“Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples.”
Whether you’re a professional working in a high-rise or a construction worker building one, something we all have in common is that most of us don’t intend to work forever. Retirement is something the majority of people look forward to, and in order for that to happen comfortably, we have to save for it.
For myself, I started to save as soon as I started to earn. My internship was the first year I was taking home more at the end of the month than I was spending. And I knew that just because I might be a smart guy educated in science and medicine, it didn’t mean I knew anything about money.
A popular book in Canada at the time was The Wealthy Barber. Written by David Chilton, it offered a lot of useful advice for the average person and did it in an amusing way: the narrator has regular discussions with his local barber who is already a millionaire by following some basic principles. Simple suggestions like maximizing your registered savings, minimizing your debt, and paying yourself first every month got me on the road to saving properly. Chilton’s long-awaited sequel “The Wealthy Barber Returns” came out last year and has offered more up-to-date advice for the economy of today.
As part of our savings plan, my wife and I invest in some mutual funds, as many people do. One thing that came up in a meeting with our financial adviser just this past week was whether or not any of our funds were connected to industries we wouldn’t want to support. For example, I wouldn’t be very consistent if I drive a hybrid and purchase green electricity, natural gas and carbon offsets on one hand, while I’m part owner of companies in the coal and oil industry on the other. I wanted to make sure we were consistent across the board.
Our discussion turned to SRI, or socially responsible investing. Just like it sounds, these are investments that are meant to have a good rate of return, but also consider social good. They are typically directed toward companies that include not only environmental stewardship, but also human rights, consumer protection, and diversity.
The concept isn’t a new one, it turns out. The Quakers prohibited their members from participating in the slave trade in any way dating back to 1758. Modern applications tend to summarize it as simply investing in a better world. As the Ethical Funds website outlines, “the best possible returns can be achieved by investing in companies that combine strong financial performance with positive social, environmental and governance (ESG) performance. This is particularly important as investors worldwide become increasingly concerned about the impact our activities are having on the global community.”
In our case, we can easily switch some of our funds without any loss to our portfolio at all. Many of the socially responsible investment funds have rates of return which are as competitive as any other. Some funds, however, have slightly higher fees than others that don’t follow a SRI philosophy. But since I’m already prepared to pay in other ways to reduce my carbon footprint, I think this is just one other way for me to be consistent in my philosophy.
As is often the case, trying to be greener often costs a little bit more. But I’m truly confident that won’t be the case forever. If you invest as part of your retirement plan and want to promote a greener lifestyle at the same time, make sure you check out your portfolio and see if some it needs to be changed toward socially responsible investing. Every little bit helps.