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Here’s a personal finance truism: if your employer offers a 401(k), be sure to take advantage of any matching funds. That’s a terrific idea, but what if doing so presents an ethical dilemma? Eric wrote looking for advice on a sticky situation:
My employer is moving our 401(k) accounts from one investment firm to another. The new investment house is condemned by human rights groups because their investments facilitate the genocide in Darfur.
What am I to do? I feel very strongly about human rights issues, and my knee-jerk reaction is to reject the (generous) 401(k) plan completely. I understand this will cost me dearly, but I must be able to face myself in the mirror. Surely other people are faced with the same dilemma. What have others done in situations like this?
I’ve been thinking about Eric’s situation for days, but I haven’t been able to arrive at a good answer. There’s only one compromise that makes sense to me:
- Contribute to the 401(k) in order to take advantage of the full employer match.
- Route all other retirement savings through alternative accounts, such as an IRA.
- Make a large contribution to an organization working to help the people in Darfur.
Have any of you faced this kind of decision before? How did you resolve it? How do you think you would handle the situation if you did face it?
This article is about Ask the Readers, Choices, Investing Friday, 9th November 2007 (by J.D. Roth)
November 9th, 2007 at 5:13 am
Perhaps his company isn’t aware of the situation.
Has he made decision-makers aware of the ethical implications of having this company manage their retirement accounts?
If not, that might be a good place to start!
November 9th, 2007 at 5:32 am
Maybe I am lacking in the morals, but I would still invest as I would otherwise.
That said, I am curious how exactly the investment house’s investments faciliate genocide in Darfur, at least the ones relevant to the 401k. I mean, you probably will be investing in mutual funds for US companies, not some sort of African investment of any sort.
Unless I can get some more details to understand what the investment house is doing wrong, I see no moral qualm with investing in the 401k as long as you stick to domestic and European options.
November 9th, 2007 at 5:43 am
Here’s a bit that didn’t make the final cut for the post…
The latest issue (December 2007) of Kiplinger’s features a similar problem, though it’s not couched in terms of ethics:
Also, in my original draft I noted that this sort of seems like an instance in which socially responsible investments might come into play, but it’s really not. The problem isn’t in picking the stocks and mutual funds, but in the investment house itself…
November 9th, 2007 at 5:46 am
I agree with Brandon. You probably have some options and can avoid your funds being diverted incorrectly. Even if they offer a simple money market US account and then when you can transfer the funds away from the offending party.
Also, make sure every single day you e-mail your department than handles the 401K as well as send an e-mail to the company to change their investing ways. Also, get other people to do the same.
I’m not quite sure how an investing firm would be linked to genocide, but I’m sure you have your info. You need to look out for you. Then look out for the others and do what you can. The priority is in that order.
November 9th, 2007 at 5:54 am
I cannot think of a single instance where money would trump a personal ethical dilemma. As Sammy suggest, it is best to approach the decision makers about the situation, and before you do that, discuss with your coworkers and approach in numbers…chances are that others have a problem with it too.
November 9th, 2007 at 5:55 am
Before starting my own firm, I managed assets for a regional 401k investment firm. More details are needed to answer your question directly but, in general, you need to find out how the new investment firm is paid…
If the new firm is paid by commissions or “revenue sharing” then find out which investments pays the firm the most. For example, you may consider placing all of your 401k money in a cash account (money market, stable value) just to get the match. You won’t earn as much in returns but you’ll receive the match and your conscience will be clear because it is unlikely the firm will share in much, if any, revenue in a cash account.
To keep my response a digestible length, I suggest finding out how the new firm is paid (commissions, revenue sharing, asset-based fees, “head-count” fees). Armed with that information, ask your question again and we’ll help you make the most of your 401k while minimizing or removing support for the firm’s questionable practices… Fortunately, recent legislation is working to make expenses more transparent — you just have to do a little homework…
A final idea is to ask your employer if there is an “investment committee.” If so, ask to be on it and you will have more leverage in decisions. Just be aware that investment committee members are “Fiduciaries.” That’s another conversation…
November 9th, 2007 at 6:02 am
Well, my fave financial guru is Dave Ramsey, and I know he doesn’t recommend “values-based investing,” as he feels very few of these types of “ethical funds” have long histories of strong rates of return and are therefore really really poor investment decisions. Ramsey also points out how values-based investing can drive you batshit — he talks about how if you were to no longer invest in funds that might invest in a company that supports abortion, then to be consistent, you’d have to stop shopping at a grocery store that sells pornography. He also points out you’d have to stop banking, as nearly all banks contribute to United Way, which supports Planned Parenthood.
