How do I build a 'stache without harming others?

[Treechunk]

This has probably already been covered someplace I'd imagine, and if it has, please redirect me to an official thread or something.


So I'm not exactly sure how best to convey this, but I'll give it a shot anyway. 

My wife and I would both like to be retired and spend all/most of our time raising our baby and working jobs for fun as this excellent blog's founder and his wife do.  That part sounds AWESOME!
   
    The part that I find a bit more sticky is the thought of investing in companies who are working counter to my ideals and ethics, companies like Monsanto for example.  I recently was reading an article about how to boycott Monsanto, and Vanguard was listed as an investor.  We currently have money invested with them, and Mr. Money Mustache seems to think they're one of the better ways to get yer interest compounded, but I feel like they are funding my food-enemy, and so investing with them would directly work against my interests. 

Is it possible to be a part of our modern investment system and not be working counter to my principles?  Do I have to become some sort of investment wizard and start my own company that makes it possible?  Should we just invest in a local business that does business in ways we support and hope that the money grows? 

[Physics]

Monsanto is a enormous publicly traded company.  Therefore is it part of large index funds.  I suppose you can choose to participate in funds that do not include MON in their portfolio. (Other sector funds, individual stocks?)

But finding a _brokerage_ that doesn't offer investments in exactly the companies that you take moral issue with is highly unlikely, so you might want to explore other ways of expressing your disagreement with their business practices.

[Treechunk]

yeah, and the real problem isn't Monsanto specifically, although they're the most blatant example, there are many companies who I don't REALLY wanna be giving money to, ya know?

[velocistar237]

Buy individual stocks. Become a landlord. It takes more work, but it sounds like your only other option is to not invest.

How do you feel about US Treasury bonds, a backbone of the world economy? I ask because the government has done unethical things, and I wonder where you draw the line.

[Treechunk]

We're in the very beginning of looking at how to make all this work, and where we'll end up drawing lines, I don't have any idea. 


I posted this question partly to see if there were options I had missed, and partly to see how other people square their values with their investing, and what I can learn from that.

[judgemebymyusername]

While I disagree with this philosophy myself, the OP isn't the only person who's concerned with this.

It's called investing in "Socially Responsible" companies, and there are already entire mutual funds dedicated to picking them out and making it easy to invest in them. A quick google search will point them out. www.socialfunds.com is the number one result.

[Physics]

Yeah, I was going to mention social funds and stuff like it, but again, it is going to depend on what you specifically want to avoid, I'm sure plenty of people have a problem with some of the choices of social funds too.

Land-lording and entrepreneurship should definitely be considered.

[Bakari]

As the poster above me mentioned, there are many mutual funds and a good number of index funds geared specifically toward socially responsible investing.  Even Vanguard has one, with the same low fees that Vanguard is known for.
All of my money with Vanguard is in VFTSX (up about 3.5% since summer of last year)

There are also entire companies which only sell funds of socially screened companies.  After having looked through what criteria the use, I went with Calvert (one of the oldest of them), and have a couple of their funds.  Their Alternative Energy Fund has done TERRIBLE, but my high-yield bond fund with them is up about 4% since last summer.

I also have an account with Lending Club, but instead of just using the filters and letting the system choose notes for me at random, I actually read and hand select who I will loan to, with an emphasis on things like home solar system purchases and other things I feel good (or at least neutral) about supporting.

I also have a few hand selected stocks I bought through Options House, but of course if (like me) you aren't extremely knowledgeable about both the ways of the markets and the individual companies, you may end up losing in capital than you ever gain in dividends.  Its a risk I'm willing to take to avoid helping out companies like Monsanto (and of course many, many others!)

As of right this second it looks like I'm down, but then again, the entire market took a nose dive today, which means its time to buy!

[sol]

Basically any large index fund is going to own Monsanto, and all of the oil companies, and Philip-Morris, and whatever other corporate evil you can think of.  I've accepted it.

