Author Topic: New and I need help with specific question  (Read 3102 times)

Bea

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New and I need help with specific question
« on: September 10, 2013, 11:15:48 PM »
Hi Friends,
So excited that I found this blog as it mirrors so many of my own thoughts and goals. I recently convinced my husband to start putting money for retirement into an IRA mutual fund. I wanted to do an index fund but he was so opposed to the stock market at all that this was a big win. Let me explain, he feels that the stock market is unethical especially investing in companies we both oppose like weapons manufacturers, tobacco companies etc. I convinced him to buy into a socially responsible mutual fund with a 1% expense ratio. But, over time I've realized that not only am I not really investing in companies that align with our views but we are giving tons of money away to the mutual fund company. I've tried so many times to convince him that index fund would be much more practical, though I cannot get around the fact that some of our money would be going to support companies we hate. What should I do? I feel conflicted and frustrated, both with the situation and with his stubbornness. Saving and working towards financial freedom are so important to me! any help would be appreciated.

Half-Borg

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Re: New and I need help with specific question
« Reply #1 on: September 11, 2013, 01:11:09 AM »
When you buy shares, you don't give money to that company. You are giving money to someone, who gave money to that company probably decades ago.
And in turn you get dividend payouts so you are leeching money from your hated company and you also get a vote what they do (a small one).
So if you really hate a company, buy shares :P

Mega

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Re: New and I need help with specific question
« Reply #2 on: September 11, 2013, 06:36:27 AM »
When you buy shares, you don't give money to that company. You are giving money to someone, who gave money to that company probably decades ago.
And in turn you get dividend payouts so you are leeching money from your hated company and you also get a vote what they do (a small one).
So if you really hate a company, buy shares :P

This +1. You are not paying money to the company when you buy shares, unless it is an IPO / new share offering.

Buying stock != supporting the company.

I own stock in the telecom company my wife uses for her cellphone. It is one of the most hated companies in Canada. I get a preverse pleasure that they are essentially paying my wife's cellphone bill via their dividends.

justchristine

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Re: New and I need help with specific question
« Reply #3 on: September 11, 2013, 06:44:50 AM »
I get a preverse pleasure that they are essentially paying my wife's cellphone bill via their dividends.

I feel the same way about my stock in Lorillard.  Smoking has ruined my father's health and effected our family in several ways.  My dividends are a small compensation for all of that.

Bea

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Re: New and I need help with specific question
« Reply #4 on: September 11, 2013, 05:39:42 PM »
Thanks for the replies! I don't think that answer is going to cut it for him though. Can anyone direct me to a way to explain to him the difference in potential money we will loose with a 1% expense ration rather then the super cheap ones offered by vanguard and other companies? He is very principled and I'm not sure if anything will ever convince him that investing in the general stock market is right but maybe if he sees the math he'll understand how much we will loose out and his desire to take care of his family will out weigh the issues. I'm not sure.

chasesfish

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Re: New and I need help with specific question
« Reply #5 on: September 11, 2013, 06:02:00 PM »
I'm more of an individual stock investor.  I don't have the same social responsibility motives, but I think it's dangerous to invest in companies who's customers hate them (cable operators?).  Would he be okay buying Warren Buffets company, Berkshire Hathway?  Is basically a mutual fund in itself.

ShavinItForLater

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Re: New and I need help with specific question
« Reply #6 on: September 14, 2013, 11:36:07 AM »
In my opinion a 1% expense ratio isn't the end of the world.  Saving the money to begin with, and getting an equity return are both huge wins vs. not doing it.

That said, if you're a US investor anyway, you could certainly do better I think.  For example, the Vanguard FTSE Social Index Fund Investor Shares (VFTSX) have a .29% expense ratio.  It isn't the .17% or lower expense ratios you can get with the broader index funds, but it isn't too shabby if it's important to only own socially responsible companies.

If I were in your situation I think I'd compromise with the Vanguard fund or similar funds/ETFs with lower expense ratios, it isn't worth the fight for .12% lower expense ratios.  I might also look into local real estate investing as an option, certainly it's not as passive as stock market investing and there is work and knowledge/skill requirements, but it avoids all the social responsibility issues and can offer similar returns (assuming you don't consider landlording evil too!).  You could start with real estate investment trust (REIT) funds if you like, or stick with the socially responsible indexes, and then use the funds to buy a rental property when you have enough and have found a cash flow positive situation.