Your Money or Your Life

Best-selling author and Natural Investments client Vicki Robin  recently published a fully revised fourth edition of her classic book, Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence. With more than 1 million copies sold over the past 25 years, this book has guided countless people to take control of their spending, reduce debt, increase savings, and ultimately achieve financial independence. We are honored that Vicki asked us to collaborate on revising the last chapter of this edition, and we are grateful that she was able to take a short break from her book promotion tour to speak with us.

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Eggs and Baskets: the Secret of Resilient Investing

Diversification is, at its root, a response to the ancient admonition you might have learned from grandma: don’t put all of your eggs in one basket. If that basket drops they could all break, ruining your and grandma’s breakfast! This proverb can be traced back to the 17th century, and was popularized by Cervantes in Don Quixote[1]. (Later, Mark Twain, ever the contrarian, proposed the exact opposite: “pull all your eggs in the one basket and—watch that basket!”[2]

The wisdom of Cervantes goes nearly unquestioned today. Virtually every reputable financial firm teaches people about diversification, extolling the importance of spreading out risk. But—and this is an important but—we contend that however well intentioned, Wall Street’s version suffers from two major omissions: first, they focus solely on one’s financial instruments, and second, they can’t model the possibilities of Breakdown/Breakthrough, so they presume that we’ll be Muddling Through for the foreseeable future.

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Get Your Microplastics Out of My Beer!

The community I call home, Duluth, MN, happens to be perched on a steep hillside that runs down to the shores of the largest freshwater lake in the world, Lake Superior. There’s hardly a place in town where you can’t turn around and see the lake stretching out across the horizon. With such an expansive geographical feature nearby, it’s not surprising that people who live here share a special affinity for the lake, borne out in the names of local businesses (Lake Superior Brewing Company, Lake Superior Garden Center), local colleges (Lake Superior College), and the plethora of Lake Superior tattoos that adorn the bodies of many young locals.

Because Duluth people love Lake Superior with such fervor, we were outraged when we read about a recent study published in the peer-reviewed journal Plos One that found eight of nine tap water samples taken from all five Great Lakes, including our beloved Lake Superior, contained plastics. It was especially alarming for the significant population of beer lovers in our community to learn that scientists also found micro-plastics in all of the 12 brands of beer brewed with water drawn from the Great Lakes.

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Data vs. Drama – A Cautionary Tale

Factfulness by Hans Rosling

FACTFULNESS: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think
By Hans Rosling
Hardcover: 352 pp. Flatiron Books

The conundrum about this book is that it really should be read by those folks who never read books. You know who I’m talking about. The late Hans Rosling, who died in 2017 after an impressive career in education and public health, urges us to let the data tell the story, rather than imposing a narrative based on our “dramatic instincts.” He highlights ten ways that our instinctual bias and craving for drama, similar to our craving for sugar and lethargy, undermine our wellbeing.

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A Radical New Way of Thinking About Investing

As frontrunners of the socially responsible investing movement, we at Natural Investments are “resilient investors” who are working off a radical new map of the investing universe. We invite you to navigate your own path across this vast terrain. But before we start exploring the nooks and crannies, let’s take a moment to ask the fundamental question: why invest?

Some would say this is obvious—we invest to build wealth. And what’s the point of building wealth? To be secure? To then build even more security and more wealth? Isn’t that what we all want? Well, no, at least not in the way it’s usually presented. While we take it as a given that most people want to increase their financial assets (at least up to a point) and have some nice things, traditional measurements of personal wealth are inadequate, often ignoring that which gives us the most satisfaction. Economists measure our “standard of living,” but what we’re really after is a higher “quality of life”—and while there is overlap, those two are not the same thing! The point of investing, we’d like to suggest, isn’t just about having more, but about being happy in a full, classical sense.

Let’s look back—back as far as 2500 years—for help in answering these questions. Aristotle, writing in the Nicomachean Ethics, described the point of a well-lived life, the goal we should be aiming for, as “blessedness.” For Aristotle, blessedness meant enjoying family and friends, with a deep feeling of well-being and contentment. In our day, this ideal might suggest a mature experience of knowing one’s mission, succeeding at pursuing that mission, having a solid primary relationship and close friends and family, having sufficient financial resources to live well according to your own standards, to be making a contribution and leaving a legacy one can be proud of, and staying in right relationship to the natural world that sustains life. It’s not about more—it’s about better!

We don’t think of investing as simply a professional, numbers-crunching discipline; for us it’s something much more fundamental. We believe investing should support financial goals (buy a house, start a business) and it should support the bigger and deeper and more profound purpose of a life: Aristotle’s blessedness. Investing can help each of us live a better life, and it can help improve communities and build a better world for all.

To do this, we must first break out of the confines that limit our ideas about wealth. Financial choices are just one part of a continual process of giving and receiving, balancing risk and reward, and exchanging time, energy, and money with those around you. So let’s make room for values and communities, for society and the Earth. And let’s expand our vision to include the interior realms of emotional and spiritual well-being as well, which are enduring elements of healthy human development. By doing so, we are bound to get more relevant, and more life-nourishing results.