One alternative you might consider is that investing in one of these companies does, technically, give you shareholder voting rights.  Most of the big changes to McDonald's menu, both in terms of healthy food and in terms of environmentally sustainable sourcing, have been driven by concerned shareholders. 

Consider that SOMEONE is going to own these terrible companies, and if that someone is you then perhaps you can help guide their business practices in some small way towards the lighter side of the dark side.

[Treechunk]

lotsa good stuff to think about.  I hadn't considered the fact that owning stock in something would give me any control over how things happened there, I was just focused on the fact that our money would be used to further goals I don't agree with.


Hmmmmmmmm.....

[velocistar237]

Here is the VFTSX portfolio. Take a quick look through the list. Monsanto and Phillip Morris aren't there.

I like the idea of using shareholder votes to influence change. That's something you won't get with an index fund.

[JJ]

I really like this question...  If you are going to change the world (or have some measurable impact) you need to put a fair bit of effort in.  Selecting socially responsible investments is very tricky, particularly if you are focussing on stocks &/or bonds.  It is hard to pick by category in many cases. For example, mining and agricultural products are essential to maintaining people well-fed and suitably sheltered with the massive global population we now have.  However, there is huge variability in ethics within those investment categories.  I would be really loathe to invest in some of the older South African mining houses (which shall remain nameless), as I have seen up close how they treat their employees - you really would not believe it.  However, I have also seen the care and attention other mining companies give their employees and the land they operate on.  I would happily invest in them.  The short term environmental damage is constrained and generally fixed up very well, and it allows us to live in relative comfort and I'm happy with the balance.  Same goes for agricultural products - Monsanto clearly have an interesting history, and a future I don't really want to be a part of, but there are plenty of smaller players out there who really care about productivity, people and the long term future of the environment.

Anyway, back to the point of this post.  To be comfortable with where I plant my dollars to grow I feel I need to spend quite some time observing and researching a target investment.  A structured approach to researching stocks can be found in "Common Stocks and Uncommon Profits" by Philip A. Fisher.  He doesn't talk about socially responsible investment per se, but does give an excellent framework for evaluating stocks and the "scuttlebutt" approach he recommends can easily be applied to understand the operating model of the company and how ethical it really is under the "greenwash".

[kudy]

If it doesn't seem too risky for you, you could try financing p2p micro loans instead of buying stocks.

[Grigory]

Even if you find the most socially responsible, ethical company to invest in, you'll still be paying taxes (I hope you will, anyway), which means you'll be indirectly responsible for every single thing done by our government: drone bombings, supporting corrupt regimes, waterboarding, CIA, etc... The only way to escape that would be by living abroad (and/or in the international waters) to avoid paying income tax on the first ~$90,000 you make. If you manage to do that, you'll be my hero. :) Until then, it's just cherry-picking...

[Gerard]

I dunno, Grigory, that feels like the old "I can't fix everything so I won't fix anything" argument...

[shedinator]

Even if you find the most socially responsible, ethical company to invest in, you'll still be paying taxes (I hope you will, anyway), which means you'll be indirectly responsible for every single thing done by our government: drone bombings, supporting corrupt regimes, waterboarding, CIA, etc... The only way to escape that would be by living abroad (and/or in the international waters) to avoid paying income tax on the first ~$90,000 you make. If you manage to do that, you'll be my hero. :) Until then, it's just cherry-picking...

I don't think you can equate the two. While I do know a couple of war tax protesters, and am impressed with their willingness to stand by those principles, most people with moral standards/convictions recognize the difference between tax and investment. It's the equivalent of the difference between volunteer and conscripted military service. A lot of dyed-in-the-wool pacifists accepted their fate when they were drafted for Vietnam, but I doubt very many volunteered to serve. If the gov't is automatically deducting taxes (or requiring them to be surrendered under threat of imprisonment), that's one thing. But personal investment gives the individual the option to control what his/her money does or does not support, and that's a whole different ball of wax. Whether that means a member of PETA not investing in YUM, a luddite not investing in tech, or a socially conscious person investing in socially responsible funds, it's not cherry picking, it's working within a limited capacity to impact society as you're able.