November 9th, 2007 at 6:08 am
I agree with what the commentators above have said.
1) Ensure that your information is correct. Is the investment firm legitimately tied to genocide/abuses or to indirectly encouraging them, or is the human rights organization mistaken? I have a lot of respect for most human rights groups, but sometimes they don’t do all the research they should before calling in the hounds.
2) Make sure your employer knows about the link. They need to consider the ethical costs and possible publicity harm due to association which such a firm, and not just what I assume is an increase in immediate returns for them.
3) (This is where my foreign ignorance of 401k plans comes into play) Can you control what parts of the firm your money is invested in? If so, stay away from African investments and anywhere else in the world you think the investment firm might be harming.
4) If none of those options are possible or help to ease your mind, it might be better for you to forego the plan. It may cost you, but it’s up to you what ethical and moral stance you want to take. Only you can make that choice for yourself.
November 9th, 2007 at 6:08 am
I didn’t know the United Way supports Planned Parenthood. I guess I don’t feel guilty about not contributing when they were drumming up money this fall at work.
November 9th, 2007 at 6:20 am
Buy conscience offsets.
Sign up for the 401k and use that as “fiscal authority” to demand a change in the companies policies.
Ask yourself: would you have ever acted upon this issue if you weren’t concerned about having blood on your hands (money)?
I disagree with a lot of the things my government does. That doesn’t mean that I should/must/will leave my country. Instead, I work to change my country for the better.
Demand change, but diminishing your family’s future won’t save a life in Darfur.
November 9th, 2007 at 6:28 am
Eric, my husband and I struggle with this issue all the time and it isn’t just with issues abroad. Our investment choices in our various retirement plans always include shares in big oil, big energy, tobacco, alcohol, and firms like Caterpillar which makes the machinery that destroys settlements in the West Bank. Unfortunately, we decided investing isn’t that black and white. Even the socially responsible choices in investing have pretty paltry screening for the companies they invest in. So we have decided to invest fully in our retirement plans through our employment but work toward investing in the most socially responsible companies we can find and build on those investments over time as well as give generously toward causes that work toward our values (and by give generously, please don’t assume we have loads of money - our annual income is under 45k but we strive to give away 5-10 percent of our income each year).
So if you max out your employment plan here is a place to start. http://www.paxworld.com
And for those wondering why this even matters, try googling ‘SRI’ or Socially Responsible Investing. There is lots of information on the damage to human life and the world that is supported in part by our mutual fund dollars
November 9th, 2007 at 6:56 am
What investment house is this? I’m also curious as to how you found out about it. I have no idea what my investment houses faicilitate, if anything at all. Guess I better get on the research train.
November 9th, 2007 at 7:02 am
I sent a link but it got eaten by the comments. The firm in question is probably invested in Petrochina, which alot of human rights group link with darfur for some reason unbeknownst to me.
Oh, and good luck finding one that doesn’t have a connection to Petrochina.
November 9th, 2007 at 7:05 am
Genuine moments where the money invested is what controls whether the bad thing occurs or not are rare. But this kind of thing is the thing about money and its use that people have been wrestling with the longest. In the 1850s, some few Quaker families would only buy “free cotton”– that not made using slave labor. It didn’t make a perceptible difference; its effect was purely to make the people doing it feel like their hands were cleaner. The people with dirty hands– who dealt in business with its inevitable moral compromises and then donated to anti-slavery societies and the like, or who maybe weren’t such good people but who took up arms to end slavery– accomplished far more. The main effect of refraining for moral reasons from doing something profitable is to give those not troubled by ethical considerations a leg up on you, because their rate of return just went up from your refusal to invest, which would have driven the price up.
I’m not saying that therefore anything goes. Just don’t delude yourself into thinking that those bent on genocide wouldn’t find an easy alternative to whatever support you’d have provided them with.
