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socially conscious  investing

socially conscious investing

by rob thomas
The Business of Yoga | Finances


401(k) plans that reflect your conscience
People who regularly practice yoga work hard to ensure that the essence of “namaste” lasts longer than just during class. They buy eco-friendly pensilvoga mats and organic cotton apparel, and often stock their personal larders with organic food or buy Terra passes when flying to conferences. But all too often their 401(k) plans, if even they have established one, are invested in funds that financially support many of the companies whose operations are contrary to their personal morals and principles. Highlighted here are a few suggestions for those who are looking to engage yogic philosophies into all areas of their lives, including their investments.

The usual plan included in a benefits package may include one or two “socially responsibly invested” (SRI) funds, but employees wishing to spread their retirement investments over several funds still are often left to invest in funds that include companies they do not support philosophically. In fact, according to a 2002 Calvert/Harris Interactive® survey, less than one-third (thirty-two percent) of employees have access to socially responsible funds as part of their retirement plans.

By way of background, socially responsible investing or SRI funds use both positive and negative “screens” within the context of rigorous financial analysis. Positive means the companies in the fund may support alternative energy or have a strong record on human rights and labor issues, while negative screens may exclude companies involved with alcohol, cigarettes, guns or nuclear power as well as those with egregious human or labor rights or environmental problems.

Socially responsible investing as part of one’s retirement plan is the only way that makes sense to yoga instructor Polly Dibella, owner of the yoga studio dibellayoga in Paoli, Pennsylvania. “My retirement money is like a resource to me,” Polly says. “I manage that resource like I manage my breath and my yoga practice. I chose a socially responsible retirement plan, as I want my investments to support companies that support a healthy planet.”

Polly, like many others, is excited to discover online resources like a retirement platform, with over 150 comprehensive SRI funds and more than 2000 traditional funds that provide flexibility to the advisor. Akin to a “pick your own fruit” stand, “green” financial advisors, or individuals in the case of a Solo(k), work together to pick any of the numerous mutual funds available and develop a plan that works the best for them when determining a retirement portfolio mix.

Today, conscious investors and yogis alike are able to choose from a broad array of screened funds, enabling them to profit while maintaining their principles. And profit they can. Over the past eighteen years, since the inception of the Domini 400 Social Index on May 1, 1990, annualized returns of almost twelve percent have beaten the S&P 500’s annualized returns of just over eleven percent. In addition, companies or individuals investing in screened funds are in good hands. The Pax World Balanced Fund was honored among all other funds by MutualsAdvisor.com as one of the “Top Ten Mutual Funds for 2008.”

Similarly, the Winslow Green Growth Fund was ranked by Lipper as the number one small cap growth mutual fund in December 2007. Some of the companies the Winslow Green Growth invests in include those involved in solar and geothermal power, recycling, organic food, water pollution treatment and green building products.

Not only can socially responsible retirement investing be lucrative, but employees will appreciate the efforts their employer makes to help them profit with a conscience. Approximately $2.5 trillion dollars are invested in 401(k) plans in the United States alone, and there is still plenty of room for growth. In a 2006 Calvert/Yankelovitch survey, sixty-eight percent of retirement investors said they would invest in an SRI fund if it were made available to them. A 2007 Social Investment Forum survey found that sixty percent of defined benefit sponsors plan to include SRI options in their retirement plans by 2010.

Whether you are starting a 401(k) or just want to merge your existing plan with your mission and vision, the opportunity exists to align your investments with companies you believe in. You can then let your retirement money work for you while you continue enjoying your asanas!

* Some of the SRI fund families represented include: Abacus Bull Moose Growth Fund, Calvert Funds, Citizens Funds, CRAFund Advisors, Domini Social Investments, MMA Praxis Mutual Funds, Parnassus Investments, Pax World Funds, Portfolio 21, Sierra Club Mutual Funds, Winslow Green Growth and Women’s Equity Mutual Fund among others.





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