United Nations urgently warning that in order to prevent further increased global warming, dramatic steps were going to need to be taken. They estimated that human activities have caused an increase of 33.8°F of global warming compared to pre-industrial levels. If this continues at the current rate, as 2017 data indicates, it could reach an increase of 34.7°F by as early as 2030!
Potential Impacts of Climate Change
So what does this change in temperature mean, exactly? Well, scientists have high confidence that not only who this create an increase in mean temperature, but hot extremes, a probability of increased drought, decreased precipitation, and an increase in sea level. Further impacts due to these considerations include an increase in wildfires and destruction of homes and habitats, species loss and extinction, and risks to health, livelihood, and food and water sustainability.
That sounds terrifying. What can I do?
To halt climate change at the current rate, it is going to take not only a national movement but a grassroots acceptance and lifestyle changes. We’ve put together a list of things you can do within your daily life to help mitigate climate change on a local level – share, tell your friends, and together we can make being green a popular choice.
- Choose Green Transportation
Fossil fuel use is one of the largest human contributors to global warming. Stop and consider the difference in emissions if every person who owned a car changed over to an electric or hybrid vehicle, ride-shared, or choose energy-efficient public transportation. While this may not be a cost-effective avenue for you just yet, take a look at the affordability of electric transportation. It’s rapidly declining, while vehicle styles are becoming popular choices for urban and suburban professionals.
- Change Your Diet
Don’t get us wrong here. Diet is not only a health choice but a very personal consideration at that. We can certainly appreciate a good Juicy Lucy here in Minnesota. However, land-intensive animal products and processing use a fair share of consumables. Consider a plant-based diet, grow a backyard garden, and eat local to help reduce your eating imprint on the world.
- Renewable Energy
A significant section of the UN report focused on renewable energy use. Their staggering requirement: that renewable energy account for 85% of electricity production by 2050, with gas energy being just 8% and coal at 0%. Solar, wind, and electrical technologies have improved significantly the last decade, but are still vastly underutilized due to the societal, economic and political pressures by large industries. At home, consider solar panels for energy generation and reach out to your local energy co-op for sustainable options.
- Invest in Sustainable Business
On a larger scale, step back and consider 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.
Questions about our climate change or environmental investment portfolios? Ready to get started with no minimum investment? Request a FREE impact investment consultation, and we’ll be in touch!