Yeah, well, that was before I got hired on permanently at a job where they give us a chunk of money every month (in lieu of a pension plan) that we can invest in any kind of retirement vehicle that we wish, as long as we provide proof that we've done so at the end of the year.

So now, not only am I forced to save for retirement (which, really, is a good thing), but I have to try and figure out what on earth to invest in! And I'm clueless when it comes to this stuff. Luckily, this plan starts in October, so I have a few months to try to figure something out.

Edited to add: I think there may be other funds like this. You may want to shop around for an investment strategy you feel comfortable with.

[ 21 July 2004: Message edited by: Oliver Cromwell ]

Thanks for the suggestions, both of you. I was thinking government bonds too, but as Oliver says, they've got a terrible rate of return.

On the other hand...I'm trying to reconcile my lefty-sensibilities about gargantuan rates of return through no effort except investing with what I decide, so...

I don't know. I find the whole thing confusing.

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Originally posted by Oliver Cromwell:
If it had been invested in the stock market - with its historical rate of return of 7% - it would have been worth $7612.

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Originally posted by skdadl:
I'd like to hear the experts talk a bit about risk. Over the last couple of decades, little happened to my puny GICs, but I know a fair number of people who lost more than they could afford on fairly modest stock-market investments.

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I'm not an investment advisor, but I do know something about financial economics.

The stock market is risky - the 7% number I gave is a long-run average. But as we all know, it can generate very heavy losses in the short-run. But these losses are more than offset by the gains in the good times. Michelle won't be retiring for 30+ years, so she can afford to ride out a bad market. Anyone nearing retirement should stay the hell away from the stock market.

Another thing to think about is diversification. Stocks don't all move in lockstep, so heavy losses in one stock can be offset somewhat by gains (or, in many cases, less heavy losses) in others. This takes a lot of work, even for experts, so many people just buy index funds. This is sort of like buying a little bit of everything, so it's a rough-and-ready way of diversifying your portfolio

[ 21 July 2004: Message edited by: Oliver Cromwell ]

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Edited to add: I think there may be other funds like this. You may want to shop around for an investment strategy you feel comfortable with.

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This organization appears to have some useful introductory resources for ethical/socially responsible investing:

http://www.socialfunds.com/

My understanding is that the basic options you have available are the following:

(1) "Screening" funds, which avoid investing any of their portfolio in tobacco, weapons, etc. You will have some choice of what type of screen you want. Theoretically, these should involve some increased risk as a result of the reduced diversification. In practice, though, I understand the increased risk appears to be negligible, and may in fact be the opposite, because the funds actually control better for risks like tort liability, bad PR, labour disputes, increased government scrutiny and public protests that crop up from time to time against "unethical" companies.

(2) "Targeted Investment" Funds, that dedicate a portion of their resources to local economic development, renewable resources, minority or union job creation etc. There are similar arguments about the performance of these, i.e. some people think they sacrifice risk or return, other people think they do better because they have better long-term investment strategies, and can uncover opportunities the "market" alone would otherwise miss.

As someone who's involved in ethical investments, both for retirement and as part of my efforts to democratize the economy, I have found there are some good progressive options to put some of your hard-earned cash.

Oliver Cromwell's suggestion of Ethical Mutual Funds, started originally by the pro-NDP board of directors and Vancity Credit Union are a good place--in general.

However, Michelle correctly points out that some of these funds aren't as "ethical" as they claim.

Keep in mind that managers and actuaries that also manage non-ethical funds and basically are trained in the corporate capitalist mantra of thinking control many EMFs investments.

SO, it's wise to choose what EMF to invest in yourself, and make sure you, in addition to your broker, can monitor them. The only EMF I have money in is what is called out here the Canadian Diverse Equity Fund.

This fund invests exclusively in Canada in mortgages, government bonds and bonds in Canadian firms that have been screened for labour and environmental standards. As of the last time I checked, two thirds of these firms are unionized.

I can monitor this fund myself. However, ethical funds that put money into Asian countries are very suspect, since they are hard to monitor. Also, what is "ethical" becomes very selective or subjective. For example, bosses at a firm may agree to stop dumping toxic waste into rivers, but still brutally resist unionization efforts among their workers. Is this an "ethical" firm or not? I would rather not have to make such compromises.

