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Socially responsible investing begins at home, Scott Pape

IN his first expanded column, Barefoot Investor backs socially responsible investing — and says that’s why he has a family portfolio.

You need to be careful about outsourcing your ethics to a bunch of finance guys.
You need to be careful about outsourcing your ethics to a bunch of finance guys.

WELCOME to Super Sundays!

Welcome to my first Super Sunday column.

When I told my editor that I had big news for my first expanded column, he was all ears:

Barefoot: “Well, my wife and I … we’re having another baby!”

Editor: “Congratulations … but what’s that got to do with finance?”

Barefoot: “Nothing really ... but it does have a lot to do with my finances.”

This wasn’t the first time I’ve left my editor scratching his head.

When I started the column in 2005, I honestly had no idea what I was doing. I wasn’t a journalist. By rights they shouldn’t even have let me in the building.

So I did only what I could do: I told the truth, tried to help people, and shared my life with my readers. And then a funny thing happened: you began sharing your lives with me — the tears, the triumphs, and the tiara-style tantrums.

As many of you have read, I’ve certainly had some ups and downs in life: I met a beautiful woman (up), convinced her to marry me (up), bought a farm (up), watched it burn to the ground (down), had two little boys (up), and now we have a third one on the way (the jury’s still out!).

This column is part of my life. Most days I meet people who I have spoken to or helped. It makes me proud. And given I currently have 27,000 emailed questions from readers in my inbox, there’s every chance I’ll still be here writing when I’m as old as Sam Newman.

Let’s get into it! Tread your own path!

 

HELEN ASKS: I am currently reading your book. It interests me to read how lovingly you speak about your family, yet I have not come across any mention in the book of investing ethically, socially or environmentally. You suggest readers should switch to indexed super and stock funds, but do these align with your values? Having said that, I am currently getting ripped by high fees on a well-known ethical super fund. So what is the best and cheapest way to invest ethically?

BAREFOOT REPLIES: Your ethical fund is ripping you with fees? That doesn’t sound too … ethical. Still, as an investment option within superannuation, socially responsible investing (SRI) is so freaking hot right now. It’s the financial equivalent of a paleo-approved, gluten-free, organic kale and almond milk combo shake (and you get charged through the nose-ring for both!). My view? I think you need to be careful about outsourcing your ethics to a bunch of … finance guys. That being said, I strongly believe in ethical investing, so much so that I have an ethical fund: it’s called the Pape family portfolio, where we make our own investment decisions, based on our own convictions.

SEPARATION ANXIETY

BRENDAN ASKS: Last year I bought a 50 per cent share in a rural property with a married couple (who I was in a polyamorous relationship with). We then embarked on a 12-month-long complete home renovation. Sharing finances with them was very hard to get used to. Now we have split up I do not know whether I should stay invested in this property or push for them (or another party) to buy me out. Please help!

BAREFOOT REPLIES: When I was at uni, I once shared a house with a couple. But there was no poly-anything going on. (Actually, who I am my kidding … my university days were Han Solo.) Whenever they were fighting they’d both bitch to me about each other. And then when they made up, they’d gang up on me. It was terrible … but hey, I was only renting. You are joint owners in a property, tenants-in-common … and if the relationship is over, so is the house. Either have them buy you out (after getting two written valuations), or sell the house and go your separate ways.

HEARTBREAK MOTEL

TASH AND SIMON ASK: We are in our 30s, have two kids, have a $70,000-a-year household income, and owe $190,000 on our home ($240,000 value, we live in Tassie!), with $80,000 in an offset account. We now have an opportunity to invest in a business as 25 per cent owners in an accommodation/wedding venue. The asking price is $1.5 million-plus, with four partners putting in 25 per cent ($500,000 each) and an additional $500,000 for improvements. The profit from previous years is around $200,000 per annum, with future bookings into 2019. We are unsure if we should take this opportunity (as silent partners) or just continue to pay off our mortgage. Please help.

BAREFOOT REPLIES: This sounds like a real stinker of an idea. In fact, let me count the whiffs: Whiff one, you can’t afford it. You’re simply not earning enough to take on more debt. (Though that’s my opinion ... not the opinion of a bank that wants to flog you more debt.) Whiff two, you’re getting into bed with not one, not two, but three partners!? You may start out wanting to be a silent partner, but trust me, you’ll eventually have to raise your voice. Whiff three, if the business has a downturn you may have to put your hand in your pockets, or reduce your dividends. And this is at a time when you’re still repaying your debt. And you can’t afford it in the first place. Look guys, this venture smells worse than my son’s teething nappy (and the end result will be just as messy). Life is difficult when you’re raising young kids, and living off one income. To quote Jon Bon Jovi, “You’ve got to hold on to what you’ve got”. Keep your life simple. Pay off your mortgage. Take time to smell the roses.

BLUE AND IN THE RED

VICKIE ASKS: My partner and I married in April 2016. A month later it came out that he had massive debts from online spending. He had lied to me for the last 10 years. We had counselling, and he proceeded to pay off everything except a BIG debt of $40,000 (he runs his own business and earns $150,000 a year). Money is still a major issue, though he says paying off the debt is priority No.1. Now, unexpectedly, I am pregnant, with around $10,000 in savings. Yet the day I confirmed my pregnancy with the GP, my partner bought an $800 briefcase. I am terrified — what can I do?

BAREFOOT REPLIES: If he’s earning $150k in his own business, he’s obviously no dill — he’s just depressed. His spending is a symptom of that depression. However, by deciding to have a family with him, his out-of-control spending is now your problem too. So if I were in your situation, I’d sit down and call him out on his bulldust: he’s got a problem, and he needs to deal with it: First, by getting help from a professional (call beyondblue). Second, by working with you. From now on you share the one joint bank account, you have an equal vote on where the family money goes, and you have a regular monthly Barefoot Date Night where you plot and plan and scheme about all the things you’re going to do to secure your family’s future. Let him know you believe that he has it in him. Then hold him to it.

 

SHARING THE LOVE

KAREN WRITES: I bought a copy of your book for my niece, who has told me it is the best birthday present she ever had. She has thrown away her credit card and is talking to me about banks and super, and she is excited! A remarkable financial turnaround for a beautiful young woman who has had a difficult path through life, through circumstances outside her control. I love this girl so much and now I can see a more positive future for her. Thank you.

BAREFOOT REPLIES: I I’m sending your email straight to my grandmother in Ouyen (okay, I’ll print it out and post it ... she doesn’t have email). Thank you so much for helping me spread my message, and pass on my congratulations to your niece. She’s got this!

Read more:  

How to save for a baby without going broke

A financial overhaul can help fathers realise their dream of independence

What to do when your partner spends too much

Taxing time for a bride-to-be

barefootinvestor.com

The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice

Original URL: https://www.heraldsun.com.au/business/barefoot-investor/socially-responsible-investing-begins-at-home/news-story/c4f431c5b40911cf8934bf6d919b6808