November 9th, 2007 at 7:12 am
The 401k is just a label that tells the IRS how to treat your money. Stick your money in any number of great performing mutual funds and sleep better at night… Diversity is keep top investing success,you may not get matching funds but, you do get the pre-tax benefits just the same, besides who remembers Eron? Anybody? Bueller? Bueller?
November 9th, 2007 at 7:16 am
Roadshow, I think Eric knows that a 401k is just a label. That’s not the problem. The problem is that the company handling the 401k, processing the transactions, etc., is one he does not want to support. It’s not a matter of finding something else to invest in because all the money goes through this one company before reaching its destination.
November 9th, 2007 at 7:17 am
I think, sadly, its almost impossible to invest in the stock market in general and not in some way support various industries or industry practices that I disagree with. Human rights, worker’s rights, child labor, union busting, womens’ rights, the environment…. all of these issues are somehow implicated in consumer choices and investment choices. Even clothes ‘made in the USA’ can come from exploted workers - see No. Mariana Islands. http://en.wikipedia.org/wiki/Saipan
November 9th, 2007 at 7:44 am
http://www.sudandivestment.org/screener.asp
You can look up funds in the link above to see a report of their Sudan investments. There are a number of companies on the Sudan Divestment Task Force’s Targeted Divestment List, and the link checks whether the fund has any holdings in these companies.
The administrator of my 401k had several funds that included such companies, and several funds that did not. I chose to invest within the 401k, but only within funds that didn’t hold any of those companies.
You would have to decide whether this is a strategy that works for you or not.
November 9th, 2007 at 7:49 am
There are many good theories and some good pie in the sky ideas. That and $1.85 will get you a grande coffee at Starbucks. Oh yeah, and a one way ticket to the poor-house.
First, I would love to hear more about this 401k company and where this information was found? Are there others like this? This is big news IMHO, that a 401k company has DIRECT involvement of the killing in Dafur.
We all walk a fine line with these types of decisions. We all invest in funds that have oil and tobacco companies. It’s impossible to weed them out and like others have said, SRI won’t get you where you are going. Of course when you are 75-years of age, living in low income housing, eating cat food, I guess you could stand on the moral high ground. And I don’t mean to dismiss that high ground you may have, but your children might.
To hear a company like Caterpillar get thrown under the wheel like that is amazing. Where would it end? If I punch someone in the face with an Everlast boxing glove, is Everlast culpable and should be excluded from future investments?
November 9th, 2007 at 7:51 am
there will always be someone to invest in ‘dirty business’, and it’s pretty good odds there’s some money to be made from it.
the question will always be what your own peronal tipping point is- where the consequences of your choices start impacting on the quality of your life. You might *like* starting a crusade to get your 401 ethical, and the awareness raising would be doing good too, but if that’s not how you want to live, that investment will cost you more than money. The quakers with their free cotton might have paid more, and not made a lot of difference to external observers, but if it meant they could sleep at night, then that’s really all that matters.
and the fact that you’ve got a conscience to grapple with means you’re that much more likely to be on the slightly more affluent side anyway- this isn’t likely to end you up in the poorhouse, just cost you a couple of hols in your old age!
November 9th, 2007 at 7:54 am
I doubt that those doing the genocide in dafur are stockholders of the investment company, so any ‘facilitation’ of the genocide would have to be extremely indirect - probably by investing in companies that do business in the country, and therefore have some economic link the those that are doing the genocide (eg. via paying fees or taxes). So the ‘human rights’ groups are probably pushing for economic boycotts or sanctions in order to pressure the regime. Unfortunately economic sancations generally hurt to civilian population more than those running the country, so the whole concept is flawed. I’d just ignore the alleged link to genocide and, if truly upset by the situation in dafur, direct some of my charitable giving to a suitable aid organisation.
Regards
http://enoughwealth.com
ps. For those who would cut ALL ties with companies that have been involved in genocide, good luck - you’d better not use the computer any more! It’s development was largely driven by IBM, and IBM did contract work for the Nazi party in Germany, helping process the national census data. This supported the genocide of the Jews, Gypsies etc…
November 9th, 2007 at 7:57 am
I don’t know the details, but both Vanguard and Fidelity (two of the largest, highest returning, most accountable firms in the financial world) have both turned down offers to divest from Darfur. Warren Buffett is in the same boat. Mostly, this is through stakes in one company: PetroChina. Values-based investing is awfully sticky.
