Activate Your Money

Invest to Grow Your Wealth and Build a Better World

Janine Firpo

• Publisher: Wiley
• Year: 2021
• ISBN:
  9781119777090
• Edition: 1
• Topic: Business
• Subtopic: Finance
• Index: Business

Educate yourself about finance and socially conscious investing with a woman-centered approach

Activate Your Money provides the foundational support women need to talk to each other about their money, invest to grow their wealth, and to take the actions required to shift their assets into alignment with their values. Written for smart, savvy women who want to feel financially empowered, Activate Your Money starts where other personal finance books leave off. It delivers the depth of information you need to make informed investment decisions across your entire portfolio. Starting with checking and savings accounts and proceeding asset class by asset class, this book provides you with core investment knowledge, as well as concrete examples about how and where you can invest your money in alignment with your values.

You don't have to do it alone. As women, our strength is in relationships, and this book will help you use that strength to attain better financial outcomes for yourself and your family. Activate Your Money will help you find communities of support and position you to share your knowledge with other women and enable the next generation of smart, confident values-aligned investors. Activate Your Money also includes a companion website that contains downloadable tools you can use to take action and a curriculum that guides women through the process of starting and running their own values-aligned investment clubs.

• Step up your relationship with money and recognize the power you have to change the world through your investment decisions
• Demystify financial lingo, learn investment strategies, and acquire tools to help you grow your wealth
• Explore values-aligned investment options, asset class by asset class, and make informed decisions about where to put your money
• Break the taboo on discussing money with partners, advisors, friends, and daughters

Unlike any other investing book out there, Activate Your Money offers expert guidance, a uniquely woman-centered approach, and a focus on doing good while doing well. Whether you are just starting out or are already a seasoned investor, this book has something for you. Use it as a reference that you can return to again and again as you build your knowledge, confidence, and values-aligned portfolio.

PART 1
Establishing Your Foundation

In Part 1 you will be introduced to key concepts that will be referenced throughout Activate Your Money. You'll learn what values-aligned investing is, how it works, and why women should care. In addition, you'll discover how the pieces of a values-aligned portfolio fit together and become inspired to incorporate this type of investing into your own financial life. Along the way, we will debunk several myths related to values-aligned investing and show how you can achieve both financial and social returns.

You will also have an opportunity to identify the beliefs you have around money that may be sabotaging you, as well as to consider the values you would like to integrate into your future investments.

Even though this book is not intended to teach the basics of personal finance, there are a few critically important concepts that anyone diving more deeply into their investments needs to understand. The final chapter in Part 1 touches on those fundamentals. It also explores the theory behind portfolio diversification and asset allocation. And, finally, it steps you through the process of taking an inventory of your current investments and points you to tools you can use to set realistic savings and retirement goals.

CHAPTER 1
Values-Aligned Investing: Step into Your Financial Power

Whether you realize it or not, you're already an investor. Your money is having an impact somewhere, somehow. This is true even if all you have is a savings account. Every entity in which you save or invest your money is using your assets for some purpose. The question is whether this supports the things you value—or undermines them.

When you take greater responsibility for understanding your investments, you can use the power of your capital to make a difference in the world. Values-aligned investing, while novel, is not a new practice. In the US, it can be traced back to 1758 when religious societies like the Quakers didn't allow their members to invest in companies involved in the slave trade.¹ The momentum picked up in the 1960s when opponents of the Vietnam War blacklisted weapons manufacturers and continued into the 1980s as students demanded divestiture from South Africa as a response to apartheid. Today many people are interested in “voting with their dollars” and boycott companies that do not support their values and patronize the ones that do.

In the best-case scenario, 100% of your portfolio would be invested in the things that matter to you. Personally, I have made a pledge to invest all of my assets in alignment with my values. But you don't have to make the same commitment I did. You might prefer to make a smaller commitment initially and take this step-by-step. Perhaps you could start by shifting some of your assets into investments that create positive change. Or you might decide to keep the investments you already have and allocate all your new assets to values-aligned financial products.

As you learn, you'll gain more confidence and may decide to move even more money into alignment with your values. That is what happened to me. My increased desire and ability to reallocate my money to funds, companies, and financial institutions that deliver positive results is an outgrowth of gaining more confidence in my overall investing knowledge and skills. Follow whatever approach and timing feels right for you. We're not here to tell you what to do. Instead, we want to give you the tools you need to feel empowered and to make more informed investment decisions.

Before digging into what values-aligned investing is and how it works, let's take a look at the dynamics around how women currently invest, what they want, and the potential women have to change the world for the better based on the investment choices they make.

Women Think Differently About Money

Our current economic model has led to a world that does not work for all of us. It enables businesses to maximize financial gain without full consideration of the adverse impacts their operations have on people or the planet. Since these damaging effects do not have a direct financial cost to the business, they are often ignored or underreported. Even worse, businesses have been known to obfuscate, refuse blame, or actively cloud an issue to avoid having to pay the full cost of their negative impacts.

This has led to environmental degradation, social problems, and other adverse consequences that are known as externalities. In economics, a negative externality is a cost that affects a third party who did not choose to incur that cost. An example would be a manufacturing plant that contaminates a nearby lake but does not pay for its cleanup. The cost is ultimately paid, but it is borne by the people who live near the lake, taxpayers, or both—not the company that created the problem. This approach is not sustainable, and it does not bode well for our health, happiness, or prosperity—or for that of our children and grandchildren.

Today's financial system also undervalues the priorities of women. As wage earners, we garner only 81 cents on the dollar compared to men.² As entrepreneurs, we get a mere 2.2% of the venture capital funding.³ And as money managers, women serve as the exclusive managers for only 2% of mutual funds.⁴ Across the board, the situation is even worse for women of color. We are also living in a country where the top 1% of the population holds more wealth than the entire middle class.⁵ However, it doesn't have to be this way.

The prevailing...