Last year we wrote an article about Ethical Consumerism, the practice of spending your money on businesses who support your ideas of a healthy community and environment.
In addition to where you spend your money, you can also put a lot of thought into which investment vehicles agree with your personal ethics. This is something weighing on my mind as I start from scratch learning about investing as a whole (see my previous article on the subject: What Do I Know About Investing?). There are a few different strategies, as I see it so far:
Invest in things you think will succeed, regardless of your own ethics
One of my co-workers is the sort of person who eats well, exercises all the time and generally treats his body as a temple. When I asked him if he ever does any investing, he quickly answered, “Only in the Vice Fund”. The Vice Fund invests in alcohol, gambling, tobacco and aerospace and defense industries. You could think of it as the “World is Going to Hell Fund”. The way I see it, investing in something with that kind of mission statement is akin to hoping other people keep destroying themselves.
For a guy who treats his own body as a temple, this seems like a weird contradiction, but as he tells it, the fund has been very lucrative for him, excluding 2008.
A similar example might be a vegetarian with a lot of stock in Burger King. Doesn’t make a whole lot of sense, except it could be quite profitable.
Invest in things you wish would succeed
For example, I wish that solar, wind and geothermal energy would succeed, and if I believed my Fifth Grade teachers, by 2009 those are the only sources of energy we should be using. I’m not particularly opposed to oil and coal because they’re dirty and they may be funding who-knows-what kind of overseas operations; I’m opposed to them primarily because they are finite resources. Eventually we will run out, and we may as well start weaning ourselves off of them now, because of the other environmental and political reasons. But do I think all humans will stop using oil and coal by the time I should be retiring, in about 30 years? I’m not sure.
Hedge your bets
Well, there’s one method of hedging your bets, which is to invest both in the things you think are successful-but-harmful, and in the things you think would benefit the world if only people saw things the way you do. But this doesn’t seem like a strong, long-term strategy to me. One of them will eventually fail. Thankfully, there’s another nuance:
The oil giant Shell is following BP and releasing a bunch of commercials highlighting how they’re committed to refining new ways to power things. This reminded me of another transition that shook up some companies: when photos moved from film to digital.
Nikon, for example, cruised along for decades making some very good (and some very cheap) film cameras. When computers became fast enough and connected enough, people started sharing their photos digitally and demand for digital cameras grew. Not willing to let a different company take their market share, Nikon became expert at making digital cameras as well.
Oddly, I don’t hear the names Kodak and Polaroid as often as I used to, though I know they’re still around.
Today we think of Exxon and Shell as “oil companies”, but they may very well position themselves as leaders in the geothermal energy space in the future. Here’s where my earlier advice about doing lots of research come back into play.
Further reading
Consumerism Commentary has written many, many articles about investing in the past. Flexo is a lot more knowledgeable than I am, so far, but I hope to catch up soon.
I produce a lot of garbage, and I’m not talking about just my writing. Here’s one reason: Even though the grocery store is only about a block or two away from my apartment, I tend to take large shopping trips infrequently rather than smaller trips more frequently.
Here are the problems with this approach.
I’ve been going through a large number of plastic bags, producing more garbage than necessary. Formerly, I saved the plastic bags with the intention of reusing them for the next trip, but I never did so. This usually resulted in a ball of increasing size underneath the sink in the kitchen, consisting of crumpled plastic bags. Every once in a while, when I decided one particular ball of bags would never be used, they would go in the garbage and the process would restart.
Also, because I wait long between trips, I have a lot of food and paper products to buy, more than I can carry in one trip. Rather than walking two blocks to the store, I drive from one parking lot to the next to pile the full bags into my car, transport them back to my apartment, and carry them up to my second-floor apartment in multiple trips.
I’ve solved the first problem. Stop & Shop, my local grocery store, offers reusable fabric bags for sale. They cost $0.99 each and one fabric bag holds more than one plastic bag, and it does so more comfortably. Every time you bring a fabric bag back to the store and use it for your shopping, the cashier will provide a $0.05 credit per bag on your receipt.
I purchased ten bags in a recent shopping trip to help reduce my plastic usage. In order for this purchase to “pay off” for me, I’ll need to buy 198 bags of groceries. My initial purchase was probably too high — I didn’t realize the bags were so capacious. For one of my large shopping trips, I use only five or six bags. At that rate, it will take 33 to 36 trips to the groceries, or about three years, for me to “break even” on my purchase.
More importantly, I won’t be producing as much plastic garbage.
In terms of the second problem, my girlfriend suggested I purchase a cart to transport my groceries to eliminate the necessity of driving. It’s not a bad idea. It would reduce the short trips I take in my “gas-guzzling” Honda Civic and provide me with more exercise. I’m just about out of storage space in my apartment, however, so I’m not quite sure where I’d leave the cart when not in use. I understand there might be folding carts available, in which case, I could probably store the cart in the closet, so I’ll have to research this further.
Congress will likely pass a bill this week that will have a positive effect on global warming. The bill requires requires light bulb manufacturers to create products that consume 25% to 30% less energy than the typical incandescent bulbs on the market today by 2012 to 2014. The goal doesn’t end there; by 2020, light bulbs must be 70% more efficient. Compact fluorescent bulbs (CFLs) already meet this objective, but they cost four times comparable incandescent bulbs on average.
The good news is they last much, much longer. The difference in price is easily recovered due to the bulb’s long life. Additionally, replacing one incandescent bulb with a fluorescent will save an average consumer $5 on their electricity bill each year. With bulbs costing $4, there is no argument that a switch to compact fluorescent isn’t worth it.
I have compact fluorescent bulbs in most of the sockets in my apartment. I can’t say that I’m a fan of the color of light they produce. Also, many CFLs cannot be placed on dimmers. With improvements to the technology, I’m positive that better bulbs will continue to be made and prices will decline over time.
As my incandescents continue to die, I replace them with compact fluorescents. The small expense now will go a long way to saving money later. I’m helping the environment as well.
photo: Bludgeoner86
It’s lights out for traditional light bulbs [USA Today]
CNN Money is offering seven suggestions for reducing your tax, all possible before filing your 2007 taxes. The first suggestion is to “re-energize” your home.
You can reduce your tax bill by up to $500 if you install insulation, windows, doors or central air conditioning that meet certain energy conservation standards. You also can take a credit up to $2,000 if you install a solar-powered hot water system or solar photovoltaic panels, which convert sunlight into electricity.
While this tax credit sounds interesting, I don’t see it as an immediate financial advantage for the taxpayer. Yes, making these changes may increase the “value” of the house, but only if a buyer recognizes that down the road. You won’t get as much tax back as you would spend to make these changes. So you’ll owe the government less, but more money will leave your pocket. Here are the credits you can expect to receive:
* $50 for each advanced main air circulating fan
* $150 for each qualified natural gas, propane, or oil furnace or hot water boiler
* $300 for each item of qualified energy efficient property.
Even if you go on a spending spree, the maximum credit you’ll receive on your tax form is $500. From a financial standpoint, this is likely not worthwhile, but green energy will eventually be less harmful to the environment. I’d like to see better incentives.
7 Year-End Tax-Saving Moves [CNN Money]
Treasury and IRS Provide Guidance for energy Credits for Homeowners [IRS]
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