As Sarah said, the investment world is not black and white. Neither is the world in general. People should try not to have knee-jerk reactions to commpanies “involved” in X, Y, or Z. (Such as, “They support Planned Parenthood = bad and evil” without mention of the good PP does.)
November 9th, 2007 at 8:26 am
I think it’s nearly impossible to find a company to invest in that is not oppressing someone in some way or another. That is just the nature of business competition.
If they are not being competitive or cost driven or causing misfortune in someone or something else, the company likely will not succeed financially..it is a sobering reality.
I always think it’s ridiculous when I hear people trying to boycott products from human rights questionable countries like China. It’s impossible to boycott a country that has a hand in making nearly everything we use. Prices for everything would double or triple if Chinese products were banned.
These are broader policy issues that should be determined and set by the government, not individual businesses.
-R
November 9th, 2007 at 8:58 am
Sorry to rehash what others are saying, but since this is a valid problem I wanted to share my feelings. Please get all the facts regarding the 401(k) and its connection to Darfur’s genocide. Contact HR and explain to them your concerns.
If it is connected to this genocide, I’d pass on this. I’d notify all my co-workers of the connection and see if a coaliation can be built to get an alternative.
November 9th, 2007 at 9:03 am
I haven’t seen this suggestion. Why not contribute enough for the company match and then immediately remove the money. Usually the company match easily covers the 10% penalty for early withdrawal…
November 9th, 2007 at 9:04 am
Hello,
I am the person that originally asked the question that GRS responded to. The main source of information I used is found here:
http://www.savedarfur.org/page/content/other_resources
According to documents on this site, the investment house is investing $1.5 Billion in PetroChina on the Hong Kong stock market. I have a real problem with that. PetroChina props up the Sudanese government, which facilitates the genocide.
November 9th, 2007 at 9:33 am
I would like to point out that a company that holds shares of PTR cannot divest without selling those shares to someone else. So if you don’t want Company X to own those shares, you should be able to say who you do want to own them. (I guess you could call this principle “Conservation of Evil”. All you can do is move it around.)
November 9th, 2007 at 9:39 am
Eric…
If you have a real problem with that [which is completely fair], you got a real problem with just about everything a mutual fund touches. Don’t just hang this up on your 401k provider.
Where does it end? Say your 401k provider didn’t have dealings with PetroChina, but a 5% interest that owned the 401k provider did?
Dafur is highly publicized, but there are 100’s if not 1,000’s of companies that invest or are someway related to something bad. It wouldn’t end.
November 9th, 2007 at 10:16 am
@Brandon Barkley: “I didn’t know the United Way supports Planned Parenthood. I guess I don’t feel guilty about not contributing when they were drumming up money this fall at work.”
Just as an aside, I spent 3 years as an admin asst at a United Way in the last 90s. Each United Way distributes funds independently to nonprofits in their area.
This may or may not include Planned Parenthood — it all depends on your particular United Way.
Feel guilty or not (I don’t contribute now) but don’t use that as your particular rationale, unless it happens to be true of your area.
November 9th, 2007 at 10:33 am
In addition to what Johan said, sometimes 401k plans have provisions to take regular withdrawals in-service as long as you roll it over to an IRA. This does not have a penalty.
Take a look at your summary plan description. You might be able to put the money in and immediately roll it out. You would still be using the investment company, but it would be minimal and only to get your match and get out.
November 9th, 2007 at 10:43 am
For me, the connection between the investment and the genocide is too nebulous to be a problem. The ‘ethical dilemna’ is essentially that one should boycott all economic activity related to Sudan.
If the investment involved supplying weapons, or corruptly paying the government to clear villagers from land, that would be a problem.
However the so-called ’support of genocide’ here is just paying taxes to the government - this is normal conduct that is part of doing legit business anywhere.
Point is, that economic activity will continue and sudanese taxes paid whether you have the 401K or not.
So the solution of withholding investment in your 401K has no effect on the problem, and the ethical dilemna is more ‘how you feel about the investment’ than any actual effect on the situation in Sudan.
