[...] JD asks his readers: What to do when money and ethics clash? [...]

[...] JD asks his readers: What to do when money and ethics clash? [...]

[...] Bargains Blueprint for Financial Prosperity: You are a Business, Act Like One! Get Rich Slowly: What to do When Money and Ethics Clash No Credit Needed: What if You Make Maximum Retirement Contributions for 20, 30, 40 Years Free Money [...]

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.

Glad that you brought up the dilemma. Makes us all think.

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.

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?

My reaction is always the same: save your conscience for the voting booth.

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?

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.)