Another good bet (in fact the most secure and ethical) are labour-sponsored (like the BC-based WOF) venture capital funds. They have RRSP and GIC options and invest the money locally with the firms having to report directly to shareholders at the AGMs. Also the boards are elected by one-person-one-vote, not the undemocratic share-based voting.

Finally, there is the recently formed Real Assets investment funds, started by Vancity credit union and the BC Federation of Labour, that is focused directly in shareholder activism ( by lobbying corporate managers and presenting resolutions at shareholder meetings), while still providing good rates of return. Although it's fairly new, it's so far been quite successful and shows promise.

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Originally posted by Oliver Cromwell:
The planet 'We Check Our Facts Before Hurling Abuse'

It took me about 2 minutes to find this page.

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Unfortunately most stock market analyses use trough to peak to gauge returns.

I had my RRSP invested 50% interest bearing and 50% mutual in a fund rated in the top 10 by the Globe and Mail. At the end of the 1990s equal amounts in both. And that was before the tech bust, 911 and Enron.

Ethical funds were good investments but seem to be highly invested in tech stocks.

There is a general rule of thumb with respect to asset allocation that is subtract your age from 100 and that is the percentage of your portfolio that should be in equity and your age is the percentage of your portfolio that should be in fixed income investments. That is far too simple as each individuals objectives and constraints are unique, however, it is a good starting point. While you have a long time horizon, from this and other posts I gather you do not have a large portfolio, that plus your attitude towards risk indicates a fairly low risk tolerance.

What needs to be understood with risk is that the key element is correlation among assets and asset classes. You can create a portfolio of high risk securities with low or negative correlations that is less risky than a portfolio of low risk securities with high correlations. Therefore diversification is key. Given the situation you describe, you obviously do not have the ability to do individual security selection yourself as the transaction fees would be prohibitive, as such, funds are your best approach. I will warn you however that buying multiple mutual funds will not necessarily give you diversification benefits since different funds will likely be invested in many of the same securities.

With respect to your comment on ethical funds, there are quite a few, however, it may be likely that their definition of ethical investments may be different than yours.

Klingon, your post was really detailed and useful and I will look into the funds you have mentioned.

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Originally posted by Oliver Cromwell:
If it had been invested in the stock market - with its historical rate of return of 7%

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I feel investing is an opportunity for us lefties to put our money to good use.

something else you may wish to consider are income trusts or stocks that invest in alternative fuel research and development. Much of the money for this kind of work comes from investors like you and I. If you find the right alternative energy stock or income trust to invest in, you could be paid a monthly or quarterly dividend as well.

Another thing you may wish to consider is shareholder activism. One of my best friends in Regina works as a cashier at Superstore, and received Loblaw shares as part of his benefits package. My friend then turned around and used his shareholder rights to send proxies to the Loblaws AGM and harass Galen Weston into selling organic food throughout the Loblaws Empire.

Yes, it's a real rate (i.e., after inflation). That page I linked to earlier had data going back to the 19th century, and it's the ballpark number economists use.

And yes, a risk premium (the difference between the rate of return on risky and riskfree assets) of 6% is high. In fact, the 'equity premium puzzle' is one of economics' most durable puzzles: standard asset pricing models predict a risk premium of around 1%.

Many theories have been put forward to explain it, but none can claim to have solved the problem to most peoples' satisfaction.

[ 21 July 2004: Message edited by: Oliver Cromwell ]

But then, I let my wife do the finances and she told me all of this...

The stock market and mutual funds amount to playing in a game that is not set up for our benefit. At best, we are an afterthought, a sales opportunity, or simply roadkill in the pursuit of profits. Stocks are ethereal and transient things, usually managed and traded by business school clones with no critical thinking skills.

For most of us at the low to middle end of the earning scale, home ownership is the most important investment we can make. We aren't likely to have a lot in our savings accounts when we retire, even if we live like poor Amish for most of our working lives.

So, unless you are suddenly wallowing in cash, you don't want to be paying full market rent when you are 85 and living on your old age pension and your meagre savings.

