4. PICK YOUR COMPANIES
Once you have established your second bottom line, researched your investments and put your concerns to rest, you now have a choice to make. Basically you have two options: 1) invest in mutual funds or 2) pick individual companies yourself.Investing in a mutual fund
The main benefit of mutual fund investing is that the fund manager does all the research for you on the financial and the social side. The drawback is that you might not agree with every company chosen. Minimum investments typically are $1,000 but may be as low as $250 for an Individual Retirement Account, where your money is not withdrawn and not taxed until retirement age. So you must first contact the mutual funds that are compatible with your profile and scrutinize the ones that meet both your social and financial criteria until you find what you like.
With dozens of socially responsible mutual funds available, you may get overwhelmed with which direction to take. Don't worry, it's not so painful. Just follow these three steps:
- You can easily get a list of them by doing an Internet search for "socially responsible investing" or "socially responsible mutual funds." Or you can check out the web sites listed at the end of this article, some of which have complete listings of socially responsible mutual funds.
- Check out each fund's web site before requesting a "prospectus" from them. A prospectus is basically a booklet with the fund manager's philosophy on screening and investing, the fund's financial performance, and an application form. This way you can quickly determine if the fund's social priorities are compatible with yours. Typically, each web site will also have financial information about the fund, so you can figure out if it is profitable enough to help you retire to the Bahamas immediately or not.
- After you have found a mutual fund you like, you can order a prospectus online or by calling the mutual fund's 1-800 number. It should be on the doorstep for your reading pleasure as soon as the ever-speedy U.S. Postal Service allows.
Remember, only you know how much money you have to invest and what your tolerance for risk is. This will determine whether you choose one mutual fund or two or ten. Go with whatever seems both socially justified and financially promising.
To get you started, here are some of the players in the business (WARNING: This is merely a list of players, NOT an endorsement by SoYouWanna.net):
- Calvert Group: The mutual fund family offers 21 funds with $6 billion under management and over 200,000 investors. (http://www.calvertgroup.com)
- Citizens Fund: In business since 1982, the company has screened over 2,000 companies and has five mutual funds to choose from. (http://www.citizensfunds.com)
- Domini Social Investments: The Domini Social Equity Fund, with 400 companies, is one of the largest mutual funds in the socially responsible sector with $1.2 billion in assets. (http://www.domini.com)
- Parnassus Investments: Established in 1984, this group of four mutual funds screens for the usual line up, including companies that generate electricity from nuclear power. (http://www.parnassus.com)
- Pax World: Invests in companies that provide life-supportive goods and services, such as health care, technology, pollution control, housing, utilities and education. It avoids defense and weapons manufacturers, liquor and gambling operations. It has been in operation over 25 years. (http://www.paxfund.com)
401 (K) it
Wait, wait! Before you write out that check and give up luxuries like food and toothpaste, you should know that you may be able to become a socially responsible investor immediately through your employer's 401 (K) plan, which lets you invest for retirement in the stock market through mutual funds. A 401 (K) plan automatically invests a portion of each paycheck without being taxed on your investment. More and more employers include such mutual funds as an option, including Ford Motor Co. and Oracle. So find out ASAP if your employer has such an option.
Do it yourself
Instead of letting a mutual fund manager be your guide, do your own damn picking to invest in a group of companies completely suited to your tastes. We're not gonna spend much time talking about self-investment, because it's really difficult. If you're reading this article, then you're probably a newbie to investing your cash. We therefore strongly recommend that you start out with mutual funds, and worry about investing on your own once you've made a couple million bucks.
But just because we're that nice, we'll provide you with a couple of suggestions about how you can invest on your own. One way to start is by looking at companies that are included in some socially responsible mutual funds. Another way to find companies that care, although this is not necessarily a reflection of their personal habits, is to look at a charity or cause you support, like breast cancer research, and see who the big donors are. But just remember, do some due diligence with their records because they may be forking over the big bucks just to look good. You can now inform your personal financial advisor of your choices, or you can buy stock directly through online trading companies or a stockbroker.
Get your financial groove on
Congratulations, Stella, you've got your groove back! You have started down the path of compounding karma. Just don't stop that diligent recycling effort. . .
Additional resources on the web:
http://www.goodmoney.com
http://www.socialinvest.org
http://www.SocialFunds.com