(This article is adapted from The Resilient Investor by Hall Brill, Michael Kramer, and Christopher Peck and is part of an ongoing series in our monthly e-newsletter. Subscribe here.)

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Can You Future-Proof Your Life?

Many people are motivated by the desire to be as prepared as possible for an uncertain future, but they recognize that this is no easy task. We encourage you to take a big picture view of the world and consider the many ways that the future could unfold. You’ll want to envision where you would like to be going in both the near-term and in years to come, and to keep abreast of the wide and growing range of investment choices available to you. By thinking in this broad, creative way, resilient investing gives you the tools to design a personalized plan. This will show you where you’re currently investing your time and money, highlight areas that you might be over or under emphasizing, and provide the guidance you’ll need to move forward in your chosen directions.

As you put your plan into action, you’ll notice a newfound sense of calm, one that rests on the knowledge that you’ve taken measured steps to future-proof your life and are ready to ride out the inevitable storms and surprises that come your way. You can’t eliminate risk, but you can dial down your stress levels and have more peace of mind by knowing that you’re prepared. Having a comprehensive and diverse set of investments will provide genuine benefits when one or another market you’ve invested in has a downturn (whether it be a sudden drop in the Dow, a dry spell that decreases yields in your garden or regional food network, or an unexpected health challenge). While it is always painful to suffer a hit in one area, investments in other Zones will likely be doing better and help carry you through.

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Post-Disaster Lessons for Resilient Investors

My family and I survived the Northern California firestorm of 2017. We were incredibly fortunate; unlike many our friends and residents in our area, we did not lose our home or livelihood. At the peak moment of fear, the fire came within 3,400 feet of our home. I spent hours wetting the roof, talking with panicked neighbors, and gauging the wind and the smoke. We got ready to evacuate by packing the car, letting our chickens loose, and making peace with the thought of starting over. Thankfully, some can-do neighbors with tractors plowed down the fire front, and we were spared.

Months later, our lives returned to normal. But as a planner, I am surprised at how unprepared we were when disaster arrived. We had planned for this. We’d held meetings with family and neighbors, checked on each other’s stores of water, food, and supplies, and located the water and gas shut-off valves for each home. We had back-up phone numbers of relatives, battery packs for our phones, and emergency radios. But still, we were missing critical elements. I share these insights now, with the hope that they will encourage others to prepare well in advance of fire season.

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Your Money: Smart Strategy and Positive Impact

“I want my money to have a positive impact in the world but my dad (uncle, mom, broker) said that was a stupid idea. Is it?”

That depends. If what you mean by “a positive impact in the world” is that your broker simply screens out investments in certain companies or industries, well, sorry, yes, that on its own might be a bad idea. That approach could damage a portfolio.

If you’re serious about getting your money to make a real difference for people and the planet by investing in all kinds of good things with smarter financial analyses and strategies, yes, we believe this is a really good idea.

“Ok, but how can I do all that?”

Natural Investments maintains stringent and thoroughly researched investment due diligence standards and procedures. No system is perfect, but we have developed a strong process over the last few decades of work. Here are some of the pillars of our investment strategy:

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The Resilient Investor

What Does Resilience Really Mean? 

Excerpted and adapted from The Resilient Investor, by Hal Brill, Michael Kramer, and Christopher Peck

For the past few years, the term “resilience” has been the buzzword du jour in economics, climate science, leadership, online security, and community planning. Surprisingly, it has managed to span the ideological spectrum even in these partisan times. The Post-Carbon Institute recently re-branded their website as resilience.org, while the World Economic Forum in Davos jumped on the bandwagon by focusing its 2013 conference on “Resilient Dynamism.” If resilience science speaks simultaneously to re-localization activists in their transition towns, as well as the 1% gathered in their enclaves, it’s clearly an idea whose time has come.

 

Let’s take a look at what is meant by resilience and why it has arisen from so many quarters as a concept that is truly emblematic of our times. In Resilience: Why Things Bounce Back, authors Andrew Zolli and Ann Marie Healy frame resilience as “the capacity of a system, enterprise, or a person to maintain its core purpose and integrity in the face of dramatically changed circumstances.” They see resilience as “an essential skill in an age of unforeseeable disruption and volatility.” A unifying and powerful lens, resilience can focus our awareness and actions at all levels—for individuals, businesses, communities, nations, and the entire planet.

Many people become aware of the importance of resilience only after a disaster. Do a search for “Hurricane Sandy & Resilience” and you’ll find numerous articles and conferences convened as decision-makers tried to figure out what we could learn from this super-storm and how we might rebuild in ways that will leave people less vulnerable. But the time to focus on resilience is before disaster strikes; in 2014, President Obama proposed a $1 billion “resilience fund” to help communities protect themselves from climate change impacts such as floods, drought, and wildfires.

