Happy Money

Before I say ANYTHING, I want to say that I am NOT a financial advisor in any way shape or form. I cannot tell you if you should be in a Roth or Traditional IRA or what percentage of your portfolio should be stocks versus other stuff. This post is not meant to advise you how to save money, but I wanted to share some ideas about how to invest in a socially responsible way and the impact your money could have or not have on the earth and humanity.

On the actual topic of investing, I will only say this:
You should be saving money.

I know it is hard. Believe me, I have spent my adult life in the low-income brackets. I did not have kids, and I am not married, so I am only me, which certainly makes things easier, but lest you think that I am wealthy or even middle class, let me quickly recap my adult life.

I went grew up in a middle-class family, but I started college during the financial crisis of the mid-90s, which seriously impacted my family. I took out loans for and worked through college. I lived in L.A. for five years piecing gigs together to scrape out a living. Spent three years as a Peace Corps Volunteer. Went to grad school and took out loans while still paying my undergrad loans. Worked through grad school and then took a job in nonprofit and a waitress job. Joined Peace Corps again. Spent four years temping, contracting and teaching yoga while looking for a permanent job.

This brings us to January 2019, one month before my 42 birthday and 19 years after graduating from college when I got the job I have now, which includes an excellent retirement plan and the option to invest in a 401K that is partially matched. I paid of my undergrad loan in 2015, and I just made the final payment on my grad student loan. #goals.

I have a couple of disclaimers worth pointing out. I was raised in a middle-class family, but there was not a lot of money left over. Despite this, my parents did pay a portion of my college my freshman year, and while I was in Peace Corps the first time, they paid $100/month towards it to off-set the interest. In L.A. and London, I had roommates to keep costs down. For four years after my second Peace Corps service, I had an uncanny ability to find free places to live. Between house sitting, yoga clients with extra space, family, friends with cheap rooms to rent, and then finally, a building manager gig, which included a free apartment, I was SUPER lucky with housing. I lived in cities, so I could get by without a car and did not own one for 13 years. I  never got pregnant, and I was lucky to never get sick or injured, since I was often uninsured. I am a world-class hustler and can always find work. I have done some crazy jobs, and I have worked for minimum wage and $50/hour, but I have always worked.

I would still argue that my frugality and ability to manage a small budget helped my manage to: 1.) Pay off both of my student loans. 2.) Not have credit card debt. 3.) Not mess up my credit. 4.) Save money for when I can no longer work. I don’t imagine “retirement” will ever be a thing for me!

I do not understand it when I talk to my peers who have had steady jobs since they graduated from college and still have no savings, no retirement plan, and in many cases, do not own a home. Some of them didn’t have student debt because of parents, sports or other financial help. Until now, I NEVER made more than $40,000/year (usually MUCH less) and yet have still managed to save and still travel (on the cheap). My only reason for telling you all this is to say that we all have different situations, and if you have kids and rent and bills that aren’t getting paid at all right now because you are not working, you are probably like, “Woman, I have NOTHING left.” I get that.

If you feel like you have nothing left to save, before you despair, I suggest you read my previous post with tips on how to live on less than you think you need.

If you are in credit card debt or have other negative debt, you probably want to focus on that, but again, a good financial advisor may be able to help you with that. Maybe it still makes sense to invest a little now and then once you get that debt paid off, invest more.

BUT…if you even have $1, you could be saving $1/month and if that $1 a month is going into a high-yield interest account, it will turn into more. Talk to a bank or to a portfolio manager and see what your options are. MANY savings accounts or brokerage accounts offer no minimum to invest or a low minimum like $5. There are mutual funds with $100 minimum starting investment. Ask yourself if there is something you can sacrifice to make that start and then commit a small amount each month. Compounding interest is bad for debt, but great for investment! Can you take even 10% of your net pay each month and save it? That 10% will multiply and multiply!

