A newsletter of simple ideas #27 -- July 2000

Book Review--Investing With Your Values

Socially responsible investing is, in a way, both new and old. For example, Quakers have been using their money in a way that could be considered socially responsible investing for almost 500 years. On the other hand, a mutual fund with stocks screened for social criteria is rarely more than 10 years old. However, in Investing with Your Values by Hal Brill, Jack Brill, and Cliff Feigenbaum, you get the whole shebang--from the first beginnings to current (2000). It's not a book for those wanting to learn how to invest; rather, it's a book for those who do invest who want to learn how to bring their investments into alignment with their values.

Money-Saving Tip: Make a List. Before you go shopping, decide what you need. Up to 30 percent of grocery store purchases are impulse buys. If you go with a list, and stick to it, you can save...well... up to 30 percent. If you find that you always leave things off your list, try this strategy--write your list in one color ink. Bring a pen of another color (a bright color like red works nicely) and write down anything you purchase that wasn't on your list in that color as you put it in your cart or basket. When you go home, you can see how many of those added items were impulse and how many were really needed.

The book is divided into four sections and a huge appendix. The sections are: Values in the World of Finance; The Four Spokes of the Natural Investing Wheel; The Natural Portfolio Guidebook; and The Sustainability Revolution: Designing a Greenprint for the Future. The appendix has several sections, listing resources for the different areas of socially responsible investing...or what they call "Natural Investing."

In Section One, Values in the World of Finance, the authors cover two main areas: the history of investing and corporations, and debunking the myth that you can't "make money and make a difference." Included is information on trends (the rise of the Cultural Creatives, changes in the way corporations are formed and how they behave, an increasing shift towards natural or socially responsible investing, and so forth). While I found this section pretty interesting, I knew a good deal of it already. If you know about Cultural Creatives, understand why people protest the WTO and FTAA, and have a sense of what SRI is, you may want to just skim this section and move quickly on to the meat of the book in the next couple of sections.

Section Two, The Four Spokes of the Natural Investing Wheel was where I really started to get pulled in. According to the authors, there are two ways to do Natural Investing--evaluation and involvement. Each way of doing it has two main options. Evaluation includes avoidance screening (refusing to invest in companies or other investment vehicles that don't support your values) and affirmative screening (seeking out companies or investment vehicles that do). Involvement includes community investing (putting your money in a fund that supports various community-building activities) and shareholder activism (working as the owner of the company--a shareholder--to move the company towards practices more in line with your values). These four things--avoidance screening, affirmative screening, community investing, and shareholder activism--are the "Four Spokes."

The sections about each spoke include tons of resources; for example, the "Avoidance Screening" chapter covers at least a page about 11 different areas that are commonly targeted with avoidance screening--things like alcohol and tobaco, companies that invest in countries with repressive regimes, and global warming--as well as several pages of shorter descriptions about other topics. The "Community Investing" section includes information about various organizations that offer community investing options and how that money will be used (from microcredit loans for disadvantaged people trying to start new businesses to financing low-income housing).

Section Two ends with several worksheets to help you clarify which approaches (spokes) are right for you, as well as what issues are most important so that you can zero in on the best investments for your values. I had originally checked the book out of the library, but after I read the worksheets, I started thinking, "This is a book I think I want to own."

Section Three, The Natural Portfolio Guidebook, goes into the nuts and bolts of the kinds of investments you can make. A good portion of this section focuses on what most people are familiar with--stocks, mutual funds, and bonds. It provides the same useful, high-quality information as the previous section, covering such things as what the various screened mutual funds actually screen for (the criteria on which they allow a company into the portfolio), as well as information on risk, reward, and how to balance the two. I especially love their "Beach Lover's Guide to Asset Allocation," an image that looks at ways of splitting up your money into different kinds of investments based on their risk and your risk tolerance--from the very safe, the "Sunbather," through increasingly risky "Wader," "Dunker," "Swimmer," and finally to the highest risk, the "Surfer."

However, Section Three also covers less well-known investment vehicles such as special-interest funds (bond funds, special emphasis funds, and sector funds), limited partnerships, annuities, real estate investment trusts (REITs), unit investment trusts (UITs), closed-end funds, and venture capital. Each they cover with enough information that, at the very least, you can understand whether or not it's going to fit in with the investment strategy you've been developing in the previous workshets and with your level of risk tolerance.

The last main section of the book is Section Four, The Sustainability Revolution: Designing a Greenprint for the Future. Here the authors talk about lots of other ways you can use your money (and time) to help shift things towards a more sustainable future. Concepts covered range from voting with your dollar when you shop, bringing values and spirit to the workplace, philanthropy and charitable giving, community service and volunteering, and (a particular favorite of mine) supplemental/community/barter currency systems. They cover political change that will help the shift, including pushing for changes in the tax code to tax negative things like pollution or noise rather than positive things like income. They cover tax subsidies to corporations and other structures that support corporate power and what a difference reducing or eliminating those would have.

• A. Resources
• B. Listings of Socially Screened Companies
• C. Avoidance Screening Lists
• D. Community Investing Resources
• E. Chapter-by-Chapter Resources

All told, this book is well worth its purchase price (Paperback MSRP: $18.95). It's got loads of useful information--more than I'll probably be able to use. I wholeheartedly recommend it to anyone except to those who are beginners at putting their money in places other than savings accounts and CDs. As I said earlier, it's not a primer on investing, it's a primer on socially-responsible investing. If you know the difference between a bond and a stock--and own one (or both)--you'll be fine. If anything beyond your checking account is kind of vague and undefined, start your education elsewhere and come back to this book when you're ready to select which investments you want to make.

More information on Natural Investing can be found at www.naturalinvesting.com.

Note: If you order Investing with Your Values from Amazon.com via the following links, a portion of your purchase will go to support Reasonably Simple. Click here to order the hardcover or the paperback edition.

Quote of the Month

Get happiness out of your work, or you may never know what happiness is.

--Elbert Hubbard

Editor's Notes

It is currently May 2001 but I'm only just posting the July 2000 Reasonably Simple. My intention is that over the next year, I will write and post a new article about every other week, so that by the end of the year, I'll be current again. So, I'd appreciate suggestions, guest writers, or anything else that could help me step up production this year.

You can contact me with your submissions, suggestions, or comments at:

Michael J. Coffey
PO Box 23221
Seattle, WA 98102
(206) 524-3898

michaelc@ardeacoaching.com

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