Welcome to Think-It-Through Thursday on The Plumber. Here, there will be a question posed. Jordan Foos (that is me) will give you his thoughts on the question, and then you can share your thoughts in the “Leave a Reply” section at the bottom of this page. This is the whole point…interaction, expansion, debate, pondering…
So, don’t hold anything back…let’s see what chyuh got!
Question: How can a person invest in an ethical, community-centered way?
Jordan’s Thoughts:
Ok, so, this week’s Think-It-Through Thursday is really a shameless peal for advice.
My wife, Rebecca, and I have been faithful followers of the Ramsey Plan since we’ve been married (This is a money strategy developed by a man named Dave Ramsey; check him out here.) In his early days, Mr. Ramsey found himself in a lot of financial distress, and from those experiences, he developed courses to help folks avoid the mistakes he made.
Some of his key thoughts are as follows:
1) Avoid debt like the plague (unless it be for something which debt is almost impossible to avoid…like buying a house)
2) Make sure you take care of your 4 walls, first—Food, Clothing, Shelter, Transportation
3) Have an emergency fund that equals, at least, 6 months of income
4) Pay with cash…cash is awesome
To all of these things, I say “Amen”. Once you have the 4 above things figured out and you’ve paid down any previous debt, Ramsey suggests you start looking at investment options.
And here, for me, is the rub. The word “invest” makes me cringe. I am not interested in giving money to a blind economy; I’m not interested in loaning money to a mutual fund, which will then dole it out to companies, which will then spend that money in ways I am clueless about.
The main idea is this—our current economy has become so impersonal that I have very little control over the way my investments are used. I will never know the CEO of the company which is using this money; I will never know how this CEO treats his or her managers, and I will never know how his managers treat their employees; I can’t be certain what these funds will be used for—will they be used for strip mining?…will they be used for the production of weapons?…will they be used to support other things which do not align with my values?
Even though the homepage of a company’s website might boast about it’s ethical practices, there is no way I can check in on a company that is 2000 miles ways or, maybe, on the other side of the planet. It’s not as if I’ve invested in my local grocery store and can walk down the street to see how the business is being run. There is very little chance for investor oversight.
The type of investment in which I am interested is the local-grocery-store variety. I want to directly support those folks in my community, with as few middlemen as possible. I don’t want, simply, a return on my investment. I want to build relationships with those folks who are putting my money to good use. I want to build community.
Problem is—there are very few of these mom-and-pop investment opportunities (…though, they are starting to pop up in the form of crowdfunding…). In a culture that is still dominated by Wall Street, how the heck can a guy invest and invest well?
I don’t want to be a dummy, either. I first encountered the tenants of Dave Ramsey when I was 20 years old. That’s when I got a taste of this investment stuff, and where I heard Dave’s teachings on compound interest. Yes, I probably should have started sticking a few bucks into mutual funds way back then. I probably should be shuffling a little doe into a Roth IRA so that Rebecca and I can still have a living when we are old farts (…gosh forbid our children take care of us…).
But, I just can’t bring myself to put our money into a black hole. I can’t bring myself to support an economic system that, because of its inner structures, gives precedent to the centralized and the big, and ignores the diffused, local, and small.
What is a guy to do? Am I totally off mark? Am I dreaming too big a dream?
What say you?
The Plumber 
Spend your money on fishing trips you will be very HAPPY !!!😜
Hey Jordan,
I better leave a reply now rather than putting it off because if I don’t, I will just let it go by and never actually leave a reply, which I think, by the way, is your actual hope in this Think-It-Through-Thursday. Well, I have a little experience as a former worker at a mutual fund company to supply some of my own opinion about this investing of which you speak.
First, the idea behind investing, is to make money. Businesses, generally, are what make and generate money (capital), yeah? So, by investing in mutual funds and stocks, you’re taking on a share of the profits (or losses) of said company. A mutual fund allows you to distribute your money among many companies as a safer way to avoid losses should a specific company encounter troubles. At the same time, however, as you may invest in many companies within an industry, that industry can suffer and your mutual fund will not perform as well considering all of those companies are in the same boat. In addition to that, there’s all different kinds of mutual funds with different investments for people at different times in their lives. For example, us young folk can afford to be in some more aggressive growth funds whose swings high and low can be pretty drastic. But since investing in mutual funds is a long-term thing, a low figure at the end of the quarter isn’t so low just as long as you don’t actualize that loss by withdrawing your money from the fund. Keeping your money in the fund is the idea, long-term. Over the next 30-40 years, that can really generate some revenue, especially with that compounded interest and reinvested dividends. Old folks, however, generally move their money to funds invested in bonds which generate and pay dividends monthly which they can live on in their retirement. So, investing in the growth funds now as we are younger and then moving your money to the safer funds is the idea, to keep what you have earned. But, perhaps this is all stuff you already know about.
