Tuesday, September 2, 2014

Making Your Super Socially Responsible

Since 2005, most have been able to decide where the money contributed to their superannuation by their employer will be invested. Generally, people look to investments with high returns.  There are other factors that should be considered when investing your money, which is where socially responsible investing (or SRI) comes into the picture.  Socially responsible investing takes into consideration the impact our investments have on the planet and society at large.  While myths float around that SRI can't beat traditional investments, the numbers tell a very different story.

Why Should I Consider Socially Responsible Investing?

Our investments don't just impact our retirement; they impact the future of the world.  When we invest in a company, we are endorsing and funding the way they do business.  In 2013, a garment manufacturing building in Bangladesh collapsed.  As a result of the unsafe work conditions, 1,100 workers died.  When we were buying clothing and investing our money in companies that had their clothing made in this building and others like it, we were endorsing the continuance of these work conditions, and ultimately had an indirect hand in over 1,000 people's deaths.

Our planet is changing rapidly as our fossil fuel consumption releases carbon dioxide and other carbon compounds into the atmosphere.  These changes are not for the good.  But when we invest in companies that are trying to change how we obtain and use energy, we are using our dollars to change the future.  Hopefully we are able to do it quickly and efficiently enough to save this blue orb we call Earth from destruction.

Some of the most popular issues driving SRI are unsustainable consumption, global population, health care, emerging markets, developing markets, and, of course, climate change.

The Myth of Underperforming SRI Investments

There is a commonly-held belief that SRI investments underperform when compared to other investments.  Data shows us that this is an erroneous myth.  Many studies have been done proving that SRI investments keep pace with non-SRI investments, and in some cases even outperform them.  According to Responsible Investment Association Australia, core responsible investment Australian equities funds have outperformed the ASX 300 index over 1, 3, 5 and 10 years.  Core SRI international equities funds and balanced funds have had similar sucess, with the former outperforming over 5 and 10 years, and the latter outperforming over 1, 5 and 10.  More supporting data can be found in this Griffith University paper, which uses the Markov regime switching model and measures efficiency on a weekly basis.  It also notes that the SRI sector performs much like the equity market at large; the US SRI market heavily impacts Australian investors, much as the US equity market heavily impacts non-SRI Australian investors.

It's worth checking to see if your super offers a responsible investing option through managed funds, industry funds, or master trusts.  Many do, but if yours doesn't, let those in charge know that you'd like to see that change.  Just a few people expressing pressing interest can truly make a change in this field.

Terms to Familiarize Yourself With

ESG- Environmental, social and governance.  You will often see this term used as an adjective to "considerations" when building your investments through your super.  It may also be couple with "ethical considerations."
Negative Screening-When you run a negative screen on investments in SRI, your are looking at them to see what you don't want.  For example, if a company participates in unsustainable forestry, it will not pass a negative screen and therefore be left out of SRI funds that are concerned with this issue.
Positive Screening-When you run a positive screen, you are looking for companies to invest in that are doing things that you want to promote.  Perhaps you are screening for companies that have made major innovations in using sustainable energy.  They will pass a positive screen and you will be investing in something that changes the future for the better.
Best Of Sector-This approach uses only positive screening, and includes exposure to all sectors of the economy.
Thematic Investing-Again, this approach uses a positive screen, but it is concerned with only one, specific area of SRI.  One example would be funds that only concern themselves with human rights issues.
RIAA-Respsonisble Investment Association Australia (or RIAA) provides further education on SRI issues as they apply to Australians.  They do yearly reports on the sector, along with providing certification to asset managers and financial advisers who work with SRI products.

Sunday, August 17, 2014

Save money (and your sanity!) when moving house

I am moving house again soon. I have moved quite a few times, but this time I hope to stay much longer, treat it as our home and invest in other properties while there.

Moving can be expensive with costs such as:
- Transport/removalist/truck or trailer hire
- Disconnection and reconnection fees
- Menu plan disrupted
- A big clean (e.g. carpets professionally done and so on if renting)
- The time to move takes it's toll too

So how can you reduce the impact of moving expenses?
1.) Sell off what you don't need
As you are preparing to move, have a proper clean out. List what you can on eBay, Gumtree, Facebook and other places to sell.

2.) Donate or get rid of the rest
Anything you don't need and can donate or throw away, get rid of. You don't want to spend time and money moving things that aren't going to be used.

3.) DIY moving
If you can, hire a truck and get help from some friends or family instead of hiring removalists. It can save you thousands of dollars.

4.) Old packing boxes
Ask around for old boxes such as in stores, friends and family or put a wanted ad online. Don't pay for boxes if you don't have to.