[Grigory]

I dunno, Grigory, that feels like the old "I can't fix everything so I won't fix anything" argument...

Just pointing out the gaping hole in OP's argument... It's the same way with vegans - especially vegan crusaders: yes, it's very nice that they're trying to minimize their impact on environment, but true vegans don't exist. Not unless they decide to live in a cave and lead a hunter/gatherer lifestyle. While I admire OP's motivation, it'll most likely be just damage control, unless s/he decides to do something really cool and radical, e.g. refuse to pay taxes altogether, or move abroad/to the international waters, or reduce income to under $10K a year to avoid paying income taxes, or donate most of his/her income to charities to avoid owing any taxes whatsoever. It's possible, but difficult. Anything less than that is, well, either investing at a high difficulty level or a feel-good exercise, depending on your level of cynicism. ;)

[shedinator]

That's an unfortunately nihilistic outlook on principled purchasing you've got there :)

[Grigory]

I was born in the Evil Empire, survived a nuclear disaster and got a degree in political science. Either one of those three is a pretty good reason for nihilism. I daresay the combination of all of the above is enough to proclaim myself resident nihilist. ;) (A constructive nihilist, mind you - I hate the complainypants just as much as anyone else here.)

[slugsworth]

In the world of socially responsible investing, there are the 'negative screens' e.g. not investing in weapons or oil companies or S. Africa but there are also postive screens, which would be things like sustainable agriculture, affordable housing, etc, etc

I'm not a financial advisor, but it sounds like you may be interested in the latter. Given your aversion to Monsanto, I would recommend looking at this website. http://www.slowmoney.org/

[kaeldra]

I've kind of made my peace with it by investing in both traditional mutual funds and a little socially responsible stuff. I have the standard Vanguard porfolio, but have also added a mutual fund dedicated to green energy (and other environmental issues), New Alternatives Fund (NALFX). Doesn't seem to be doing so hot at the moment, but I have hopes for the long term future of green energy...

[nondualie]

Kind of have to agree with the general sentiment here.  Unless you are willing to totally unplug from society, you're going to be contributing in some way to things you don't really love to support.

But if it's just about not investing capital in corporations you don't like; then you're left with finding other alternatives.  Horse-trading in one form or another has always been a way to use one's capital to increase one's net worth.  Could you start or invest in a business that re-finishes or re-furbishes used goods and then re-sells them?  Anything from cars to bikes to furniture is game...  If you get good, your returns could outpace the S&P quite easily; but it's not passive income; but then you have the added bonus of learning quality skills...

Just a thought.

I'll second the slow-money recommendation too.  Or investing with a credit union that is locally owned at least so some of your money is flowing through the local economy.

[Crash87]

Why not invest to maximize porfits and donate some of the proceeds to charity?

[Katnina]

Buy individual stocks. Become a landlord. It takes more work, but it sounds like your only other option is to not invest.

Individual stocks are great, IF you are willing to put in the effort to optimize your portfolio, and really pay attention to your investments.  Another option would be to search for 'socially responsible' mutual funds, you may find some that work for you.  A friend of mine has a large family trust and she did not approve of a lot of the investments made by their advisor, so she went the socially responsible route and has been getting better returns than the professionally managed portfolios that the rest of her family is in.

Definitely landlording is a great option, BUT if you aren't comfortable with evicting people, having to chase down late rent, etc, it might not be a good fit.  I couldn't handle evictions which is why we have a property manager for our 6 rental properties.  10% of rent + 1st month 's rent when new tenants come in, but since my returns are pretty crazy (5 out of 6 were bought in the Detroit metro area at bottom of housing market), I am happy to pay the manager.

[Emg03063]

http://www.amazon.com/Socially-Responsible-Investing-Making-Difference/dp/0793141737

Worth a read...