Dealing with Having Money

Towards the end of December 2014, with a very probable full-time gig with Aspiration (which I continue to adore) on the horizon, I realized that I would (for the first time in my life) have slightly more money than I needed to live off of. Rather than expand into the space via my consumption (ok, I’ve done a little of that, too), I wrote to the Berkman list asking for help in investment or saving.

After years of living by the skin of my teeth, it seems I’m about to have steady employment. I don’t know how to invest or save money, and I generally think capitalism is pretty evil. However, I do need to survive in the long run in the world we’ve got. Does anyone on this list have advice on 1) who I can talk to about this (I am _clueless_), 2) how to do this as someone who cares about disinvestment from petrol, promoting social justice, smashing the patriarchy and maybe the state, etc?

This was met with an outpouring of advice (and some fascinating discussion about monopolies, silicon valley, investment, etc, which I won’t get into right now), which I’ve distilled here as best I can for a wider audience. Caveat that I have absolutely no idea what I am talking about, and I look forward to making further edits (with credit!) based on feedback. I’d like to specifically thank Brian Keegan and Tom Stites for their amazing overviews and deep investment (ha!) in the topic; Andy Ellis for sitting on the phone with me; and Hasit Shah, Emy Tseng, and Amanda Page for their distilled wisdom and links.

Apparently, socially responsible investing is something tons of smart people have already put a lot of thought into. Hooray! Less work for me! One basic thing to consider is the level of granularity and control you want to personally have — stocks, bonds, and companies are the more granular. Preset choices, such as through funds, are easier to manage, and you can still have some selection-level control. It’s also suggested “to (1) diversify so that all your eggs aren’t in one basket and (2) keep investment costs low so that your returns aren’t eaten up by paying other people to manage your money.” Amanda pointed out that tutorials exist on the websites of Vanguard, Fidelity, and TIAA-Creff, and more.

One suggested thing external to investment is to just have charitable petty cash on hand – like Awesome Foundation – just giving directly to charities without ending up on their lists of People to Pester.


The easiest (and seemingly least risky) thing to do is to set up an Individual Retirement Account, or IRA. My bank had a special portal just for this, and it took about 10 minutes. You can set aside $5,500/year in this, and apparently it does nice things to your taxes.

Things to be aware of, when dealing with the risk of investment:

  • A healthy approach seems to be thinkng “I’ve lost the money” the moment you give it. Like covering a friend for lunch — it’s nice to be giving money to something it’s nice to spend money on, but will also enjoy the reciprocal motion if it happens.
  • Via Andy, “always ask yourself, ‘is this too good to be true, and why do I have this opportunity?'”
  • “The investment world is a peppered with people and institutions devoted to fleecing the public, usually in entirely legal ways, so beware.” – Tom
  • REITs are generally considered unsavory.

Suggested groups to check out:

  • Calvert Foundation is a community investment fund – as in, you’re loaning money to communities so they can improve themselves. This was recommended by Tom and stands out to me the most as a meaningful investment.
  • Global Alliance for Banking on Values. One thing that stood out to me from this group was their goal to “promote a positive, viable alternative to the current financial system.” While it’s not possible to interact with this group directly, it seems like a good roster to select a bank from, if you are opening a new account of various sorts.
  • Social Equity Group. If you need/want to talk to a financial planner, this is one group worth thinking about. Another group is from Start Investing Responsibly.
  • The Forum for Sustainable and Resonsible Investment. USSIF seems to be setting up a whole ecosystem of investors, businesses, community funds, etc.

Interesting reading:

Institutions also provide various forms of guidance based on their respective moral frameworks:

In Summary…

There is no direct path from index funds, which by their nature cannot exclude any particular companies, to customary approaches to socially responsible investing, which insists on excluding the worst actors. Socially screened funds charge way bigger fees than index funds — they’ve got to pay people to assess companies and exclude the worst — so one approach is to use index funds and take the money saved by not paying high fees and put it in community investment vehicles offered through the nonprofit Calvert Foundation. Using socially screened funds may help you feel virtuous, but community investment funds can actively make people’s lives better. – Tom

Based on all this, (for as long as it’s possible,) I’ll be putting the suggested $5,500 in my IRA each year, and putting the bit extra into the Calvert Foundation through one of their suggested advisers. Next, I need to figure out what state I actually exist in, if that even matters. Emails are out, we’ll see how it goes.

Tell me your stories, thoughts, etc.