5.) Frugal packaging
Wrap breakables in linen such as tea towels, sheets and other manchester. You have to move the manchester anyway, why not use it to protect valuables?
Other packaging that works well is bubble wrap, newspapers and butchers paper.

6.) Be organised
Label everything clearly so you know what is in each box and which room it should go in. Don't ne haphazard about it, throwing random items in together. Each time I have moved I have managed to clear a room or area so I can pack items that are not needed before the room and start storing them in one spot to make it easier to move.

7.) Sealable bags for screws
When dismantling furniture put all the little pieces into a sealable bag for each item of furniture. Label it clearly so when you are reassembling, everything is there.

8.) Talk to your providers
If you are relocating in the same area, many providers will waive fees if you ask them to or if you resign for a year with them.

9.) Get mail redirection
Have your mail redirected but also make a list of every service, club, provider and person you will need to notify of your address change. A redirection takes a few days to start, so do it before you actually move to make sure mail is redirected. Be aware, it doesn't pick up on all mail so it is better to set aside a time to contact everyone and have your address changed.

10.) Reassess your providers
Since you are calling to relocate, ask for an ongoing discount. Compare insurance providers and other services as you make all your changes. It doesn't take much more time to do and can result in ongoing savings.

11.) Get help
Don't try to do it all yourself. It is a big job. If people offer to help, take them up on it.

12.) Menu plan around the move
Your regular menu plan is going to go out the window. Try to eat down what you have in your cupboards before the move. It might mean some of your meals get a bit creative, but you may discover a new family favourite by doing it.

Plan easy meals or if someone offers to cook a meal, say yes! There are various easy to prepare meals you can whip up that are significantly cheaper than take away.

13.) Keep important things close
I have copies of all my documents scanned and stored elsewhere, as well as the hard copies. Any important papers or things you will need immediately after moving, keep close.

14.) Have an emergency kit
Keep some first aid supplies, basic cutlery and crockery and so on in one box or bag to make moving easier and cheaper.

15.) Don't pack too heavy
Packing so much in a box it is too heavy to lift is a recipe for disaster. Not only is it hard to move, but it is more likely to break which could damage your items too.

What tips would you add?

Tuesday, August 12, 2014

3 Things My Kids Have Taught Me About Money

When I first discovered I was pregnant, I was stressed the heck out.  Studies throw around numbers in the hundreds of thousands when estimating the cost of raising children to the age of 18, and the sticker shock of cribs and diapers was overwhelming.  Over the years, I've gotten a handle on things.  A lot of that I have to credit to my children themselves, as they've reminded me of so many money lessons that are so easy to forget as we age.

1. Just because it's free doesn't mean it's not fun.


It's amazing how much we spend. On ourselves.  On our kids.  On our entertainment.  On our toys.  But raising children has reminded me that these things don't have  to cost exorbitant amounts of cash.  The biggest thing we've done for entertainment is take the kids to a Yo Gabba Gabba show.  While that was amazing, and I wouldn't trade the look on their faces for anything in the world, I could have sworn I saw that same look the other day at the park when we discovered an army of ants under a rock.  That grandiose princess castle that grandma bought for Christmas?  It's the coolest thing ever.  It's so cool I've even played with it.  But the excitement around it has faded, and now the biggest thing is Daddy pushing them around the living room in an empty diaper box.   The sticker prices were very different, but the level of enjoyment was at least equal.

2.  It's people that are important in our lives, not things.


We could have all the toys in the world, but my kids aren't happy unless they have a familiar face in the room.  Preferably Mommy or Daddy.  (That's a million dollar feeling right there.)  Left with a new-to-them baby-sitter, they scream and cry for hours.  (This is a mistake I'll never make again.)

When we are with them, which is most of the time, they have a much better time with all their "things" if we are playing with them.  Reading a book is so much better on Mommy's lap.  Flying on Daddy's shoulders is a million times better than watching TV.  And block towers can be built so much higher when grandma helps.  The real proof is in all of the cuddles, kisses, and love.

I hope they hold onto those things as they grow up.  I hope they choose to allocate their spending towards the things that bring true happiness, like shared experiences with people they love, rather than status symbols.

3.  Sometimes, you've just got to make it rain.

One time, we were visiting family with an eighteen-month old.  It was far enough away that we chose to fly which meant we couldn't bring a pack-and-play or other closed-in structure for them to sleep in.  So they had to be supervised during nap time and sleep in beds with us.  My husband went to supervise one of those nap times and fell asleep himself during it.  He woke up to a baby holding a wallet with credit and store loyalty cards strewn everywhere, throwing all his cash in the air.  There was an ear-to-ear smile on that baby's face as paper bills fluttered down all around them.

