Saturday, September 27, 2014

Paying Attention To My Money

by Dick Mac

Image from
Used without permission
There are different ways to pay attention to your money.

Most of us do the standard thing:  budget.  I earn $x and my expenses are $y and I like to save $z.  That leaves me $lmnop for music downloads, hookers, subscriptions, booze, gambling, dating, etc.

Some of us have investments and follow our holdings in the stock market.  Ford is up, Home Depot is down, ATT is a strong sell, Abbott is a strong buy, for example.  By the way, I am not an expert in investments, I just made up all of that stuff.

Many more of us have retirement funds, sometimes with our employer, but some of us also have privately owned fund. I have no opinion about what funds are better than others, but I am trying to understand the machinations of it all.

Most 401(k) plans provide us with a list of funds that we can choose from.  Often I hear people say they have their money in target date retirement funds.  Those are funds that are geared to maximize the benefit for people retiring in a certain year.  So, if you are 29 now, and plan to retire when you are 60, you might put your money in a fund with a target retirement date of 2045.  A fund like this will invest aggressively and with more risk when we are young, and then the investments become more conservative and stable as we approach the target date.

There are also individual funds that specialize in stocks and bonds:  international, small-capital, metals, health care, media, treasuries etc.  You put your money in these funds and the majority of the money is invested in companies or bonds that fall in that category.

The thing that's always baffled me about funds is finding out what stocks/bonds they own.  If I am anti-abortion, is my money in companies that provide abortion-related devices?  If I am opposed to war, is my money invested in mercenaries and arms manufacturers?  If I am concerned about obesity, is my money in Coca-Cola or Hostess?

How are we supposed to know this stuff?

Bankers certainly don't want us to know, so they don't publish that data in an easy-to-access manner.

Fund administrators don't want us to know because we might form opinions that conflict with their plans and we might start bothering them about it.

In the world of finance, those in charger prefer we all remain uninformed and, hopefully, unenlightened.

There are some companies I boycott and do my best to avoid:  Nestle, Wal-Mart, and Monsanto, especially.  It's easy to avoid the first two.  Monsanto is insidious because it's next-to-impossible to know which growers and manufacturers use their poisons.

I decided to not only avoid these companies products on a retail level, but to also divest any funds that own that stock.

Quarterly, I look at the funds in which I am invested, find out which stocks they hold, and sell any fund that has purchased these companies.  I have learned that two fund I own are no longer aligned with my moral position on these companies:

First Eagle Global Fund Class I (SGIIX) has acquired a position in Nestle.

Vanguard Capital Opportunity Fund Admiral Shares (VHCAX) has acquired a position in Monsanto.

On Monday morning, I will no longer have a position in those funds.

How do you know where your money is?  Do you care?