Help me make socially responsible investments

NINA MOINI: Well, we're going to turn now to our third segment in a new series on Minnesota Now, called "Professional Help." We all need a little bit of help to get through life sometimes. From everyday questions to more complex problems, we're asking the experts to lend us a hand. Throughout the series, we'll hear some direct advice for us not-so-direct Minnesotans. Here's Minnesota Now's producer CJ Younger.

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CJ YOUNGER: I recently dipped my toes into the world of investing. It felt like the next adult thing to do after graduating college and getting my first full-time job. But once I started looking closer at companies I could invest in, I had a few major questions. What if I don't want to support companies drilling oil or supporting deforestation? Shouldn't I be investing money in companies that align with what I believe?

And how am I supposed to tell? So I asked a professional. Help me invest responsibly. Jina Penn-Tracy is the co-founder of Centered Wealth, a Minneapolis-based financial planning firm that focuses on socially responsible investing, or ESG, which stands for environmental, social, and governance.

JINA PENN-TRACY: We look at what is their behavior environmentally? Are they violating environmental rules, getting fines, not taking good care of their resources? What are they doing for the people? So the people that they're serving as customers, the people that they're serving inside of their company, their workers.

That's the social component of it. And then governance means how is the company being run. Is it being run in a way where they've got transparency, they're considering diversity, they're considering how people are getting trained and promoted?

CJ YOUNGER: After all, investments are basically voting with your money. I'm choosing companies to support, literally invest in, and I want to make sure my money is going towards something that aligns with my values.

JINA PENN-TRACY: I work with a dual set of goals. It's what you want your money to do for you, what you want your money to do out in the world, in your name.

CJ YOUNGER: And as a brand new investor, I wanted to get it right. But after just one Google search, I was already drowning in information.

JINA PENN-TRACY: Getting started is a little bit overwhelming, I think, right now, because there's so much information for people online. And so it's easy to go down rabbit holes that make things very complicated. But I think often the best thing to do is to look at what money that you can really afford to put away for a long period of time.

CJ YOUNGER: And it doesn't have to be thousands of dollars, either.

JINA PENN-TRACY: Dollar cost averaging, meaning that you're putting a little bit of money in on an ongoing basis, is really the best way to invest when you're starting out.

CJ YOUNGER: If I invested $100 a month, over the next 10 years, I would earn over $8,000 in interest. That's way more than I thought. But I had to wonder, wouldn't it be smarter to put that $100 towards debt payments and start investing after I paid those off? To my surprise, Jina said no.

JINA PENN-TRACY: High interest debt needs to get paid off. But I've had clients that are so focused on paying off debt that they don't go in and do their investing. And you want to-- you want to invest early and often, because that's your friend, compounding over time, over many, many years.

CJ YOUNGER: I was worried that socially responsible investing wouldn't earn me as much money as bigger, more traditional companies. But Jina said I might want to think again.

JINA PENN-TRACY: The biggest misconception is that ESG investing lowers your returns. And there have been numerous research studies done. And over and over again, it shows that over a period of time, using additional screening on your portfolio to look at environmental, social, and governance factors actually adds to your return.

CJ YOUNGER: A New York University study pulled data on ESG investing from over a thousand other studies from 2015 to 2020. Researchers found that in 60% of cases, ESG investments performed similarly or even better when compared to investments that didn't screen for ESG. Now, for getting started, I have a couple options. If I want to work with a financial advisor, I can ask them to screen for ESG. But if I want to go solo on my investment journey, there are a lot of resources available online.

Jina recommended As You Sow. That's S-O-W .org They have lists of companies from deforestation-free to smoking-free, whatever I don't want my money to support. But this isn't limited to personal investments. People with full-time jobs get a percentage of their paycheck invested for them every month.

I can actually figure out where my money is being invested by checking my retirement account and looking for a title like "asset allocation" or "summary." And, you know, I can always ask HR. Ultimately, investing, even if it's towards a cause that you believe in, can feel scary, especially when you're young and the future feels really uncertain. Jina had some words of wisdom for me.

JINA PENN-TRACY: Investing is really a relationship with the future. The feeling of I'm going to put my money away for the future, or I'm going to trust that the economic system is going to work well long term, or that companies are going to be growing over the long term, it's really scary right now, I think, for a lot of people. And I think what we really need to remind ourselves of is that it's been scary for human beings for as long as we've been conscious. And we have to really trust that investing in the future on our small scale and on the large scale is worth it.

CJ YOUNGER: For MPR News, I'm CJ Younger.

NINA MOINI: You can hear our new series called "Professional Help" every other Thursday here on Minnesota Now. Or if you missed one, find the whole collection on mprnews.org.

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