The mutual fund I opened when I was 22 was with the bank I had used since my mother opened an account for me when I was 17. I knew nothing about investing and just told them to put me in whatever fund made sense for my age. I set up an automatic monthly deposit of $25 and forgot about it. Over the years, I adjusted the deposit amount and at some point, on someone’s advice, I started investing more aggressively: more stocks, fewer bonds, but mostly I just let it be. This fund grew and grew. I increased my monthly deposit to $50 and then $100 and then $500 a month. If I got a small windfall like a tax refund that I could live without, I would put that in. Right now, I actually am not adding to it. It is just sitting there earning money. Dividends are reinvested, the interest compounds and it grows everyday without me doing a thing. (Right now, it is not growing, but it will bounce back. No worries!)

I have a pre-tax 401K through my employer, a traditional IRA and a brokerage account that are all mid- to long-term investments, and I put almost 40% of my net pay of each paycheck into them. They are all on auto-deposit, so the money just goes to that and I never see it. I just have forced myself to live off what is left. No longer having student loan debt is HUGE! I also do not yet own a home, so one of those accounts is to help me towards that goal, but I am probably 10 years away from thinking about it.

So…all that being said, if you are investing or wanting to invest based on your own research and the advice of experts, I want to talk about Happy Human investing, which is actually called Socially Responsible Investing (SRI), and I didn’t come up with the concept!

I very incorrectly assumed this was a new thing. A quick scroll through the Wikipedia entry on it corrects that misconception! However, it sure seems to be a secret. If you read my blog, you know that I try to make ethical decisions in as many aspects of my life as I can. I am a vegetarian and seriously limit my dairy consumption and only buy pasture-raised chicken eggs. I buy clothes from thrift stores and consignment shops. When I buy new clothes, I buy organic and ethically made. I buy nothing from Amazon. I support local businesses wherever I live.  I buy produce from farmers’ markets or currently, street vendors. I try to avoid produce shipped from around the world. I research companies I am going to buy from to make sure that I agree with their business practices. I consume as ethically as I can in these small ways, yet when it comes to banking, I was not doing any of this until recently. The mutual fund I had was managed, and I had no clue what was in the portfolio, but I hate the idea that I would be earning money from tobacco, weapons, fossil fuels, AMAZON and other companies whose only interest is their own bottom line.

I am not going to go on a rant against banks. If you have not lived under a rock for the past five years, you know about #OccupyWallstreet and you know that the political left globally is railing against the political right. In the U.S., there is a massive class divide that is growing larger every day. The rich are getting richer, and the poor are staying poor. What’s more, the rich are gaining their riches off the backs of the poor. The very same companies that I won’t buy from, I probably had stock in. The thing about mutual funds is that they are a portfolio of funds. The fund manager assembles a diverse portfolio, and you are investing a little in a lot of different stocks. This diversification means that there is less risk overall, but it also means you have less control over where your money is and what it is doing.

A year ago, when I started this job, I decided two things. 1.) I wanted to be saving AGGRESSIVELY to make up for lost time. 2.) I decided that I wanted my money to work for me, but also not work against the causes I think are important and perpetuate practices with which I disagree. I started looking into socially responsible investing.

There are so many ways you can hold your money aside from cash under your mattress.

• Checking accounts usually are where your pay should go and from where you pay your bills. It is unlikely you earn much if any interest here, but you should be looking for a bank where you aren’t paying a fee.
• Savings accounts through your bank are often for short-term savings, and may earn a small amount of interest, but usually there is no fee to take money out of them (with certain limitations sometimes).
• Brokerage accounts, mutual funds, investment accounts, IRAs, etc. are all different types of portfolios that will have a mix of funds and and a mix of stocks and other investments. High-risk, but usually higher-gain long-term funds will have more stocks and are often advised when the investor is younger and has a lot of years to save and to recover from a crash. Lower-risk, but usually lower-gain funds will have less of a percentage in stocks and are usually for people closer to retirement.
• 401(K)s and 403(B)s and others are pre-tax investment accounts from your employer and are often also a mix of stocks and bonds. If you’re lucky, your employer matches, so I will say, take advantage of that free money! There is an annual maximum that you can invest, which is determined federally.