Futurists and systems theorists are having a heyday, creating a menagerie of frameworks describing resilience, but it really doesn’t need to be a difficult concept; we see it all around us. Anyone who’s over 40 knows that they’re not as physically resilient as they used to be; injured children recover more quickly than injured grandparents. Healthy ecosystems bounce back from fires or storms better than degraded ecosystems. Technology companies become irrelevant if they fail to respond decisively when circumstances change: perhaps the most striking example is Kodak, once synonymous with the very idea of photography, but left in the dust by the shift to digital imaging.

For those with a strong bent on assuring that we maintain the viability of the biosphere, it’s worth taking a moment to see why resilience is starting to displace sustainability as an organizing concept. Zolli points out that sustainability tries to come up with an “equilibrium point” in which a system stays in balance but this is counter to how many natural and human systems operate. As architect and systems thinker William McDonough wryly asks, “Who simply wants a sustainable marriage?” Resilience does rely on the principles of sustainability (unsustainable investments weaken the capacity of a system to maintain integrity), but it strives for a healthy dynamism rather than stasis.

The lens of resilience makes us more cognizant that for better or worse, we have entered the age of the Anthropocene—a new term for a geological age in which humans have become the dominant factor shaping the world. Natural systems have been damaged to such a degree that we need to be prepared for random, extreme disruptions, according to Zolli and Healy. At the same time, resilience points out that we should be designing our systems, and our lives, so that we do more than survive such disruptions.  We’ll want to “capture the upside,” thriving and growing when exposed to volatility and disorder, while also seizing emerging new opportunities as they come into view.

For some, resilience has a flavor of hunkering down, waiting for disaster to hit, and coming out unscathed. That’s not a very juicy way to live, and it’s not what we mean by resilience. Our goal as investors is to make things better, for ourselves, and for the world. We are using “resilience” in its most flexible and optimistic form, still loyal to the goals of sustainability (providing for the needs of the present without harming the future), and with eyes staying sharp for emerging prospects. Here’s our new and improved definition:

Resilience helps us to thrive by anticipating and preparing for disturbance, improving the capacity to withstand shocks, rebuilding as necessary, and adapting and evolving when possible.

Resilience is a powerful remedy for our uncertain times. It helps us learn to live with the fundamental complexity of modern life, rather than trying to simplify our way out of it in order to make decisions. When the inevitable disruptions do hit the system, resilient investors will have the best possible shock absorbers to minimize being rattled, and be positioned to bounce back even better than before. Our favorite one-liner comes from Harvard business professor Rosabeth Moss Kanter, who wrote, “When surprises are the new normal, resilience is the new skill.”

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From “Noble Poverty” to My Brand of Joy

Releasing my “noble poverty” mindset has been an exhilarating journey.

When I first heard the term “noble poverty,” I had a visceral reaction of relief at finally having a name for a condition I had lived with since I was a child.

Mikelann Valterra, founder of the Women’s Earning Institute, has defined noble poverty as “the belief that there is virtue in not having money and that good people do not have it.” People with this mindset live by the phrase “It is better to be good and poor than rich and evil.”

The roots of the noble poverty mindset I used to carry run deep. I was raised in a devout Catholic family in a small rural town in Kentucky. My parents had me when they were both nineteen and worked hard to make a sweet little home for my siblings and me, but they struggled over money. The conflicts over power and control were exacerbated during their divorce, when I was a teen.

My experience of church teachings gave me clear messages about money: “You cannot serve both God and money,” “The love of money is the root of all evil,” and the most memorable to me as a child, “It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God.”

I first started earning money through small jobs: brushing my grandmother’s hair for ten cents and later babysitting. At sixteen, I worked at a local video and record store and did my own tax returns. I worked two to three jobs at once to put myself through college, and even still, I took out as much in student loans as I could to pay my tuition; I was part of the first generation of students to incur unprecedented educational loan debt without fully grasping the consequences.

I went on to get an M.S.S.W. in social work and worked for nonprofit organizations with refugee and immigrant families and affordable housing. In my early thirties, when I began teaching financial literacy, I realized that I needed to start a retirement account and found an SRI mutual fund for my first IRA.

Even then, by age forty, I was still living with a mindset of noble poverty. I realized that I wanted to retire from this way of thinking and living. I came to understand that my calling was socially responsible investing, and I began doing deeper personal money work to liberate myself from the noble poverty mindset as I helped people align their money with their values.

As they say, when the student is ready the teacher will appear. Lynne Twist, author of The Soul of Money, taught me that we live in a world of abundance, not one of scarcity. From her work with Buckminster Fuller, she saw that our systems that are still catching up with the reality of abundance. I now work with my clients to leverage their investments to transform these systems, so that fair trade, gender equity, inclusion, and economic justice become integral to our economy.

Barbara Stanny, in her book Sacred Success, taught me about women and our relationship to both money and power. She says that women’s challenges with money are often really challenges in their relationship with power. I continue to explore this for myself and help my clients in their own challenges with power.

There are many other teachers, of course, who have helped shaped the unique path I find myself on today. I am thankful to have defined my own “brand of joy,” an idea coined by Tanya Geisler that emphasizes the WHY of my work. As we begin a new year, I am thrilled to be continuing this journey with my clients and colleagues.

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