It's good to take money seriously.  But sometimes you just have to have fun.  Celebrate life no matter how much you feel like you do or don't have. When you don't have a lot, or you're saving towards bigger goals, remember that the best things in life are usually free, and usually experienced with the people you love.

Thursday, July 31, 2014

Slow down to save money

We live very fast paced lives and the 'convenience' costs us money. Even though it is normal in society to be constantly on the go, everyone working themselves to death and being busy, busy, busy, doesn't mean it's right.

Recently, I attended the July 4th celebrations at the US Embassy here in Canberra. I got to meet the chef they had flown in, Tory McPhail and it was interesting listening to him speak about how he cooks and cooking in New Orleans. Everything is slow and in his restaurants they make everything themselves including pickling plus all food comes from within a 100mile radius.

The past few months I have been insanely busy setting up a new company, participating in Human Brochure, court and other things and as a result, my finances have not been as robust as normal. Over the past few weeks I analysed my life as well as my finances to see where I could slow down and what flow on effect that would have.

1.) Cooking
I got very lazy with this in June, partially because I was out at events a lot and the tasty items I was given made me not want to cook. Since re-establishing routine, starting dinner earlier and focusing on slow food not only are we eating better again, but my grocery bill has dropped.

2.) Driving
My petrol bill went up as I raced to get everywhere and drove many places instead of walking. The simple act of driving my kids to and from school instead of walking because I was so busy the day before I slept in doubles my petrol bill.

By slowing down, making sure I get adequate sleep and we get ready in time to walk to school saves me on petrol, wear and tear on the car as well as my own sanity. I get very stressed if I am late.

3.) Enjoying life
When we are busy busy busy we don't get to enjoy the little things or appreciate the 'moment'. My kids are growing so fast, but when i am rushing around I don't get to see the little things they learn, I miss out on events at school and their milestones. This week I slowed down and saw my youngest get 2 awards at school, watched as my eldest daughter read to her sister and overheard a little whisper from one of them that has made mornings run smoother.

That little whisper was "Let's race mum and beat her." This was in reference to getting ready. Game ON! Every morning was a battle with my children dragging their feet, stressing me out and we'd end up late. Now, it's a race to get ready before me, which they love and we are getting ready in time to walk to school then walk home. On the walk home they tell me about their day. When I am living too fast paced, I miss out on these things.

4.) Decision making
We all make the wrong choices at times, but I have noticed when I am busy, worn out and trying to live too fast I make more wrong decisions. When slow down, keep my priorities in order and take time to make decisions I do much better. The wrong decision can cost you a lot of money.

So tell me, do you live too fast? Are you trying to slow down? What benefits have you seen from living a slower life?

Tuesday, July 22, 2014

Debt is Slavery

debt is slaveryBeing in debt feels horrific.  It's something that's always hanging over your head.  If you amass enough of it, you can end up owing entire paychecks to the lending institution.  Not that you pay them you're entire paycheck.  You can't, so your interest rates rack up and you end up even further under water.  In this way, debt has you in bondage. In this way, debt is slavery.

We are familiar with the definition of slavery being one person owning another down to every last hair on their head.  I do not mean to diminish the suffering these human beings go through.  (And they do, in fact, still go through it to this day.)

But Merriam-Webster has two other definitions for slavery, both of which may describe your situation if you find yourself in debt:
"1. Drudgery, Toil
 2. submission to a dominating influence"

When  you decide to borrow money, you are deciding to submit to a dominating influence.  That influence is consumerism.  That influence is the culture of immediate gratification that we live in.  That influence is the banks.

After you submit, you must go through that drudgery and toil to repay every penny and then some.  You have lost your freedom to spend or save your money however you would wish.  You have lost your freedom to vacation.  To send your children to good schools.  To be able to spend the money you work for on the things you truly value in life.  In some cases, you could even lose your home, your vehicle, or your business.

But there is good news.  You have the power to liberate yourself from debt. The easiest way is to avoid it in the first place.  Live within your means.  Practice provident living.  If you feel like you need to spend more, find ways to make more money before you do.  Don't allow yourself to become a victim to advertising schemes that entice you to borrow money.

If you find yourself already in over your head, you can still free yourself from this bondage.  First, don't take out anymore debt.  Then, make it a priority in your budget to erase the damage you already have incurred.  You may have to turn over parts of your budget to your goal, giving up things like entertainment, travel, and shopping for non-necessities for a while.  You may have to shop for food by buying what's on sale rather than what you want to eat.  The clothes in your closet may no longer be quite as trendy.  You may feel like you have no social life whatsoever.

But it's worth it.  Because on the other side, you can shake off your shackles and once again taste sweet freedom.