Last updated on June 23, 2020
How to be a Conscious Investor
There used to be a time when practicing meditation or yoga, or being spiritual was “woo-woo.”
These people were put in a box labeled hippies and the rest of the world moved on.
But those days are over.
It turns out a hippie is just someone who sees through the bullshit of society. They are good at following the money, standing up for their values and living life on their own terms, not those of greater society.
Hippies are conscious.
Related Reading: Retirement Accounts are Dumb Money
The History of Conscious Investing
It should come as no surprise then, that the 1960’s (the decade of the hippie) is when modern forms of conscious, impact, green and socially responsible investing began.
According to Wikipedia:
The modern era of socially responsible investing evolved during the political climate of the 1960’s. During this time, socially concerned investors sought to address equality for women, civil rights, and labor issues. Concerns about Vietnam War were incorporated by some social investors. Many people remember a picture of a naked nine-year-old girl running towards a photographer screaming, her back burning from the napalm dropped on her village. That photograph channeled outrage against Dow Chemical, the manufacturer of napalm, and prompted protests across the country against Dow Chemical and other companies profiting from the Vietnam War.
By the mid-1990’s, socially responsible investing was mainstream and expanded its issues to include limiting tobacco stocks, excluding oil companies and standing up to multinational corporations that relied on sweat shops to produce their products.
Related Reading: The American Dream Includes 30 Years of Debt
Conscious Investing Today
The popularity of socially responsible investing has exploded since the 1990’s.
SRI, ESG, impact, green, and conscious investing are in demand and wealth management companies are eager to sell you a “green” mutual fund or “impact” investing strategy.
For example, below are a couple of the largest SRI (socially responsible investing) and ESG (environmental, social and governance) funds:
Do they think we are idiots?
Socially responsible investing is nothing more than marketing copy used to get you to invest in their funds.
No matter the mission, no matter the issue, every single “socially conscious” fund invests in the same multinational, billion dollar, tax-evading corporations:
- Google (Alphabet)
- JP Morgan
- Johnson & Johnson
- Amazon, Procter & Gamble, Wells Fargo, Paypal, etc.
But don’t take my word for it.
If you want to “invest consciously,” then you need to know how to research this yourself.
First, visit this website which lists 163 ESG and SRI funds. Read through the descriptions and jot down the ticker symbols that sound interesting to you.
Next, Google the ticker symbol + “Morningstar.” Morningstar details every mutual fund, ETF and index fund in the world.
Once you’ve located the fund’s page on Morningstar’s site, click “Portfolio” to see the fund’s top positions.
How well does the fund’s mission and their top holdings align?
Below are the portfolios of the tickers listed in the chart above. Comparing their “mission” with their holdings tells me that these financial fund managers are full of shit and most Americans are falling for it.
- SHE (gender diversity): https://www.morningstar.com/etfs/arcx/she/portfolio
- DSI (vague ESG mission): https://www.morningstar.com/etfs/arcx/dsi/portfolio
- TICRX (climate change, business ethics): https://www.morningstar.com/funds/xnas/ticrx/portfolio
- SUSA (excludes “morally questionable”): https://www.morningstar.com/etfs/arcx/susa/portfolio
- BIRIX (ESG used in title, no details): https://www.morningstar.com/funds/xnas/birix/portfolio
- SPYX (excludes fossil fuels): https://www.morningstar.com/etfs/arcx/spyx/portfolio
So if you’re passionate about climate change, fossil fuels or gender diversity, just invest in an SRI or ESG fund that shares your passion and you’ll end up owning shares of Microsoft, Facebook and Apple.
Are You Conscious of Your Investments?
Over half of all Americans have money in the stock market through a retirement or taxable account.
I’d bet that less than 20% of these people know which companies they are actively investing in, supporting, and profiting from.
Given the rise in index investing, most Americans own ExxonMobil, Wal-Mart, Wells Fargo, Facebook, Huawei and Google.
If you don’t see investing as voting with your dollars, then this shouldn’t matter to you.
But if you participate in climate strikes, for example, isn’t it hypocritical to make money from ExxonMobil stock?
- Log into your investment account(s)
- Find and write down the tickers (i.e., VTSAX)
- Google the “ticker + Morningstar” and click on the Morningstar link and then click “Portfolio” and look for “Top Ten Holdings.”
