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Green RRSPs

Those T4s have started coming in already; hopefully your receipts are more organized than mine! Are you wondering what to do with your money this year? I mean, the markets are in the toilet, the financial pundits sound suspiciously like Chicken Little and we're all just hoping we're still going to have jobs to worry about over the course of the year!
So what if I told you that you can invest your money in a way that not only makes you a buck or two, but actually helps make the world a better place?

Albert Seliger is a mutual funds representative. It's his job to help you and your family figure out your finances and invest intelligently.
Now, before we go any further, please understand something: I'm not endorsing Albert or Ethical Funds Canada or anything else on this post. I have done a superficial background check and everything checks out, but you need you use your own discretion and if something feels iffy, step back and evaluate (and also write me because I'd love to know!)

What's wonderful about Albert is that he's trying to help you use your money to make the world a better place. At no extra cost to you of course. In fact, the idea is for you to make some moolah while corporations are forced to be more transparent and sustainable. Win-win, yes?

How it works:
Usually, Albert works with companies like Ethical Funds of Canda.. He puts your money in a mutual fund. This basically means that you're investing your frugal savings in a bunch of diverse companies. Albert usually invests in SRIs
or Socially Responsible Investments.
This basically means that you won't be putting your money in the hands of:
* The tobacco industry
* Warmongers (well, at least those that manufacture firearms)
* Producers and sellers of porn
* Anyone who uses child labour

Of course, a majority of companies fall into a grey area between truly ethical and sustainable and the folks who make the above list. THEY'RE the ones with whom we're going to play.

So back to Albert, your friendly neighbourhood investment dude, He often invests with a company called Ethical Funds of Canada. Ethical Funds takes YOUR money uses it to vote. How?
Basically, when you buy mutual funds, you become a shareholder in various companies. Now unless you're incredibly diligent, you're not going to any of those shareholder meetings, so your voice and your vote are wasted.
Here's where Ethical Funds of Canada comes in. They go to those meetings and speak on your behalf. And they use your investment (and the threat to pull it out) to get companies to mend their evil ways.

Why is this a good idea?

Well, for one, we're not preaching to the choir. While it's wonderful to invest in green technology or otherwise ethical and sustainable companies, there aren't that many of them out on the market. Many of them are nascent and one doesn't know if backing them is a sound idea from a purely financial perspective. You can certainly have a bunch of green companies in your portfolio, but only green probably won't earn you much green... if you know what I mean.
Also, this way, we get to support many of the driving forces behind the economy and make it clear that we would love them to keep doing what they're doing... but better. And greener. And more sustainably. When you have your money in there, your voice begins to matter.
This kind of dialogue and change is the very basis for a better planet. Because once these companies change their corporate policy, what do you think is going to happen when they go home to their families? (cue the violins)

But what about the bottom line?
If you're looking for a get rich quick scheme, this isn't it. Let's be clear: mutual funds (even the "unethical" kind) aren't usually high-risk, high-returns investments. This is no different. But if you're investing in more sustainable companies, here's what you should know: It's actually lower risk! There are no guarantees of course, but think about it: sustainable companies tend to outlive trends. They tend to perform better in the long term and they're solid and reliable.
Notice those words: Long term? That EXACTLY what RRSPs are. They're your retirement plan. So if you're 64 and plan to retire next year, perhaps you want something that's a little more profitable (and there are green options for you to. Just speak to your advisor), but for most of us who are decades away from retirement, what better way to save for a future? This way we might just have a future worth waiting for!

I encourage you to check out Albert Seliger's website as well as that of Ethical Funds of Canada. And I want to know: Will you be investing in SRIs this RRSP season? Leave me a comment or call our Talkback Line: (514) 597-5626.

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Comments (1)



Hello Geeta,

It was interesting to hear about "Ethical Funds Canada", and I will check out their website.

I looked into SRI funds last year. Perhaps you already know this....While SRIs explicitly do not support companies having to do with tobacco, arms, etc., SRI funds aren't necessarily beneficial to the environment.

As far as I know, all (or at least the main) SRIs use a Best-of-Sector criteria, which means a company may be better than another company as it pertains to not harming the environment, but that doesn't mean the company is necessarily non-harmful. It's only better compared to other
companies. The established SRI funds would have very low returns if their investments didn't include the energy sector. That's how they justify including them. But it's not green.

For example, the main SRI funds have investments in companies involved with the Alberta tar sands oil industry. Their choices might be "best" insofar as they meet the various criteria (i.e. have good employee support, involvement in the community, or even try to run their
operations with environmental concerns in mind). But, overall, the companies are involved with tar sands oil extraction. However, by its nature, *any* involvement in the tar sands oil industry is definitely not green! If China were engaged in a similar project, in the same
manner Alberta is causing environmental destruction and adding to global warming in the process (and use of oil), we green-minded Canadians would be completely aghast! But Canada is doing it, and it's just awful.

I think you should have something on your "Be Green" area to alert readers to this "Best of Sector" approach that many (or all) of the SRIs take. Perhaps Ethical Funds Canada is taking a different approach, and investing in companies that really don't harm the environment (at least
not directly!).

Posted January 26, 2009 12:33 PM

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