Brandon Renfro, Ph.D.

Retirement - Finance - Investing

Month: January 2017 (page 1 of 2)

Now or Later?

Have you thought about what you might be giving up by waiting to invest for long-term goals such as retirement? One of the greatest financial tools that millennials have is time. Time’s effect on long-term investment performance is much greater than financial savvy or a large income.

So many younger would-be savers and investors put off starting because they don’t think they know enough. The truth is though that doing just about anything is better than doing nothing at all.

A 25-year-old person that puts just $100 per month into a savings account will have $48,000 when they are 65. Not much to retire on, but even that may help finish off a mortgage so you won’t have a monthly house payment.

Small, incremental changes from that compound the benefits. Now say that you invest in a simple index fund and earn an average 7.1% on that money. That $100 each month becomes $269,968 by the time you reach 65. Small change, big results.

Maybe you are thinking, “Saving $100 per month is easy. I should be able to save $200.” Ok. That translates to $539,936.

Simple enough, right? But what do most people in their 20’s decide to do? Wait.

There isn’t anything unnatural about waiting to save. Most people in this life stage want to finish school, get settled in a career, relationship, or location, buy a reliable car, and maybe have kids. These things require money either directly or through saving for contingencies. It is a little more difficult to put money aside when you feel like every dollar is needed now.

Basic living expenses are an obvious necessity and student loan payments can’t be ignored.

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Planning for a Dynamic, Non-Traditional, Retirement

There are several key points to consider if you’re interested in a non-traditional retirement or one involving a second career. With the booming innovation economy and rapidly expanding communication technology, people are no longer restricted to one career or even location. Traditional methods of financial planning focus on wealth and capital accumulation during the working years, to fund a retirement that involves spending capital and enjoying leisure. For a non-traditional retirement that involves an innovative work/life balance, flexibility is as critical as accumulating capital.

Planning Ahead

We all love to plan ahead (ya know, except for folks who don’t)–planning for the future gives us something to look forward to when work and everyday life seems a burden.  A factor to build into your planning, though, is the unforeseen future. There is no way to plan ahead to cover everything that could happen. Rather than a plan that tries to cover the future in detail, build in flexibility from the start; the ability to change course and direction without wrecking the plan.

Multiple Income Streams

Rather than a plan to fund retirement solely with capital accumulation, consider the benefit of having several income streams. Investing in real estate, business partnerships, and investments, in addition to pensions, may provide a balance between risk and return into the future. It is also increasingly popular for retirees to transition to a more enjoyable and rewarding career that still provides a paycheck rather than retire completely.  The gig economy and the local peer to peer economy are both giving nonconformists opportunities.

Managing Debt

Work on habits of managing discretionary spending and debt. Staying out of debt, especially credit card and other high interest rate debt, is a critical first skill and habit in order to have the flexibility needed for a non-traditional retirement.


Savings on a regular basis is also a skill that can become a habit, and a critical one for people considering a different financial path. There are many savings vehicles depending on level of risk that is acceptable, but having a minimum of three to six months of living expenses in a liquid savings account is a reasonable safety measure.


Plan for inflation and taxes, which change over time but never go away. The average inflation rate isn’t huge, but over time it’s effect is cumulative. In 1967, a new car cost about $2,750. The average annual income was $7,300. At any point a newly elected government can change the tax codes significantly. It’s impossible to predict with any accuracy, other than to assume that both inflation and taxes will continue.

Be clear with yourself about what is most important to you. But keep in mind that things can change over time. Interests, passions, hobbies, and even the way you spend a happy Saturday morning in summer can change over time. If you would rather live in a studio and bike everywhere so you can indulge your passion for old bookstores, do that. Trying to walk a path laid out for you by someone else can be crippling.

Keep learning. The old model divided life into the school years, the work years, and retirement. Those divisions are more fluid now. But to take advantage of opportunities, and to be prepared for change that can affect our future, stay in touch with the world and keep learning.


Impact Investing: The Next Step in Ethical Investment Practice

There are several basic approaches to ethical investing. You can choose investments, and investment funds, that screen member companies and exclude those who participate in an industry that conflicts with your values. An example would be if you decided not to invest in any funds that included companies that make and sell weapons and tobacco products. You could choose to invest only in companies that show corporate values that align with your own, such as sustainability and environmental impact, worker safety, or diversity and inclusion. Or you can seek out investment opportunities that make a conscious choice to create social impact.

Impact investing is investing that actively creates opportunity for social change. The range of social impacts are huge, but can be narrowed to your ares of concern. If, for example, you wanted to invest in companies and financial institutions that are offering opportunities for previously excluded people to participate in the economy, you can do that by working with CDFI’s, or community development financial institutions. If you want to support families by offering opportunities for single mothers to start their own businesses, you can do that. If you want to invest in your favorite clothing company, one that treats workers fairly and engages in fair trade practices, you can do that.

Concerns about the behavior and actions of corporations are growing, and different investors have different degrees of concern over the issues. Some investors might want to exclude companies that sell alcohol and make abortion drugs. Other investors want to focus on carbon footprint and environmental sustainability. Concern is growing across the board about company values, though the nature of those values is fluid. Investors expect social responsibility, transparency, and diversity and inclusion with companies doing business in 2017.

B Corp Certification

The B Corp certification process is a rigorous and complex process that looks at multiple factors across several domains. Businesses must meet the highest standards of social responsibility, sustainability, transparency, and accountability. The B Corp certification is considered the gold standard for companies that live, work, and grow by their values. It’s a hard road to travel, and at present there are just under 2000 B Corps certified businesses worldwide. You can look at companies that have completed B Corp certification to get an idea of where you might want to invest.

Screening Criteria and Diversification

The more selective your criteria and screening, the fewer companies will be available. Mutual funds spread risk by investing in groups of companies. The more groups in an investment fund, the less risk to the fund if a single company loses money. As funds get smaller and more exclusive or inclusive, the risk is greater. You can spread risk around by having several areas of investment within your desired area of impact.


For your socially conscious investing to actually have an impact on the world, it needs to involve more than just excluding certain industries. Shareholder advocacy and community investing are equally important to the exclusion of industry. Shareholder advocacy involves both knowing how proxy voters acted on behalf of shareholders and being able to communicate with fund management and have your voice heard. Community investing through CDFIs helps provide excluded populations access to financial services and resources, as well as providing development capital and resources to areas not usually served by the mainstream.

Consider asking about mission and investment congruence when looking at funds that advertise themselves as impact investment funds: Is the fund’s mission reflected in their investments? If they state a social mission to end homelessness in the local community, for example, are they investing in companies and businesses who are working toward that goal? It’s no longer considered acceptable practice to make a profit by any means possible, and then ‘clean the green’ by diverting some of the profit to social causes.

ITransparency, community, and long-term relationships are qualities that will make an impact on your financial future. It takes your values, ethical partnerships, and a long-term commitment to make an impact on the world.

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