Legacy
As Jane Goodall said, ‘You cannot get through a single day without having an impact on the world around you.’ Your investment portfolio is making an impact, supporting companies and governments whether you actively monitor it or not. An introduction to some of the ways you can be a Regenerative Ancestor as an Investor, a Gift-Giver, a Citizen and a Role Model. Money is so much more than math.
Money is never still. Like water it moves through the world shaping, nourishing, moving things – so much more a part of everything than you might assume.
Money is how we as a species agree on the value of what we do and what we have, allowing us to efficiently collaborate in meeting our needs and wants. It has proven to be such a useful tool, I have no fear of us ever again managing without it.
With a little savvy you can maximize how much your money reflects your values in its journey through the world.
Whatever the limitations of your capacity to gift and risk your wealth, you can be a Regenerative Ancestor in your money management decisions.
Your Regenerative Investing Financial Plan should be the perfect fit for your needs and values.
There are five main ways you can manage your money to reflect your hopes and fears for the world: as an
- Investor,
- Gift-Giver,
- Cash-keeper,
- Citizen and as a
- Role Model.
Let’s look at each of these five aspects of how you can management your money’s movement through the world to reflect your hopes and values as a Regenerative Ancestor.
- Investing might first spring to mind when it comes to Financial Planning as a Regenerative Ancestor.
In the broadest terms, there are two kinds of investments you can make: the public and the private.
The public encompasses all stocks traded on public exchanges like the TSX, and all bonds traded on public bond markets, including secondary products like options, and market-based products like mutual funds, ETFs or permanent life insurance.
Private Investing is a broader array of options that are outside those public markets, from a personal loan to a relative, through Business Ownership, to a Community Bond.
We’ll dig into each in turn – starting with public investments.
As an investor in public markets, the temptation can be to let perfect get in the way of progress. Green washing is a real thing that many are working hard to counter and address. But avoiding ethically mandated public investment options because of their imperfections is throwing the baby out with the bathwater.
As a Regenerative Ancestor Investor you want to add an ESG filter or mandate to your public investments. An ESG mandate or filter adds substantially both to the influence you as an investor have on the companies in which you invest, and how much those companies disclose to you about how they do business. Work with your Financial Planner to address any green-washing concerns you may have about the options that most interest you.
The core focus of stock and bond markets is the current price for the traded company share or debt compared to its historical price. A lot of information must be made public to inform these agreements on price, but the market’s focus is on a short-term prediction of the company’s profits.
ESG stands for Environmental, Social and Governance. Over the last many decades, ESG disclosure and valuation standards have been agreed upon internationally so investors can compare apples to apples. An ESG mandated portfolio excludes companies that opt not to track or disclose these additional details about how they do business. An ESG mandate might also exclude companies in a specific sector (like tobacco, weapons or fossil fuels). Then it ranks those that do publish that information, favouring those that rank higher. This gives investors a substantially more robust and future-focused valuation of their investments.
Even a decade ago it was assumed that the additional cost of integrating these disclosures required ethical investors to loss in net returns compared to investors who didn’t apply this filter to their portfolio management. But instead, adding an ESG mandate has been proven to have nominal impact on profitability. In fact these portfolios often out perform portfolios without the additional screening, particularly in times of market upset. It seems using ESG screening saves you from the riskier businesses just by looking beyond short-term profitability.
Work with your Financial Planner to ensure your ESG filtered portfolio also meets your planning needs in it’s allocation, diversity and registration, and to inform your choice between the ESG filters that interest you.
Private investment options are a broad range of possibilities often rooted in your personal relationships with the people or organizations you choose to support. I strongly recommend working closely with your Financial Planner as you consider these options – they are a powerful way to have your money’s movement through the world better reflect your personal hopes and values, well worth taking the time to do well. But they can be risky.
The top options are:
- Community bonds are a growing financing tool in Canada over the last couple or decades that support small, neighbourhood-level initiatives with a loan of five years or less for $1,000 or more usually at GIC-like rates.
- Green bonds tend to be more National or Global in the initiatives they fund, generally a loan of five years that gets you a pretty competitive interest.
- Impact investment funds group many people to pool their investment in ventures for which they measure success not just by profits but also by achieving specific social or governance or environmental goals. They are as easily bought and sold as mutual funds, ETFs, stock or bonds.
- Being a business owner is a significant private investment.
