(This is the third post in a three part series. For the curious, here are Parts I and II)
If you’re like most Americans, you have less than $1000 in savings and have a lot of debt. If you’re one of the lucky few, you have some cash saved up somewhere: A six-month emergency fund, perhaps, or a growing retirement account. If you’re even luckier than that, your family struck gold or silicon, and your parents long ago set aside cash for your retirement and theirs. I’m in the middle group–I started saving small amounts toward retirement in my mid-20s and have a six-month emergency fund.
I’m also one of an increasing number of young people who want the wealth we are building to be put to work in ways that aren’t totally out of line with what we value. I don’t want to made wealthier by companies acting in ways I consider immoral (e.g. private prisons), and I’d rather not do business with those large banks that became even more systemically powerful after they brought the world economy to its knees in the 2000s. But if you want to save or invest your money, it’s pretty hard to avoid those companies and those banks; much of the system we operate in today seems to assume that it’s morally acceptable to do whatever it takes to make your money, then make up for it by giving it away again once you have it.
I think we can do better, I spent most of 2016 trying to learn how to do that. I ended up taking two steps that bring my money more in line with my values, steps I think anyone in a similar financial position can take:
- Move your checking, savings and small business accounts from large banks to local financial institution. Credit unions and community development finance institutions operate like banks, taking deposits and making investments. They often do more of that locally, too. I moved my savings accounts to University Federal Credit Union in Austin, which has taken great care of me (and Assemble) so far.
- Move your retirement accounts from large companies to an ethical robo-advisor. There are several ethical options for where to put one’s savings, including products like CNOTE. Of the ethical investing options, the most interesting to me are a handful of young companies operating what are called “robo-advisors,” which invest using algorithms and minimal (expensive) human intervention. A handful of those, including OpenInvest, Wealthfront, Betterment and Ethic focus on ethical investing. I moved my entire retirement account from Vanguard (see here for why I’m upset with Vanguard) to OpenInvest, whom I chose in part because of how helpful their team was in helping me through what turned out to be much more and paperwork and ambiguity than I’d anticipated, given that they (like other roboadvisors) use platforms like Tradier as their broker.
What am I missing? What am I wrong about? What should I learn next?