However, in Canada we have the option of taking our RRSPs and converting them into a downpayment for a home (once). So, take the money your employers give you, and anything else you manage to save, and chuck it into some kind of stable, secure RRSP, because you will need it in a couple of years.

I don't know where you live, but even in the high housing cost cities like Vancouver or Toronto you can find a decent, funky condo in a working class area for 100-150K. That means 5-10K in RRSP savings for a downpayment, though apparently you can do it with less as of April 1 this year.

Figure out roughly how much it would cost you to have a 5 or 10 percent downpayment on a place you could live in. Look at how long it will take you to save up that much, then buy GICs that mature in the month you will be buying a house/condo.

Arborwoman and I just bought a place, and our mortgage and bills come to about $20/month less than our rent and bills did.

You have 15 years to pay the RRSP account back, but that wouldn't be too difficult, given the small amount it would represent over that period. Take risks with the money then, after you've already used it to get yourself a home.

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Originally posted by arborman:

I don't know where you live, but even in the high housing cost cities like Vancouver or Toronto you can find a decent, funky condo in a working class area for 100-150K.

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If for some reason you are still determined to invest in stocks though, I also suggest you go risky (riskier stocks tend to yeild better results over the long term, which is your time frame) while diversifying amongst a number of companies - 12 or so should do it, with new ones added as some fail.

The first cold fusion company to get a realiable model will make its shareholders very wealthy indeed, as will those inventing alternatives to fossil fuels (Iogen corp. may be one of these), especially as we apparently in a time of "peak" oil. Most risky companies will fail, but the stars will tend to make up for these, and the companies most likely and able to develop alternative energy sources are the smaller ones unencumbered by large structures and entrenched ideas.

I wasn't sure whether it was still allowed, to put RRSP money into a first home. And believe it or not, last night when I was thinking about this whole subject (but wasn't reading babble and didn't see your post) that's what I thought about too - getting RRSP's, and when they reach a sizeable amount, buying a condo with them if it's allowed. I like apartment living, so that would be ideal.

I also have about $50,000 in student loans - too bad they don't let you pay off student loans without penalty with your RRSP!

Oh, btw, I discovered that the only investment option that's allowed is an RRSP, and I can do anything I want within an RRSP.

Forcing students to borrow money -- it's a scandal. The NDP has to get serious about this. (Has the party got serious about this?)

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Originally posted by Anchoress:
Ummm.... maybe Toronto, but not Vancouver.

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Well, it took us 4 months, but we found one for 129. There were others that were funky and cheaper, but not our style. Also depends what you are looking for.

150-175 thousand is not so insurmountable as it may seem. Look at the amount of rent you've paid over the past year. That goes to pay somebody's mortgage. The main thing is to get one.

I'm a little leery of the idea of a zero downpayment mortgage, but apparently they are available, but I think they have the potential to do a lot of damage.

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Originally posted by arborman:

150-175 thousand is not so insurmountable as it may seem. Look at the amount of rent you've paid over the past year. That goes to pay somebody's mortgage. The main thing is to get one.

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The great info and perspectives on this thread prove once again that socialistic/social democratic minded folks can handle markets and money as good as any capitalist and do it with more integrity and honesty.

Generally, when making investments, there are three factors to consider: rates of return, risk assessment and ethical/sustainable conduct.

The corporate capitalist mantra brainwashes many people into thinking these three factors are in conflict. All too often they are, when an agenda of rapid accumulation of wealth and maximization of short-term profit is dominant.

However, especially for long-term sustained income and equity-building, these three operate in concert.

For example, a stock option or bond may offer a high dividend payment per year. But if it also has a high risk factor, then it might not be worth it. A corporation or government that has poor labour relations, bad ecological practices and lousy human rights record is much more likely to be subject to strikes, productivity problems, international boycotts, money laundering and pilfering, etc.

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Originally posted by Privateer:

You're probably looking at about $1000/month plus about $250 in condo fees. So in total about $1250/month.

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I don't know what the rent is in Vancouver, or how much you make, but at a certain point cost-wise it will be wiser to rent a (cheap) place, save your money (buy gold to ensure retention of value, or invest in the stock market if you are so inclined), then use your accumulated savings to buy a place outright than to buy a nice place right away. The average home owner will pay 2-3X the price of the home once interest is payed on a bank loan (a lot of money), so it may be a good idea to do the math.