Your questions are of a different nature, I think. You’re not asking about the principles of investing and how it works, but that fact that you are giving your money to help grow companies that, in turn, will allow you to make money as well, although you are concerned about the means by which that growth occurs. For you, the ends is not justifying the means. You’d rather not support causes and things that are hurting the environment just to make a buck, yeah? And then your question is how to know what these companies are actually doing, right?
Well, there are some options, I think. I haven’t been in the business for some years now but I know they have all different types of mutual funds and each mutual fund has its own criteria or aim. For example, if you don’t much care how the money you make (grow) is made, you can invest in what the industry calls “Vice Funds”. These are basically mutual funds which invest in companies that make money off of the many bad habits of human beings such as companies which make cigarettes and alcohol producers. Speaking of stable companies, these tend to be quite stable as smokers generally keep buying cigarettes, even in hard financial times. They are addicted after all. Similarly goes for the beer. – On the other hand, however, you can find all sorts of funds. I remember one that started to come up when I was about to leave my prior work was a Green Fund. It invested in solar companies and companies dedicated to environmental issues. Now, what companies were exactly invested in up at the Fund Manager level, I am not sure. That is all usually included in the fund’s booklet (for the life of me, I can’t remember what we called it) which explains what the fund does and how it is invested, although I doubt anyone I’ve ever sent one to actually read it. Not your bedtime kind of reading. Even then, there is always some leeway as to what is invested in. It can change daily, but generally stays about the same. So, my point? If you are seriously considering investing, well, there MAY be a fund out there for you. You are not the only person to have asked these questions and because of that, there is usually something on the market to cater to one as yourself. Today, without having done any research other than writing you back on a whim, I think there are probably some environmental friendly, even “Virtue Funds” out there… although they tend to make less money, I’d gather.
You also mention that you are looking for a way to invest in the local grocery store kind-of-deal. Well, to this, all I can say is go there and buy from them, and keep coming back. Your money is worth something and by giving it to them, you are keeping it from the other companies. You have a lot of say in what you choose to do with your money. Imagine a lot of people doing the same and supporting these stores instead of a Wal-Mart or Target. That’s money that doesn’t go to the shareholders and investors of those companies.
Now, to remind you, you mentioned investing. Putting your money towards a local grocery store won’t make you money as you will only be a consumer still at this point. You are, however, supporting something which you find worthwhile and keeping it afloat in competition with the bigger corporate giants. You might be paying a little more but the quality should be better (I hope) assuming their products are of that type and therefore, you are benefitting through your health. An interesting way to see this investment.
What are your options? Well, first, I think, is to down-right save your money. Don’t buy crap that you don’t need. There is always some new product out there that is sold to people based on a “need” that has been created! Save your money… and you can pay for things (you need) in cash, and actually own them; call them yours.
I am also thinking of a little idea of Wendell Berry which says to curtail the costs of consumption by producing something of your own, whether that be some vegetables or some product you can make with your hands. Isn’t that business? To create something and barter with it? Exchange it?
I think its funny that a man, David Ramsey (whom I like very much), makes so much money off of people who are absolutely stupid about it. But it is not just so simple as them being stupid about it. It’s a cultural problem and the problem of them desiring things which they can’t afford so much so that they are willing to go into debt and become slaves just to “have” something. The other side, I think, is to say, “I don’t have the money for that, so… I guess I won’t buy it. I can’t.” What has happened to the idea of “affording” something? That, along with the idea, “Neat, but I don’t NEED it. I can live without it… and so have so many people who have lived before me when this product hadn’t even been conceived of yet.” Sadly, it’s a sick (here, meaning ill) system and place where people are willing to become slaves in order to have things that they don’t even own.
You aren’t dreaming too big. You just have to support the local and small. There, with the other people who are also supporting the local and small, you’ll find community. Now, you won’t find big bucks necessarily there, but I don’t think that is what you are after. Sufficient for a day is its own evil.
I can’t offer much advice here, sorry brother. I do find what Andrew has to say interesting and insightful. Let me know what you figure out.