checkit:

http://www.theglobeandmail.com/partners/free/rrsp/2008/rrsp2-eternity.html

Regarding credit unions: I use a conventional bank for my main (small-money) banking, but my high-interest savings is at ING DIRECT and I transferred my investments to Credential Direct, which is operated by the credit unions. So the bulk of what I have is administered by "the good guys".

[ 06 June 2008: Message edited by: theleftyinvestor ]

I am aware of the option of Ethical Funds Company, Meritas and other similar companies; however I am also steeped in the wisdom of do-it-yourself investors who balk at high management fees on mutual funds. Canada has very high management fees on its funds, and both EF and Meritas charge additional sales fees that cut into returns.

Therefore I've decided on index investing, using low-fee exchange-traded funds that track four indices:
- Jantzi Social Index (Canadian companies)
- KLD Select Social Index (US companies)
- KLD Global Sustainability index (Intl companies)*
- DEX Short Bond Index (for fixed income investments)

The social indices are not perfect but they are still a leg up over the market as a whole.

*Disclaimer: there is presently no fund I can purchase in Canada which tracks this global index. I have it on good authority that there will be one in a year or two. Until that time, I am investing in the MSCI EAFE Index (Europe, Asia, Far East); once the index I want is available, I will switch to it within a few months.

[ 06 June 2008: Message edited by: theleftyinvestor ]

quote:

---

Originally posted by Pride for Red Dolores:
I have heard of research that says that ethical investing yields higher returns that just regular investing in the market- so in additional to being better ethically it's better financially.

---

They also entail tax credits, which clouds the picture about profitability and comparisons.

quote:

---

Originally posted by Pride for Red Dolores:
I have heard of research that says that ethical investing yields higher returns that just regular investing in the market- so in additional to being better ethically it's better financially.

---

I've heard that too (and back when I actually had and was contributing to RRSP's, before I cashed them all out to paying my lawyer's kid's med school tuition, I was getting a decent return on ethical investments as well).

Unfortunately, like jester, I have my doubts about how "ethical" even ethical investments are. I did them through my credit union, but they still invest in major banks, etc. My financial planner was a realist, and told me that if I had to buy RRSPs (and I did - I had a work plan at a very small workplace that paid 7% into an RRSP in lieu of a pension plan), I wasn't going to be able to be a total purist, and that at least ethical funds do shareholder activism for the companies that I might not find quite so palatable. So I held my nose and did it.

I would much rather have put that money towards a down payment for a house, as LemonThriller was saying.

quote:

---

Originally posted by LemonThriller:
Another ethical choice, while providing one of the best returns, is real estate! Buy a pretty house, or if you already have one, plant more trees, plants around. Good for the environment and the neighbourhood, and it raises your property value!

---

quote:

---

Originally posted by KenS:
Labour sponsored investmant funds make venture capital investmants. Most ethical inveslment funds/outfits probably do little or noe of that.

They also entail tax credits, which clouds the picture about profitability and comparisons.

Or were you making a point about how they are both peddled?

---

Both.

In the first instance, LSIFs make a portionof their investments in venture capital investments but the hook is that the investor's funds are committed for 8 years while the funds exorbitant MER and fees eat up both the profits and tax credit. In the second, ethical investors are not appraised of these realities in the sales pitch.

If an investor is astute enough to accurately appraise the bonafides of their advisors, they are astute enough to make their own investment decisions. If not, they should stick to GICs.

Canada has some of the highest management expense ratios in the world. The spin on this is to attach the MER as a part of the total return of the investment rather than as a percentage of the investment. While the percentage of the investment MER is constant,ie: 1.9% its percentage of return is based upon the success of the investment - only the successful returns are hyped while the less stellar are ignored.

Stellar returns of past years are hyped while neglecting to mention that economic fundamentals have turned negative.

The trick to due diligence is to ask the right questions. An advisor may tell you that there is NO commission attached to a particular securities purchase but will not volunteer that there are back-ended recurring fees.

Financial advisors will sell you the products that generate the most income. Income for themselves in commissions and fees,not returns for the client.

quote:

---

Originally posted by Pride for Red Dolores:
I have heard of research that says that ethical investing yields higher returns that just regular investing in the market- so in additional to being better ethically it's better financially.