Along these lines, it might also worth looking into buying a cheap place first, then using the savings on interest to buy a nicer house later. This is also wise if/when the next crash occurs and housing prices plummet, as less mortgage = more likelyhood of owning the home, less loss of value on the home, and more chance of keeping a home if a job disapears, economic crash or not.

Re. investments, the more ethical companies do tend to increase in stock value more quickly than less ethical companies on average, according to "The Investment Reporter" newsletter's annual report on the topic.

Also, many companines invested in by "ethical funds" are not all that ethical (but still better than the average fund, mind you) considering the amount of money they have to deal with. Basically, more money invested in the funds means they have to deal with larger companies, which are seldom ethical in any strong or genuine sense of the word, IMO. Better results ethics-wise can be better attained by investing in individual stocks based on ethical principals.

As for treating staff and associates well, many business books actually advocate this as a fundamental issue, even if it is not yet that evident in the actual business practices of many modern companies. This company is #1 in its field due to this, in the CEO's opinion. The name of the book is "The customer comes second" (with the staff coming first). The author suggests that good treatment of staff is essential to ensure good customer relations, as happy staff tend to do much better work.

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As for the NDP (or other parties for that matter), I have a blockbuster policy suggestion re. mortgages.

a) Offer mortgages for the cost of inflation and a small service fee priced at the actual cost of covering the tracking and paperwork. If the government wants this to advance more quickly (to cover all people quicker) they could charge 1 or 2 percent above inflation until there is enough money to cover all interested parties.
b) Make the mortgage payable over an indefinite period of time, as short or as long as the homeowner sees fit. The service fee for paperwork would be paid yearly to ensure revenue-neutrality. Allow the government the same legal powers as banks to ensure fair payment after death or criminal acts.
c) Have a pannel (preferably of ordinary Canadians) look at the policies and practices every couple of years to ensure that the are fair and balanced. Adopt any suggestions they may have as can reasonably be expected.
d) (optional) Start with families and the more needy. Limit the loan to as environmentally friendly housing materials as can be reasonably acquired, which should also provide an incentive to produce such materials, esp. as the program grows to cover all mortgage holders.

The extra 200K or so (or whatever the average amount paid in interest over the life of a mortgage) would likely be re-invested in the economy, and would hopefully result in even more than this being freed up as other interest payments (cars, credit cards, etc.) are reduced as a result of the extra money in peoples pockets.

Unless I am mistaken here, this could attract many thousands of people to the NDP or any other party adopting it, and at the very least lead to positive reforms as the gulf between this policy and the current situation became obvious.

Ask your credit union for information about labour-sponsored venture capital. I did a days' worth of research on it a few weeks ago while working for a union and found they are one of the better ways to invest.

Of course, the fund that is set up in Saskatchewan currently invests in hog barns but they also invest in local recycling companies and small high-tech businesses. They are also local only to the province they are established - meaning no one but Saskatchewan residents can invest in the SK one, for example.

Further, as they are labour-controlled, there is an inherent democratic process to what investments are made. That is the goal with the Saskatchewan investments - to get workers and their families to invest only in their community businesses that they respect.

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Originally posted by Mr. Anonymous:
The first cold fusion company to get a realiable model

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Sorry, but mu-meson catalyzed fusion suffers from an extremely low cross-section. The Pons and Fleischmann pathway is total bunk.

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Originally posted by kyall glennie:
Michelle-

Ask your credit union for information about labour-sponsored venture capital. I did a days' worth of research on it a few weeks ago while working for a union and found they are one of the better ways to invest.

Of course, the fund that is set up in Saskatchewan currently invests in hog barns but they also invest in local recycling companies and small high-tech businesses. They are also local only to the province they are established - meaning no one but Saskatchewan residents can invest in the SK one, for example.

Further, as they are labour-controlled, there is an inherent democratic process to what investments are made. That is the goal with the Saskatchewan investments - to get workers and their families to invest only in their community businesses that they respect.

In Ontario, you would be interested in First Ontario Fund.