November 9th, 2007 at 11:12 am
Eric, you might want to do some leg work over a few months to help your employer find a new 401k provider. Depending on the size of your overall plan, saving your boss tons of money in operating costs and getting it into the hands of slightly more scrupulous people should not be difficult.
You look like the hero telling them what your original intent was, but a positive side effect is unbundling the plan and saving them on their gross fees. Whoever heads up HR will hate you though.
November 9th, 2007 at 11:15 am
Maybe I am just heartless, but unless this investment firm is handing cash to the people committing the genocide, then I don’t think you should worry.
One of the other posters above mentioned questioned supporting CAT because they make equipment that is used to destroy areas of the west bank… are you kidding me? Maybe you should boycott oxygen because it allows the “bad guys” to kill all those good guys. What about all the great stuff CAT equipment assists with?
There is being socially responsible, and then there is being extreme. Without more detail (like the actual relationship between this investment house and Darfur) I have to think this is a far reaching connection.
Also, why does everyone think that you can balance out things buy spending more money? Many commentors mentions that to balance out that they are helping a “bad” cause they give more to a good cause, that’s like saying it’s OK to kill people as long as you go feed the hungry later. Is that all it really takes to make you feel better? If so, I can’t understand how you feel bad at all to begin with, it’s like false conscious. I understand the ethical dilemmas, and may not agree with the same ones you do, but I know that if I am ethically against something, and I do it, going and giving money to a good cause doesn’t fix it…
November 9th, 2007 at 11:52 am
Thanks for the extra info Elaine. I probably would not donate to UW either way. Any extra money I have, I would give to my church instead.
November 9th, 2007 at 12:42 pm
And not to get way off topic, but I support my local United Way and Planned Parenthood (both of which do great work in my community).
November 9th, 2007 at 12:48 pm
The answer isn’t to figure out how to still take advantage of the match. The answer is to figure out what is the right thing to do and then do it. It is as simple as that. Of course, figuring out the right thing to do can be challenging and is incredibly fact-driven, which is why I rarely give recommendations of what that might be based on a paragraph.
But if your starting point is “looking for a compromise that makes sense” you have already decided not to pursue the ethical route. You may happen to do something ethical, but not because that’s what you set out to do.
So my advice is simple. Figure out what you think of the situation and whether it presents an ethical problem for you to invest moneys in that way. If you conclude yes, then you have your answer of what you should do.
November 9th, 2007 at 1:43 pm
Frankly, if you’re going to start down this road, you’re going to have to stop investing at all, and keep all your money in cash in your house.
Petrochina doesn’t do business in Sudan; it’s parent company does. All the non-Chinese investors in the world, including Warren Buffet, don’t hold enough Petrochina stock to have the slightest influence over its parent company’s actions or its government’s policies. It is silly to blame Petrochina for the genocide in the first place, and it’s silly to think that even if every investor in all the world divested themselves of Petrochina that it would have even a remote, indirect effect in Sudan.
November 9th, 2007 at 2:01 pm
If you’re really concerned about the ethics of the company administering the 401k as opposed to the companies you’re actually investing in, then I wouldn’t worry about it.
YOU are not hiring or supporting the investment firm–your EMPLOYER is. YOU are not paying admin fees, maintenance fees or any other direct fees that will benefit this firm. Your EMPLOYER is. And the employer will be doing it whether or not you contribute to the plan.
The actual fees you personally pays that end up benefitting the investment firm which manages your 401k are very very minimal, especially if we’re assuming that you don’t have millions of dollars invested in your 401k.
Besides, I’m sure you are doing far worse things in life (without intending to of course) than giving a few dollars a year to an investment firm which invests in a company which has links to some other companies/governments which may be indirectly enabling genocide in Darfur.
November 9th, 2007 at 2:15 pm
I’m totally on the other side of the fence and think that derivatives are to be ethically avoided over all. But then I have issues with fiat money, and support a return to a gold standard.
About the only unethical (IMO) thing I do with my money is pay my income tax protection money to keep Leviathan off my back. I pay the government its full demanded cut without setting up the various accounts for “pre tax expenses” nor do I itemize expenses. I’d just as soon be hung as a sheep as a lamb. Yes, I know its money down the drain but again, I can’t be bothered with playing an unconstitutional game and won’t be pacified with concessions. Of course I’d love it if everyone felt that way but they don’t and that’s fine. This is my stance and how I choose to defend it.
