Change the World One Dollar at a Time
When you think of investing, you probably envision checking a box on your 401(k) paperwork or clicking some buttons on an online trading platform. These are important ways to invest, of course, but there’s more to it than that. Whether you’d call yourself one or not, we are all investors. We invest every single day — as citizens, as consumers, as family members, as businesspeople. We invest our time, energy and money.
At its core, investing involves connection, exchange and mutual benefit. We humans invented this activity to serve our own needs, our communities and our planet. Investing is everywhere! You have a chance to invest with each and every decision you make — to vote with each dollar, with each choice, for the world you want to live in. Here’s how.
Invest In Your Own Future
Benjamin Franklin famously said, “An investment in knowledge pays the best interest.” One of my favorite stories regarding knowledge investment is from Charlie Munger, Warren Buffett’s business partner (and big fan of Franklin). As a young lawyer, Munger became concerned that his time was increasingly not his own — it was measured in billable hours, owed to others. So he chose to pay himself first, explicitly setting aside time for reading every day, with a goal of developing his own library of “mental models.” It is this internal library that he credits for his vast subsequent successes — time well spent!
There are many ways to invest in your future, whether you choose education, financial assets or what I call “enabling infrastructure.” For example, as my own business -- an investment research firm — has grown, it’s been hard to stay ahead of the demands on my time. A fantastic assistant is one of the best investments I could possibly make in my own future (not to mention my own sanity). And let’s face it — some days, the best investment you can make in your own well-being is a run along the river or a nice, long nap.
Invest as a Consumer
Say you’re just getting started on your financial goals and don’t yet have any savings to invest in the stock market. You can still invest by voting with your actions and your dollars every day as a consumer, from where you live and shop to what you eat.
Being thoughtful about your consumer choices can sometimes seem like an endless responsibility, but luckily there are plenty of resources available that make it easy and even fun. When I lived in London, I once saw kids competing to see which one could find the lowest number on the “food miles” label (which calculates the distance the food has traveled from its source to you) that Waitrose supermarket uses. Here in the United States, there are a number of services like GoodGuide.com and Fooducate.com that give lots of sourcing detail on both food and non-food products.
When we think of our consumer “votes,” eating local and buying local are top of mind. But what about living local? One friend of mine recently moved from a spread-out, car-based suburban neighborhood to a small town where she and her family can walk to the library, restaurants and the park. The financial ROI for their relocation is yet to be seen, but the emotional benefits are already clear: My friend reports a sense of connection to her neighbors, to her local community and to her own family that is being nourished by all of those car-free outings, casual conversations on the sidewalk and evening strolls to the ice cream shop.
Invest as a Citizen
Citizen investment can take many forms. You might invest your time, as two of my best friends do each holiday season, when they festoon every single gaslight on Beacon Hill as part of the neighborhood association. (Of course, festooning day is inevitably accompanied by the worst weather of the year, so it’s a serious commitment.) If garland isn’t your thing, you might invest your political voice, as a voter or a campaign volunteer. You might invest your energy, advocating for new parks or creative public space with a group like the Trust for Public Land.
When it comes to citizen investments that have a financial form, one area of focus could be your local food system. You might choose to invest in a farm share, or with your area’s Slow Money group, quite literally nourishing the soil of your community. Slow Money advocates “bringing money back down to earth” by investing in local food and agriculture enterprises. For the last couple of years, I’ve been involved with Sprout Lenders, a Slow-Money-inspired group that supports food and farm entrepreneurs in the Boston area, and it’s helped me to understand and connect with my community in a whole new way.
Invest as a Family Member
Two of my most treasured childhood memories involve my parents investing in our family, and by extension, in our community. When I was about 5 years old, my mom took me by the hand to the muddy field behind our neighbors’ house, where an amazing scene unfolded. Everywhere I looked, there were shovels and boots and oddly familiar metal pieces strewn around on the ground, and by the end of the weekend, a shiny new playground had arisen in the mud! Our local Lions Club had invested in the project, along with members like my dad. On a cost-per-hour-of-joy basis, this has to have been one of the greatest investments in the history of the world (or my world, anyway).
Similarly, every Christmas I unpack the ornaments we made with jar lids and pipe cleaners when I was a little Brownie Scout and my mom was our troop leader. Yes, I get misty every time I unwrap the tissue and see my little 6-year-old Brownie face staring up at me. I can hear my mom singing along with me and the rest of the troop: “Make new friends, but keep the old. One is silver and the other gold.”
Almost everyone I know puts investing in family at the top of their list, though the forms of this kind of investment can vary. For some, the best form is being a soccer coach or PTA member, activities that can bring both direct benefits to family plus indirect benefits to the broader community. Sometimes family investment can take the form of rituals, like family dinner or holiday celebrations. All of these activities can have a sort of “compounding return” over time, where the cumulative effect is greater than the simple sum of the parts.
Invest Money to Reach a Specific Goal
Of course, there’s still an important place for more conventional financial investing. We all need financial resources to support our own healthy, productive lives, and there are several ways to approach financial investing mindfully.
One of the greatest investment motivators is a tangible goal, whether that goal is a dream vacation, your first home or paying off student loans. In this situation, it’s key to be aware of your own needs, and to match the form of the investing with your objective. If your purpose is flexible, perhaps a more risky investment would be worthwhile — a big win could fund a trip to Tahiti, but a loss would not rob you of a weekend at the shore. If your purpose is more serious, though, like paying off credit card debt, your investing should match that seriousness with a form that is steady and fairly low risk. In fact, paying off high cost debt is a form of investment in and of itself, since you’re saving all of those interest payments with each declining dollar of your balance.
It’s also important to consider the significance of your goals — what they include and also what they exclude. When I was first out of college, I was saving up for a trip and had just started investing in the stock market. One early stock pick was a lucky one, and I used it to pay for my plane fare as well as to pay my rent for a few months. This seemed like a great return on my investment, but then that same stock went on to rise tenfold in the years to come. If I’d had a different “what” in mind, I could have funded the purchase of an entire condo in the longer term, instead of just paying my rent in the short term.
Invest in What You Care About
Your financial goals are a primary reason to invest, but the why and how of investing are just as important: What kind of world do you want to foster with your investment dollars? Whether you care about fossil fuels, ocean health or child labor, these considerations can all be incorporated into your investing decisions. This is not an either/or situation; there’s no need to choose between financial return and a more meaningful approach to investing. Study after study has shown that investing with social values and objectives can be neutral or even positive for financial returns, not a detraction. In this case, the key is to be mindful of the match between your personal goals and the impact of your decisions for the broader world.
These days, it’s pretty easy to research investments related to what you care about, whether that’s gender equity, ending labor abuses or environmental respect. A few resources include the Forum for Sustainable and Responsible Investment and Green America. In my own work, the lines between financial and non-financial analysis have always been blurred. If you are a long-term investor, you’re always thinking about concepts like true cost and true profit. If water will be more and more precious in the future, the true cost is anything but free, despite what the income statement might show. If labor practices will eventually reflect universal human dignity, exploitive current profits are obviously overstated and unsustainable. In the long term, there is no division between what and why.
Katherine Collins is author of the forthcoming book, “The Nature of Investing”, and founder and CEO of Honeybee Capital, a research firm dedicated to pollinating ideas in pursuit of optimal investment decision-making. After a long and successful career as head of equity research and portfolio manager at Fidelity, Katherine set out to reconnect her investment philosophy with the broader world. Since then, she has been traveling as a pilgrim and volunteer, earning her MTS degree at Harvard Divinity School, and studying biomimicry and the natural world as guides for investing in way that is resilient, regenerative, and reconnected.