---

Suppose I want to invest in a mutual fund that tracks an ethical/social index in my country. In Canada, I could choose Ethical Funds company's Ethical Canadian Index Fund. Their MER is 1.00%, but you must purchase it in a "load" structure, where you give up 2% of the fund's value upon redemption unless you hold it over 48 months. There is no charge to switch to another Ethical Fund, but all the other funds have higher MERs. So running a balanced portfolio with this company could be very expensive in fees.

Now, suppose I'm an American and I want to do the same thing. Vanguard offers a no-load fund tracking the FTSE Social Index, with a breathtakingly low MER of 0.24%. If the fund does so well that I need to sell some of it to rebalance my portfolio, there are no fees charged after holding for 3 months. Sadly I can't purchase this in Canada.

quote:

---

They should also go pick up a magazine called Corporate Knights- they can be found at Chapters I think.

---

quote:

---

For his part, Ambachtsheer, who launched his CSPP proposal through a paper published by the C. D. Howe Institute, says the shortcomings of the existing pension system are twofold. First, an estimated 3.5 million workers have no workplace pension plan and are not building sufficient retirement savings to maintain a decent post-work standard of living. Second, 5.5 million Canadian households currently have their retirement assets invested in retail products with high sales and management costs. These costs make it difficult for many of those households to generate adequate savings.

He says the first two "pillars" of Canada's retirement income system -- the universal tax-funded Guaranteed Income Supplement (GIS) and Old Age Security (OAS) systems on the one hand and the payroll deduction-funded Canada and Quebec Pension Plans (CPP/QPP) on the other -- should replace 30% to 40% of working income at the national median wage. Pillar 3 arrangements -- private retirement savings through workplace registered pension plans (RPPs) and individual retirement saving plans (RRSPs) -- should lift the total income replacement rate to at least 50% to 70% of pre-retirement income, and preferably higher yet.

But for many Canadians, low savings and high costs mean Pillar 3 will fall well short of this goal.

---

quote:

---

Originally posted by theleftyinvestor:
I definitely agree with the issues raised about MER in Canada. Let me give an example.

---

quote:

---

Originally posted by jester:

High MER ratios also allow for back-ended payments to sales "advisors" as a recurring fee taken from the MER allowing the advisor to state that they do not receive a "sales commission".

---

quote:

---

Originally posted by LemonThriller:
Another ethical choice, while providing one of the best returns, is real estate! Buy a pretty house, or if you already have one, plant more trees, plants around. Good for the environment and the neighbourhood, and it raises your property value!

---

quote:

---

Originally posted by scooter:

How is purchasing real estate ethical? Low density housing, lose of FN lands, urban sprawl, etc. Planting a few trees doesn't make up for bulldozing a forest or grasslands.

---

People have to live somewhere and not everyone wants to live in a warehouse for people in an urban environment.

quote:

---

Originally posted by oldgoat:
I'll see you at the wake, buddy. Care for some koolaid?

---

This may not be perfect, but projects such as Grameen Bank seem to be advancing what we truly want: a decrease in abject poverty.

quote:

---

Originally posted by jester:
How is a homeowner who maintains greenery less ethical than an apartment dweller who doesn't?

---

quote:

---

Originally posted by Pride for Red Dolores:
I have heard of research that says that ethical investing yields higher returns that just regular investing in the market- so in additional to being better ethically it's better financially.

---

The paper economy has very little to do with the real economy.

Invest "ethically" all you want. Practically none of it will go to venture capital for newly formed "ethical" firms.

Jim Stanford addresses exactly this myth in his book Paper Boom, where he points out that for all the oompah-oompah about stock market investing, none of it contributes to national production (and this is even demonstrated in econ 101 texts so it's not an abtruse, difficult concept to grasp).

In fact, in some ways, "ethical" investing involves a contradiction in terms. For an "ethical" fund to sell off shares of a business deemed "unethical" would drive down the value of the stock but do nothing to the core nature of the business itself. A business's stock can be absolutely worthless and yet it can still be healthy and making a profit year after year.

Furthermore, driving down the value of the stock would just cause other people to buy it from the seller (that is, the "ethical fund"), thereby causing the value to be propped back up to where it was before.