I feel the same way about typical retirement investment vehicles.
Yes, I am aware that most money people think I’m over-the-top daft but I do nothing by half measures, especially when it comes to standing on principle. Most of my family and friends have been burned over the years (especially grandparents) following popular “sound” investment advice (and no I don’t mean Cramer). I’ve watched either the investments tank, the investing company tank, the broker run off, or the government increase its stake (via fines or taxes) until those people are left with a fraction at retirement than they actively planned for (even to the point of working life deprivation so all possible contributions could be made)–never mind the additional inflation we are now facing thanks to fiat accounting.
What’s even more irritating, is that these same family and friends decry my lack of participation in the very same recommended strategies that gave them deprivation!
(Diversification into multiple derivatives whether EU, USA, Asian or otherwise is still a derivative portfolio.)
Funny how all the corporate gurus only quote market cycles for the last 10 years when it takes 60 years of information to view an entire business cycle. If we monitored 60 year cycles, we wouldn’t have this strange idea that investment values always increase. Monitor the 60 year cycles for fiat currencies since the 17th century and you will recognize where we are now and what is coming (no, it’s not pretty).
I work in securities law and know that most people don’t realize, legally speaking, just how shaky your investments are defined as your own property–and that the most risk comes in the small contractual print, or –shall we say–“human error” and not from how well the actual investment does on-market. Stoke of the pen, people, that’s all it takes for your entire life’s work to disappear.
Enron, anyone? Situation hasn’t been fixed… dealing with that sort of thing pays my paycheck. It only lost the headline space to other things (don’t want to spook investors in a failing economy y’know). Most of those ever increasing fees go to the SEC to prevent charges being brought and/or settlements. You never hear about it outside of legal news but you would be amazed at how much it costs these companies TO KEEP THE ABILITY to invest your hard earned money. And when the SEC seizes a company’s assets pending investigation, those are YOUR assets it seizes.
The SEC is fond of sealed files so don’t think if you haven’t heard about it, it must not affect YOUR bank, investment house, hedge fund, ad infinitum–it does, you just won’t hear about it. And don’t count on restructuring if you are an individual investor. They are rarely fed during the final feeding frenzy.
No investment is without high risk and no one can see the intact future. All of the arguments about how much one thing can affect another is like asking how many red socks we can put into the whites without turning everything pink. If you don’t want ANY pink on your whites, define your high ground, whatever that may be, then come what may, defend it–with your money if necessary.
Funny how people will defend anything with their mouth, but very little with their money.
November 9th, 2007 at 3:27 pm
I’m surprised at how many people are unconcerned at their investments’ connection to a genocide. The attitude that it’s only the person who pulls the trigger’s fault when the gun fires is a very simplistic one. Wars need to be financed somehow. The argument that “there are probably lots of other bad things that you’re supported somehow or another” is not very convincing either. This is the reason why the genocide in Darfur continues. The rest of the world just considering it someone else’s problem. The idea is to try to live your life in such a way that you are supporting “bad things” in as minimal a way as possible. Even though we have to use energy to run cars and light our homes, and that generally uses fossil fuels, that does not mean that we should not try to conserve if we can. It is the same principle. Bravo to the OP and others who are striving to invest with a conscience.
November 9th, 2007 at 3:49 pm
What “right” does the public have to have enough information to make informed decisions as consumers (B2C or B2B) or job applicants?
I wouldn’t want to do business (e.g. buy products made or sold by) such an employer. Shouldn’t consumers have this information also?
November 9th, 2007 at 5:12 pm
I strongly agree with Dave Ramsey and the people who have quoted him in these comments. These things will drive you crazy — and there is a TON of misinformation out there about what companies do what bad things.
My reaction is always the same: save your conscience for the voting booth.
November 9th, 2007 at 7:11 pm
There’s also a site that helps you screen funds to learn if they are “socially responsible” or not. There are similar screenings and listings on other parts of that site, too.