Where ever you choose to invest, talk to someone about your best options based on you age, your goals and your comfort level with risk. Maybe you are saving for retirement, maybe for your kids’ college, maybe for a house. Each goal will have a different path. Let me reiterate, I am NOT going to even attempt to advise on this.

While you are researching and talking to people, look at options for SRI. I am not promoting the following at all; they are just what I found that suited my needs, so I can share a bit about them and say that they have been, so far, good for me.

• Aspiration — Fossil fuels have traditionally been big money-makers. Aspiration has an environmental focus and their portfolios invest in companies that have sustainable business practices, and they invest in no fossil fuel. Additionally, they give 10% of profits to charities, they offer their customers easy ways to give to charity, and they let their customers choose their own fees. They have investment, retirement and traditional banking options.
• Ellevest — The world of finance is dominated by men. Women invest differently than men and have different priorities when investing, yet the finance world continues to be dominated by men from the entry level up to the highest positions. From pay gaps to gender bias to poor representation at the senior level, the finance world is still very much a man’s world. As a woman, I was thrilled to stumble upon Ellevest. In most institutions, we find “women account for less than 17 percent of senior leaders in investment banking. In private equity, women comprise only 9 percent of senior executives and only 18 percent of total employees, according to a 2017 report by Preqin. At hedge funds and private debt firms, the numbers are similarly low — women hold just 11 percent of leadership roles.” Ellevest was co-founded by a woman, and they have more men than women working there. They recognize that men and women want different things from their portfolio manager. When you start your profile with them, the site will ask questions about your goals and your situation to help determine what the best option is for you. Ellevest Impact Portfolio is designed to support women, so a portion of the portfolio invests in companies with women in leadership; companies with sustainable business practices; and supports community development.
• Betterment— Like Ellevest, Betterment offers traditional investment portfolios as well as socially responsible portfolios options for their investments. . The website walks your through the steps and will ask about your goals and situation to help you set up your accounts.
• TIAA— As far as I am aware, TIAA is limited to certain educational institutions and government employees, so given its limited reach, I won’t go too much into it, but if you are eligible, TIAA offers an option for ethically investing. I was able to contribute with them when I worked for a university, but I moved the money when I stopped working there. They have a good reputation and have been serving people in certain social industries for a long time, so they may be worth a look.  Notably, their fund is listed among the top SRIs according to this guy

There are probable other options out there, and if you are super clever and love to take risks, maybe you will choose to invest in individual companies. You do you. Do some more googling on SRI funds and companies that manage them. There are more than I have mentioned, and it is a growing industry.

If you are looking for just checking and savings account, here is a great review of your options that are socially responsible.

Have I mentioned that I am not an expert? Okay, good.

I just wanted to share what I have learned as a savvy, frugal, independent woman navigating this whole adulting thing with varying degrees of success.

I believe that we can look out for our own best interests, while also looking our for others! I want to be secure in my retirement, but I also know that my values do not revolve around wealth, so I am not interested in a portfolio that will build my “wealth,” make some dude in a $1000 suit richer, and reward companies with poor business practices while millions are suffering. I just can’t swallow that pill. For me, investing in SRI is a way that I can feel better about what my little pot of money is doing, and I can feel more comfortable about my future.

It is also worth pointing out, that we are in an economic downturn. For some, there is no money at all, and you are wondering where that stimulus check is. For others, it may be the moment to take advantage of low stock prices. I read one analysis on it that said if you are already investing, probably no reason to stop and maybe it is a good time to start. I don’t “play the stock” market and have nothing to add on that topic.

Talk to people you trust. Talk to financial advisors. Do your research. Then see if maybe happy investing can work for you!! The more of us that do it, the more companies will begin to adapt to match our needs.

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