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kg is absolutely right about LSVCCs - they are a great investment vehicle. In fact, we need them to grow so they can be a reliable source of local venture capital.

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No doubt this has been covered before, but I'm not sure where to look.
Here's the problem, back in the day I left my position with a municipal Social Services department for a couple of reasons
1. As an early pilot site for Ontario Works I couldn't stomach the idea of implementing that agenda and be paid to do it.
2. I wanted to be at home with our children, especially rather than do 1. above.
For some reason that now escapes me we decided to withdraw my few dollars from the pension fund and invest it ourselves. I think there was a good reason, but what I don't know. Since then it has always bothered me how my money might be being used although it is not very much. I can't just cash it in because of pension rules and the law it is locked in until I'm 65 or something like that.
What I would like to do is transfer it to a more ethical investment than it currently is through our bank. Any suggestions? I still need to make some money out of it too, as I am hoping to have enough in my golden years to buy a popsicle on hot days. If I could I would just cash it in and invest it in the farm, i.e. pay off some bills, but I can't so I would like my little bit of money to do someone else some good somehow. Now remember I live a goodly distance from any major centres, unless you consider Eden Grove a major centre, so I probably don't have as many options available as some of you, for instance we are a one bank town.
Thanks for any advice.

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[ 04 June 2005: Message edited by: Grant I R ]

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Originally posted by lonecat:

kg is absolutely right about LSVCCs - they are a great investment vehicle. In fact, we need them to grow so they can be a reliable source of local venture capital.

The only drawback about LSVCCs are money invested in them can't be accessed for 8 years, otherwise you have to pay tax credits back to the federal and provincial governments. Otherwise, LSVCCs are definitely a great option.

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LSVCCs are a great option as part of a diversified portfolio of investments. On their own they are very risky investments and I would caution anyone from putting too high a percentage of their portfolio in this asset class particularily if you are invested in only 1 LSVCC. As noted above their are liquidity restrictions to when you can withdraw your money, as well, they can have valuation issues as with Crocus, or others such as Working Ventures have not adequately invested their capital which can negatively affect diversification and returns.

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Originally posted by Michelle:
As it turns out, I ended up investing in four ethical funds. (I'm not crazy about the fact that they're not quite as "ethical" as I would like them to be, but there IS a such thing as shareholder activism, I guess.)

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Sure, sure, that's what they all say. And before they know it, they find themselves addicted to the latest stock market craze. Haha.. j/k.

There may be as many opinions on what 'ethical' means, as there are babblers, from war profiteering and Prison Corp, all the way to environmental damage, low wage jobs, and selling necessities for too much money so as to make the product inaccessible to the poor. I believe everybody has to come to their own comfort level on this issue.

I am sure there are those who believe that investing in the Stock Market itself is unethical, choosing instead to buy GIC's and other Bank instruments. However, that enables the Banks to make money with the deposited funds in... the Stock Market, and other 'unethical investments'.

Canada Savings Bonds are probably some of the most unethical investments, because it means lending the Canadian Government - whether Chretien, Martin or Harper makes little difference in the end - money, which uses it for a lot more unethical purposes than even most corporations would.

When it comes to the Stock Market, I don't consider trading "after market" shares as unethical, but rather, I consider them to be the ethical/unethical equivalent of currency already in circulation, basically having become a commodity in itself.

The purchase and sale of shares trading freely on the Exchange does no longer directly benefit or harm the issuing company, though it may peg the value of future share issues when the company raises more funds by issuing more shares.

To me, "ethical investing" means staying away from anything that directly injects cash into Government or Corporation. That means Bonds, Bond Funds, Term Deposits, GIC's, Rights, Warrants, IPO's, and anything which lends a direct benefit to the Corporation, because as someone on the sidelines I have too little insight into the dealings of the company.

Check out this book. "How I retired at the age of 36 without winning the lottery" It's got good tip.

David Bach has a good series of books, including 'Smart Women Finish Rich"

It's all about starting as early as possible and making consistent regular deposits.

Almost all investment plans say pay yourself first, they tend to recommend taking 10% of your income and putting at least that much asside.

Energy is a very profitable area to invest in. Uranium, oil and gas, although that may not be your cup of tea. How about getting into alternative energy, just be careful, that's more risky.

