Investing hypocrisy
I despise many companies because of what they make, sell and stand for. Generally, those that really get me angry are those that are part of the military industrial complex, those that exploit workers, those with questionable ethics, and others of their ilk. Unfortunately, I also invest in many of these same companies through my mutual funds in savings and retirement vehicles.
Therefore, I’m a hypocrite.
It is easy for me to not shop at WalMart, to not buy anything that GE makes, or watch Faux News. It is, however, quite difficult to avoid this investing paradox. Doesn’t it bother you that you may be benefiting from practices that you don’t agree with? It sure bothers me.
Now I do want my savings to appreciate in value as I’m still a few years away from retiring. But despite the rocky road that the stock market has been these last few years, the real gains have been from public corporations. That makes me torn between building a nest egg and providing for my family and the constant nagging in my conscience that I no longer want to feed from the teat of the questionable corporate succubus.
Not all companies take my money and use it for nefarious purposes. There are some bright spots of the Ben and Jerry’s variety. But for every one of those decent ones, there are at least nine despicable BPs. And it is through their ill-gotten gains that I benefit through dividends and share value increases. And to me that’s blood money.
I could choose to only support those companies that I feel have a more socially responsible vision. But isn’t that dichotomy really just a smokescreen? Corporations exist to make a profit. Period. And isn’t any of their so-called altruism still essentially to benefit the bottom line? (O.K. maybe that’s a bit cynical.).
A truly social business of the Yanus/Grammeen Bank variety is not really an investment vehicle for monetary growth. It’s just for doing good and for building social capital (noble goals, but I can’t eat goals when I retire!)
The other consideration is time. It takes a lot of effort to research, oversee, and manage a portfolio of companies that share my values. Plopping money into an index fund is oh-so-easy. Managing a socially responsible portfolio would take a lot of resources that I don’t have. Of course you could argue that if I feel so strongly about this issue I should find the time. You’re right. I am a hypocrite. I need help.
One could say that investing in a company is really a form of equity financing. You are (sort of) lending your money and taking a cut as a result. You could still not buy their products and services and therefore not directly support their questionable ethics. I don’t really think that’s a perspective I can swallow, though.
My question is simple: How do you wrestle with this issue? How do you invest and avoid supporting those morally reprehensible practices that you abhor? Don’t say bonds because their return right now is horrible (not that the stock market in total is any better). Are there some socially responsible mutual funds out there?
Use the comment below as I want to hear from you about how you confront this issue and deal with its inherent hypocrisy.
1 Comment
This is a difficult dilemma. I struggle with the ethics of a company. I was working for a company that was part of an acquisition, which eventually was caught for accounting fraud. Not only did this fraud the investors, employees, it affected those related. One-forth of my retirement vaporized in front of me. So the ethical issue hits close to home. But to specifically address your question, if something is too offensive to me, I pull out. While this might hurt my bottom line, sleeping at night is easier to stomach than compromise. I think it also has to with weight and balance of goals. If money is the goal, then compromise takes on less weight or the other way.
But a tough call in many cases, because they aren’t always black and white.