- Angel investing allow you to support a small business directly with a personal agreement that either gives you a share in future profits, or your loan back with interest.
- Real property investments are land or building ventures. A rental property is a Real Property Investment. So is a REIT.
- Personal loans or investments are a one on one agreement with someone that allows them to finance a venture. Adding your name to help someone qualify for a loan or mortgage is one common example. At the other end of the spectrum would be financing agreements for a longer term or limited number of investors that are not directly traded on the stock or bond markets. These might be included in publicly traded financial products like mutual funds, or more directly through an investment management firm.
Because private investments are more fixed than pubic ones (not as ‘liquid’), and in important ways less certain in their investment returns (more ‘risky’) it is advisable to keep them to a small portion of your wealth as a whole.
Which is why being a business-owner (which very few can do with only a small portion of their wealth – it’s generally an all-in commitment) is high risk.
Work with your Financial Planner to figure out if and how private investing fits into your wealth management plans.
- Gift-Giving is a powerful way that money shapes the world around us.
You may gift to family or friends, to community initiatives and to charities both throughout your lifetime and through your Estate when you die. You may gift:
- Ownership of land back to the First Nation whose traditional territory it is
- Family members and friends different amounts or kinds of things according to their needs or capacity or to balance gifts given earlier. Fair is not always equal
- Art to a gallery so it might be seen by many, or to a collector who would value it deeply
- To a cause or organization, whether that qualifies as a Charitable gift or not
- Those who inherit through your Estate
- Creative Assets to a person or organization you trust to manage them or want to benefit from the royalties they earn
- Someone you love with the help they need (whether or not you can ‘afford’ the gift). This could include use of your house or car or skills or time, or a down payment on a home
Gift-giving is a huge part of how money moves through our world. Some kinds of gift-giving can result in tax-benefits for the giver and some instead have tax costs, but tax planning is the smallest part of Financial Planning for Gift giving.
With the support of your Financial Planner (sometimes your Lawyer and Accountant as well), you can ensure your gift giving unfolds as intended with no surprises or avoidable complications.
- You can be a Regenerative Ancestor as a Cash-Keeper.
The money you keep in your chequing account, your emergency savings and even GICs, whether at a bank or a credit union, is not just sitting there waiting to be needed by you. It is actively out and shaping the world.
How much a Financial Institution can loan is directly related to how much their clients have with them in cash holdings. They can loan many times as much as their clients have in cash and GICs – sometimes as much as thirty times as much.
A credit-union is member-owned and not for profit. A bank is share-holder owned and very much for profit.
If you keep your cash in a Credit Union, you as a member can both find out more about the loans made by them than a bank has to disclose, and join the decision-making around policies governing those loans. Particularly if you actively participate as a member in your Credit Union, this Cash-Keeper option can have a substantial impact on how your money moves through the world.
That said, the job of changing the financial institution in which you keep your cash can be significant. It’s just not feasible for everyone.
The last two ways you as a Regenerative Ancestor can shape your legacy are about speaking up and embracing your rights.
Law, policy and cultural expectations are the sturdiest rocks shaping how money moves through our world. As a citizen and as a role model, you can help shape these rocks to improve the flow of money so it better reflects your hopes, values and needs.
- As a Citizen you can be a Regenerative Ancestor.
Speak with your vote and speak to your elected representatives. Get to know the tax and benefit laws and policies that come into your life, and if you think of how they could be improved – share those thoughts! Engage in meaty discussions as someone with skin in this game.
Sharing your hopes and fears for our financial systems, speaking up for improvement when you see an opportunity to do better, celebrating change for the better when you spot it – is powerful stuff. Change must first be imagined, then refined and defended through democratic discourse.
- You are a Role Model.
Everyone you know and interact with responds to your conversations shared, your values voiced, and your actions observed. As a Regenerative Ancestor your influence as a role model is substantial. Embrace it. Generous commitment to long-term good for all is the kind of contagion worth spreading!
When you think about what money represents and how we use it in order to collaborate in getting done all that we do as humans on this planet, it’s easy to see that money is never still. It is always moving, shaping and influencing how things unfold.
As a Regenerative Ancestor you lean into your power as the manager of your money. You aim to make your money’s influence in the world one future generations will look back on with thanks. No matter how many of these options you find an opportunity to weave into your financial plan, your efforts will have impact.