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The purchase and sale of shares trading freely on the Exchange does no longer directly benefit or harm the issuing company, though it may peg the value of future share issues when the company raises more funds by issuing more shares

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These are all the one I could find in my favourites that might be relevant.
Also, a most excellent way of learning more about SRI and investments in general is to join an investment or SRI club ! There is no shortage of the former and the number of the later is expanding. I joined one this January. In my case it's not high involvement as we only have 2 major meetings per year, and I am lucky enough that I have the disposable $50 a month that I can apply towards this ( the fees in each club vary, this is not a standard.) In Quebec there is a limit of 50 people per group, which is a good thing in terms of keeping track and organizing meetings. See Ethical Investment group- a little bit slow of a site

[ 05 April 2006: Message edited by: Pride for Red Dolores ]

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Originally posted by Pride for Red Dolores:Socially Responsible investing is also about not profiting from the mistratment of other human beings, or from enviornmental degradation, or from comapnies that produce that which will only harm or are dangerous-nuclear, arms, bombs,landmines.

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I have made the distinction between debt-financing and partaking in an IPO, and trading in after-issue-shares. If you feel there is no difference, then believe me, I don't think the Stockmarket would be for you. I look at the Corporate Knights site, for example, and see a boatload of problems with those 'Best 50 Corporate Citizens'.

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Many SRI investors also refuse to invest in companies that work in places with shady governments- take the Congo for example,where it is common place for companies from around the world to use bribery as part of ev ereyday business (I have a copy of a UN report on this if anyone wants me to email it to them); the Sudan is another example -see Social Funds.com

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If you are not buying the companies shares 'on issue', then you are not giving any money to the company. When you buy and sell shares on the market, the company has no benefit. You are trading 'paper' with someone else.

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Also, a most excellent way of learning more about SRI and investments in general is to join an investment or SRI club!There is no shortage of the former and the number of the later is expanding.

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I would be interested in hearing what companies an SRI Club would invest in. I have been the President of an Investment Club for over 6 years - there aren't many Investment Clubs anymore who survived the crash - and over the last few years my philosophy has developed to the point where:

- I feel it is important what I do with the [personal] profits generated
- I 'test' the social conscience of people who want to join. Since our club is more like a Mutual Fund than an 'all-decide-club', it is important to me not to allow people as new members who are selfish and do not share my worldview to a large degree, since I will be making money for the members of the club.

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In Quebec there is a limit of 50 people per group, which is a good thing in terms of keeping track and organizing meetings.

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Originally posted by Michelle:

I wasn't sure whether it was still allowed, to put RRSP money into a first home. And believe it or not, last night when I was thinking about this whole subject (but wasn't reading babble and didn't see your post) that's what I thought about too - getting RRSP's, and when they reach a sizeable amount, buying a condo with them if it's allowed.

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Originally posted by Michelle:
As it turns out, I ended up investing in four ethical funds. (I'm not crazy about the fact that they're not quite as "ethical" as I would like them to be, but there IS a such thing as shareholder activism, I guess.)

I took high and medium high risk, being young and able to absorb losses, and since I have a high risk tolerance. (To me, my RRSP money is all found money anyhow that I can't put anywhere else, or self-employment income that I either have to invest or pay taxes on, so what the heck.)

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Risk tolerance is made up of two factors, ability to take risk and willingness to take risk. From what I have read of your posts over the years Michelle, I don't know if I would characterize your ability to take risk as high, however, as my textbooks have told me willingness trumps ability so I won't quibble with your choices.

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Originally posted by lonecat:

kg is absolutely right about LSVCCs - they are a great investment vehicle. In fact, we need them to grow so they can be a reliable source of local venture capital.

The only drawback about LSVCCs are money invested in them can't be accessed for 8 years, otherwise you have to pay tax credits back to the federal and provincial governments. Otherwise, LSVCCs are definitely a great option.

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My WOF investments have begun to recycle. Without touching them I get a 30% tax credit. I think it is the only way to get money out of your RRSP without tax implications or being a loan.

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Originally posted by eau:
WOF investment managers are woefully bad, its a wash about whether the 30% was worth it, and it only goes down.

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