Dear Dr. Per Cap:
I read your column regularly and think I’m ready to start investing. However, I don’t want to invest my money in a company or industry just because it’s profitable. I also care about environmental and social issues and want to invest in responsible companies that feel the same way. Any advice?
Signed, Guilty Conscience
Dear Guilty
Your concerns are legit and many investors are onboard. In fact there’s a rapidly growing sector of the investment industry known as impact or sustainable investing. It’s huge with the millennial crowd, a group that’s proven to be more likely to invest in companies that align with their values and beliefs than other generations.
One way to participate in this exciting social and financial movement is to check out some impact-investing apps. According to the Wall Street Journal there were 24 million downloads of these handy little financial-tech products in 2018; enabling anyone with a smartphone and a vision for a better world to design a specialized investment portfolio that models a cause or issue.
Take my cousin who drives a Prius because she worries about fossil fuels and greenhouse gases – gotta love 60 mpg! There’s my aunt who gets fired up over elder care and health disparities – I’m down with that. And my buddy who takes a moral stand against alcohol and big tobacco. Interestingly, he doesn’t feel the same ire towards the booming cannabis industry in his home state – chuckle, chuckle.
App based tools allow fervent folks to create an investment portfolio that exclude stocks of companies whose business practices they don’t agree with. Remember that when you invest in a company’s stock you become an equity holder or owner of that company, which makes you kind of accountable for their actions. Don’t get scared off thinking you need to be a fast track hipster with boatloads of cash to invest this way. Many impact-investing apps will let you get started with as little as $50.
You’ve raised another interesting point though. People don’t always think about what they’re actually investing in. For example, many of us have an employer retirement plan like a 401k. These plans often include funds that track a stock index like the S&P 500, a pool of five-hundred large publically traded U.S. companies like Walmart, Coca Cola, Facebook, Nike, and many others. However, some of these companies don’t always enjoy the rosiest reputations for fair dealing. Walmart has been harshly criticized for skimping on employee health benefits. Coke suffers backlash for its artificial sweeteners and their link to obesity. By now we’re just about all familiar with Facebook’s ongoing struggle with data collection and privacy. And Nike’s dependence on cheap labor in third world countries is old news.
I’m not saying these companies are bad or not to support them because no large corporation can be all things to all people. It’s a matter of deciding what we want to accomplish when we invest our hard earned money. And for some people that means more than making a quick buck in the stock market.
There’s a Native angle to impact-investing as well. Excavation of Native burial sites by superstores, strip mining near tribal lands, and pipeline construction can all lead to questionable business practices that hit close to home. We all choose our battles, what’s yours?
Every major election there’s a huge effort to encourage Native people to vote. And there should be, but how we choose to invest our money is another way to exercise sovereignty, make your voice heard, and build wealth. There’s more than one way to skin an elk!
Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit www.firstnations.org. To send a question to Dr. Per Cap, email askdrpercap@firstnations.org.