You don’t have to be a financial expert to be an expert in your finances. However, many people cannot name the companies in their mutual fund. Neglecting your investments can lead to many unintended consequences. Investing with intentionality can lead to many unexpected benefits.
What is the difference between these investment strategies, and where do you fall?
What Does It Mean to Neglect Your Investments?
Neglecting your investments is essentially taking a passive approach to your finances. For some people, this means “set it and forget it.” You may put money in an index fund and wait several years before checking it. Other times people may have an advisor with whom they don’t have a relationship, so they hand over their money without being included in the process.
When you neglect your investments, you are essentially unaware of where your money is going and what it’s being used for. A handful of people will say they don’t care, but more often, there are people with values that are very important to them, and they just haven’t considered where their money is being used and the impact that is having in the world.
Finding the Highest and Best Use
If you haven’t thought about your investments in this way, then you aren’t alone. There are many complex concepts in the financial industry. These concepts often remain complicated as few people within the industry intentionally make these ideas understandable for everyone involved. It’s challenging to find advisors who can translate knowledge into wisdom and education to include you in the conversation. As a result, your only option is to hand your finances over for the professional to handle and take a backseat.
We call this finding the “highest and best use” of your time. We believe there is a better way than unintentionally neglecting your investments, but this doesn’t mean you should spend all day watching the markets. For example, our investment team focuses on everything happening in the economy, so our advisors can spend more time building relationships with clients. Our investment team works with your advisor to make sure your assets are being invested in the best possible way. Your advisor can keep you updated on your investments in a way that you can understand.
We believe our “highest and best use” mentality applies to our clients as well. You have been given a vocation to work and serve with excellence. Our job is to handle the complexities of your financial strategy yet share our knowledge and expertise with you. This enables you to have an active role in your investments so that you can feel good about where they are being allocated and the impact they are having on the world.
The Unintended Consequences of Neglecting Your Investments
Does it really matter? When you don’t know much about your investments, you won’t know what kinds of things you are profiting from. You can make money in a lot of places. You can invest in an endless number of products and services. So, what do you want to profit from? Where would you like to make a positive impact on the world?
How you answer those questions can help you create an intentional investment strategy. We call this approach values-based investing. With values-based investing, you can build a portfolio around companies whose actions align with your values. Do you want to promote global access to education? Do you want to avoid companies with connections to the tobacco industry?
When you buy stock in a company, it’s not like you’re writing them a check. It’s not the same as buying one of their products or services. When you invest in a company, four things happen:
- You validate the price level of their product or service
- You purchase the stock from someone else
- You help the company stay in business
- You become an owner in the company
As an owner, we believe you have a higher degree of responsibility. Are you promoting and profiting from things you had no idea existed — just because you didn’t know to look?
Investing with Intentionality
What does it look like to invest with intentionality? Let’s say you are looking into private market investments. You hear about a new pharmacy startup in your community addressing medication insecurity by offering affordable and easy access to prescriptions and over-the-counter medications. You buy-in, invest early, and over time the business grows. Not only did your investment grow too, but your money came from addressing a real need in your community. We call this doing well by doing good. And it’s possible.
You can do the same with public market investments, like buying stocks. You can choose companies that make decisions that affirm the value of every person and every square inch they touch. You can invest in companies that you’d be proud to own.
Want to learn more about investing with intentionality? Contact us today!
Starting Your Values-Based Investment Journey
Once someone moves from a place of unawareness to interest, the next question is either “how do I start?” or “is it going to cost me?”
As an investor, you’ll have portfolio values and personal values. Portfolio values will include how much you want to profit, whereas personal values are what matters most to you. Some solutions require you to choose one or the other, but we believe in a both/and approach. You can invest in alignment with your values, but you won’t sacrifice profit in the long run.
With values-based investing, there are limitations. You may read in the news about a company that is doing shockingly well, but they were left out of your portfolio due to engagements in several areas on your “avoid” list. There may be a question of “what if,” but they also may be back in the paper six months later for a scandal that ruined their business.
But if you’ve shared with your advisor about your financial goals and what matters most to you, you can be confident that you aren’t compromising on those values as you profit.
If you’re unsure about your investment strategy, calling one of our advisors is an easy, no-cost way to learn more. We’d love to walk with you through intentional investing! Schedule a consultation today to get started.