It is hard sometimes to figure out if you can ever be completely good in every way…don’t hurt anyone or anything ever with your investments and actions. Sometimes you waste half a sandwich, or take a slightly longer shower…just try not to do it again, I guess?
November 10th, 2007 at 11:19 am
I am quite surprised at the number of people who think it’s okay to willingly contribute to a company that is supporting genocide. Would people feel the same if it were terrorism, I wonder? Is making a few extra dollars worth the possibility of destroying people’s lives?
I heartily agree with the person who asked this question — and I applaud you for asking it in the first place! Where our money goes is our responsibility, and just saying that “everyone does it, it can’t be helped” is a terrible cop-out. And yes, I think it is heartless to say such a thing!
Getting rich is not worth giving up your ethics, although this seems to be a minority opinion. If I found out my company was doing this, I would stop my 401K. Very simple. It is not the only investment option out there. Start your own IRA or invest in stocks or property or both…all will have good long-term returns. Sure, they may not be worth as much in 150 years, but then again, maybe they will be. Nothing is certain in life.
Personally I think that people who invest in dirty business put themselves in a very shaky position. I personally invested in “green” companies and have seen a 33% return this year. I have my conscience…and a good return on my money. I may never be rich, but I don’t care, and giving money to an aid organization whilst funding the perpetrators of genocide, war, terrorism or what have you is just putting a bandaid on your conscience.
Save it for the voting booth? Please. Show me a candidate who isn’t funded by these same businesses. Money is what makes things happen, and withdrawing it works way more than a single vote.
I have to agree with Mickie, in that people defend anything with words but not with deeds.
November 10th, 2007 at 2:53 pm
Well, fidelity invests in PetroChina. Altho its dumped all its investment in China that’s on the NYSE it still invests in PetroChina on the Chinese stock exchange. What does this have to do with Darfur? Well China is the biggest purchaser of Sudanese oil. And the tribes that are being ethnically cleansed are those of non-arab descent who live in oil-rich areas. I think a lot of values investing is tricky. I don’t think this issue is. My husband and I dumped the $9,000 we had in Fidelity and now earning 13% on something else instead of the 22% on Fidelity is a relatively small sacrafice to sleep well.
November 10th, 2007 at 4:00 pm
Eric’s dilemma is a principled position and I very much applaud his feeling conflicted. I have many investments through Fidelity, though none of the funds we own are invested in Petrochina. You might check on that. However when I learned about the divestment movement, I sent Fidelity a long letter of protest about their Sudan holdings, and continue to lobby them. It is useful to do this AS AN INVESTOR, so there is an argument to be made for going ahead with the 401 through the employer.
Here is a comprehensive site. Warren Buffet has completely divested his holdings, by the way. http://investorsagainstgenocide.googlepages.com/
November 10th, 2007 at 6:36 pm
Always value ethics above money. Somehow the money always seems to come back better. And if not, you can always sleep better knowing you did the right thing. If we are putting money ahead of ethics, are we not doing the same as the companies that we are questioning?
Glad that you brought up the dilemma. Makes us all think.
November 11th, 2007 at 6:56 am
If you put your money in a cookie jar to avoid it being used for something unethical you have effectively moved the money out of the economy. This serves to boost the overall value of the American dollar. Since the American dollar is used by most Americans to invest in mutual funds, and those mutual funds generally include everything but penny stocks at some point. Therefore your cookie jar savings is tantamount to buying bullets to kill children in whatever country you would like to throw a dart at on the map!
Seriously though. If you don’t like the 401k don’t invest in it. You can invest outside of the company in a self directed IRA. You probably could have rolled the money to a self directed IRA when he did that transfer, but if not you can always quit and do a rollover to a self directed IRA then. You can also take a disbursement and tax penalty from that 401k and invest it yourself. If you put your 401k in money market accounts be aware that the banks are investing that money in something that isn’t disclosed to you at all.
Personally I distance myself from the ethics of investing to a great degree. I put everything I have other than rental property investments (paid for rental property, not financed) into the Vanguard 500 index. I know that even if I had a million dollars in it then once that is spread around my 2000 dollars per company doesn’t mean much.
November 11th, 2007 at 6:26 pm
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November 11th, 2007 at 8:34 pm
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November 12th, 2007 at 7:09 am
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