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How to Be a Conscious Investor

Last updated on July 29, 2020

How to be a Conscious Investor

There used to be a time when yoga, meditation and being spiritual was considered “woo-woo.”

Those 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. Hippies are good at following the money, standing up for their values and living life on their own terms, not those of the greater society.

Hippies are conscious.

Related Reading: Retirement Accounts are a Joke

The History of Conscious Investing

The rise of hippies in America coincided with the rise in conscious/ impact/ green/ investing.

For example, during the Vietnam War, the US Government hired a company called Dow Chemical to manufacture napalm, a powerful agent described as “liquid fire, a sort of jellied gasoline that clung to human skin on contact and melted off the flesh.”

US troops flew over Vietnamese cities spraying napalm which mutilated thousands of innocent people.

The news spread and protests against Dow Chemical were organized across America. The outrage was misguided since it was the government who ordered Dow Chemical to produce napalm, but the spirit of holding companies accountable was gaining traction.

Investing, whether it’s through retirement accounts or in a taxable account, is more than just chasing a profit. When you buy shares in a public company, you are voting with your dollars in support of that company.

When you divest in a company, because of concerning corporate practices, low employee pay, bad worker conditions, etc., you are also voting with your dollars.

The hippie movement of the 1960’s helped Americans become conscious of where their money went. We have a choice to buy sustainable, local goods or mass produced cheap goods from China. We also have a choice to buy stock in a company whose mission we believe in or to buy stock in a multinational corporation with growing profit margins.

Related Reading: Retirement Accounts are a Joke

Conscious Investors Today

Since the 1960’s, the movement continued to gain momentum. By 1990, socially responsible investing had exploded in popularly and is bigger today in 2020 than ever before.

Is it legit?

Below are some of the largest SRI (socially responsible investing) and ESG (environmental, social and governance) funds in America:

Do these people think we are idiots?

Upon close examination, socially responsible investing is nothing more than marketing copy.

No matter the mission or issue described, every single fund I listed above invests in the same multinational, billion dollar, tax-evading corporations:

  • Facebook
  • Google (Alphabet)
  • Visa
  • Mastercard
  • Apple
  • JP Morgan
  • Johnson & Johnson
  • Microsoft
  • Amazon, Procter & Gamble, Wells Fargo, Paypal, etc.

But don’t take my word for it.

Visit this website which lists 163 ESG and SRI funds. Read through the descriptions and jot down a couple ticker symbols of interest 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 align with their top holdings?

In analyzing the funds shown in my table above, their descriptions are vague and the fund manager is clearly just chasing a profit.

  1. SHE (gender diversity): https://www.morningstar.com/etfs/arcx/she/portfolio
  2. DSI (vague ESG mission): https://www.morningstar.com/etfs/arcx/dsi/portfolio
  3. TICRX (climate change, business ethics): https://www.morningstar.com/funds/xnas/ticrx/portfolio
  4. SUSA (excludes “morally questionable”): https://www.morningstar.com/etfs/arcx/susa/portfolio
  5. BIRIX (ESG used in title, no details): https://www.morningstar.com/funds/xnas/birix/portfolio
  6. SPYX (excludes fossil fuels): https://www.morningstar.com/etfs/arcx/spyx/portfolio

If you’re passionate about climate change, fossil fuels or gender diversity, invest in an SRI fund that shares your worldviews and you’ll end up the proud owner of Facebook and Apple shares.

green investing
Related Reading: History of Retirement: Why We Invest in Stocks

Do You Want to Be a Conscious Investor?

Most Americans invest in the stock market via a retirement account and I would guess less than half of them know which companies they own.

And thanks to the rise of index investing, companies with the biggest market capitalization (think Wal-Mart, Wells Fargo, Facebook, Google, etc.) just keep getting bigger.

If you don’t care about multinational corporations that don’t pay taxes, treat their employees like shit, pay off politicians to ward off antitrust concerns — then my point is moot.

But if you’re out there protesting global warming, isn’t it hypocritical to profit from ExxonMobil’s stock?

It’s weird that the government encourages Americans to invest in the stock market when they know the average citizen doesn’t have a clue how it works.

Why not require personal finance courses or Investing 101 in public schools?

You do not have to invest in the stock market to be financially secure.

People invest and build wealth outside the stock market all the time. Why not buy real estate? Or start a business? You could take a year off work and travel the world using the money you would have otherwise thrown in the stock market. What are the chances you would regret doing that?

Cultural paradigms are powerful in America. To align with your soul, however, and express its authentic desires, you may need to step outside of the box.

Take ownership of your investments, even if that’s in a scary, intimidating retirement account.

Give the custodian a call. Do some digging. Be self-reliant and overcome the rigged system that Wall Street and the US Government don’t want you to be aware of.

Related Reading: What is a Cultural Paradigm?

How to Be a Conscious Investor

Where we spend our money reflects our values. If you want to be a conscious investor, here are some ideas for how to spend your money beyond Apple, Facebook, Amazon and Google.

B-Corps

Wall Street rewards companies that increase their profit margins quarter after quarter. That is extremely demanding which is precisely why corporations have to go to such extremes to increase profitability.

For an alternative, learn how you can support B-Corporations. Certified B Corporations are businesses that meet certain standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. Please find a list of B-Corps at Bcorporation.net.

Individual Companies

Is there a public company out there whose mission you love, product you respect or work culture you admire? Invest in them! There’s no reason why all your investment decisions have to be made by anonymous Wall Street fund managers. If you invest through a taxable account, instead of through a retirement account, you’ll only be taxed 15% (capital gains) when you withdrawal, instead of 30% (ordinary income). Additionally, you won’t have to pay any fees to the government for withdrawing your money!

Real Estate

Perhaps you’re more interested in tangible assets? Why not real estate? You could buy a house, apartment unit, land or commercial space and rent it out. Look into opportunity zones which come with better tax savings than retirement accounts by a long shot. For example, there’s a company called Fundrise that connects investors to development projects in low-income neighborhoods around the country.

Business

If you are a conscious and ethical person, why give your money away at all? Why not use the extra cash you’ll have after you stop contributing to retirement accounts (i.e., Facebook, Amazon and Google) and start your own sustainable company!

Self-Directed IRAs

A self-directed IRA is still a retirement account, but not one that limits you arbitrarily to just stocks and bonds. The account lets you invest pre-tax dollars (up to $56k a year) in whatever assets you want (real estate, farms, cryptocurrency, private businesses, precious metals, tax liens, and much more). Check out What is a SDIRA? and How I Bought Real Estate Through a SDIRA for more information.

Related Reading: Why Have Investors Given Up Shareholder Rights?

Summary

Being a conscious investor once meant something. It 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, conscious investing is just a marketing campaign and actual people no longer call the shots. Algorithms do. Fund managers add the words green, sustainable and impact to attract your business and too many folks are falling for it.

Take responsibility of where your money is going; vote with your dollars. 

Despite what Wall Street says, a company needn’t break their neck (and the law) to increase profitability every quarter. It’s okay to simply be a profitable, public company which is why B-Corps exist.

Don’t invest just because you think you should. The government and Wall Street don’t want you to build wealth outside of the stock market. That is suspicious as hell.

Good luck 🙂

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