- If you want more than just Top Ten holdings, you can Google “ticker + prospectus”
- Another option is to sync your accounts to a free service like Personal Capital. This software breaks down all the holdings in all your accounts in a single easy-to-read dashboard. Blooom is another option, but that is for 401(k)s only.
Related Reading: What is Spiritual Healing?
Why Do You Want to Invest?
The government and financial services media strongly encourage Americans to invest.
I find this odd.
Why are they imploring us to invest when the average American doesn’t understand the stock market, how to calculate a good share price or even what impacts the financial markets?
Is it possible the government is pushing us to invest in stocks because Social Security failed?
Well guys, the stock market can fail, too. And it does, all the time.
You do not have to invest in the stock market to be financially secure. I invest in taxable accounts, but believe retirement accounts are a total scam.
So what are your reasons for wanting to invest? Do you just want to invest in general? Because that doesn’t restrict you to the stock market. People have been investing and building wealth outside the stock market for hundreds of years. And you could, too.
Maybe you want to invest in yourself? In real estate? Start a business?
Maybe you want to buy land or support private organizations?
The mere fact you are reading this article indicates you’re on the right path to consciously building wealth your way.
Related Reading: The Pros and Cons of Index Funds
How to Be a Conscious Investor
I think of every dollar as a soldier.
Where I send my dollars out into the world reflects my values.
It’s for this reason I recently sold off my retirement assets and transferred the funds to a settlement account.
I’ll roll the money over to a Roth IRA and eventually get out of this “agreement” with the government once and for all.
Because to me, that’s what investing is. It’s an agreement that you understand an asset, believe in its future potential, have established trust and want to build wealth by voting with your dollars.
I don’t trust the government one bit so to me, tax-sheltered retirement accounts are too risky.
Every year they change the laws and I have no doubt taxes will be higher in the future than they are today.
Count. Me. Out.
Guidance on how to invest consciously:
- Wall Street says in order to be successful, the company must increase their profit margins every year.
- Educate yourself on B-corps to see the light at the end of the tunnel.
- B-Corp company directory: https://bcorporation.net/directory
- Individual Companies
- Real Estate
- Why put money into complicated assets you don’t understand? Personally, I opted to buy a distressed apartment in Queens, New York, renovate it and rent it out for monthly cash flow. I did the same thing in Medellin, Colombia to have international exposure.
- There’s a company called Fundrise that leads investors to housing and development projects in low-income neighborhoods around the country. As an investor, you can select the projects you’d like to invest in and the ROI can be excellent.
- If you are a conscious and ethical person, why give your money away at all?
- Why not use the extra cash you have to start a movement or sustainable enterprise like the ones you’d like to see more of?
- Self-Directed IRAs
- This is technically an “agreement with the government account” but out of all tax-sheltered accounts, this one is the best and anyone can open one.
- A SDIRA allows you to invest pre-tax dollars (up to $56k a year) in whatever assets you want. So let’s you have $500k in a Traditional IRA, which means only stocks and bonds. You could roll this over to a Self-Directed IRA and use the funds to buy investment properties, farms, cryptocurrency, other businesses, practically anything your heart desires!
- Resources: What is a SDIRA? and How I Bought Real Estate Through a SDIRA
Socially responsible investing once meant something. It was a trend that started with the people boycotting a company for bad behavior. Or the people reporting corporate mistreatment of employees and calling their brokers to divest its stock.
These days, in the world of zombie-robot-index investing, socially responsible investing is just a marketing campaign. Fund managers figured out that Americans are more likely to choose a fund that includes the phrase ESG, SRI or Impact.
General Mills follows the same strategy with their cereal boxes….
That said, just because funds and robo-advisors tout conscious investing and are full of shit, doesn’t mean investing consciously isn’t possible.
Look into self-directed IRAs. Sure, they are more complicated than other tax-sheltered accounts, but it’s worth it because you’ll have control.
Start paying attention to b-corps and corporations’ missions. Despite what Wall Street wants us to believe, it’s not true that a company’s only objective is to deliver profit to the shareholder. Shareholders don’t want that if it means underpaying employees or bribing politicians to pay less in corporate tax!
But most important, don’t invest just because you think you should. The government and media refuse to accept that a person can build wealth outside of the stock market. That is suspicious messaging to me and we should be wary of it.
If you understand farmland, real estate, precious metals, cryptocurrency, building websites, or whatever, look to invest in yourself (to start a business) or in just these assets you understand.
And good luck 🙂