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Oh me oh my. What a conversation. I suspected it was going to be a challenging subject – the debate about whether there is a tradeoff between profit and impact (in the context of investing with our values). I can only guess that something about the topic brought a different level of curiosity to the conversation. Perhaps previous topics have been more ambiguous and vague (May’s conversation was about Risk, June’s was about Impact). Rather than debate profit versus impact, there seemed to be a collective desire to improve financial and investment literacy. People wanted practical solutions and answers to their questions.

Here’s a taste of some of the questions and scenarios shared in our conversation:

  • I’m not happy with my financial advisor, so I’m trying someone new. What questions do I ask them? How do I know if they are any good? How do I find a good financial advisor?
  • It’s much easier to just put my money somewhere and ignore it.
  • What are my options for investing with my values? Is it just direct investing in businesses on the one hand and SRI (socially responsible investment) and ethical funds on the other hand?
  • I have invested in mutual funds. My advisor told me they couldn’t tell me what specific companies my money is going towards.

“… how many people feel empowered in their small and daily consumption choices, e.g. organic food, but overwhelmed in their big choices, e.g. housing, investments…”

Investment Mission, Vision, and Values… Then Strategy

I encourage people to take a look at their requirements, their investment goals, their investment mission, vision, and values first, instead of skipping ahead and looking at what the options are. However, there is an eagerness to evaluate options and investment opportunities – I’ve observed this in a lot of people, whether they are sophisticated investors or prudent savers.

People do this all the time – make decisions based on an incomplete set of information about themselves and about the things on which they are making a decision. If you have not done the deep reflection about what it is that you really want to achieve from your investments, you risk choosing things which will disappoint and be sub-optimal.

That’s Great, But I Need Advice…

We did explore some useful tips and tools for making better investment decisions. If you do need to seek help from a financial advisor, remember that most are typically compensated based on product commissions (unless they are fee-for-service). These kinds of advisors have an incentive to manage large amounts of investments. If you have smaller amounts of savings and investments, you need to find an advisor that is motivated to serve smaller volume customers. A creative solution to this could be to make yourself bigger by teaming up with friends and approaching a financial advisor together. A couple of people are considering financial advisor speed dating – by inviting several different financial advisors to pitch to a group of potential customers.

One of the event attendees referred to her “Economics 101”: invest in what you know, she said. You can understand a lot about a business, by learning about it and what it does. This approach could be applied to investing in a local business that you know or it could apply to large public companies that you support. Either way, investing does require time and research to understand where you’re putting your money.

“I realise that I have learned a few things already from your workshops, especially around the rules of investors. So, hats off to you.”

Investment Thinking

These monthly events have been designed to be conversations to encourage more people to think about investing and perhaps adopt investment thinking rather than as workshops per se. But the above quote has got me thinking that perhaps there is value in offering courses to help strengthen people’s investment literacy and knowledge. I have recently worked out a map or wayfinding tool to help people improve their knowledge or literacy around investing. Watch this space!

(Links provided are not endorsements nor recommendations. They are provided to share resources that were mentioned in our conversation.)

  • Planet Money
  • Financial Literacy Council (I couldn’t find a link – if anyone has any further information on this, please let me know in the comments section of this post.  Thanks!)