From “The Social Justice Investor: Advance Your Values While Building Wealth, Whether a Few Dollars or Millions” by Andrea Longton, CFA
Angela adopts a macro asset allocation strategy
Angela recently left her long-time position as a third-grade teacher at an elementary school in northern Virginia. Determined to set aside $15 every week to build wealth through a DIY account, Angela also feels a strong pull to support social justice initiatives within the United States. Her perception of the world shifted in spring and summer 2020 as she processed coverage of George Floyd’s and Breonna Taylor’s deaths. She watched the mass protests and found herself wishing she could do more to make change. She hosted a book club for De. Kendi’s How to Be an Antiracist, and is listening to voices of those who have lived experiences of social injustice.
In Angela’s words, she’s ready to “put my money where my mouth is”.
While getting organized, she realized that her family’s portfolio is organically segmented into four distinct buckets.
First are the three separate accounts for her children’s college tuition support. Second is her husband’s employer-sponsored 401(k) account that receives regular contributions from her husband as well as an employer match. Third is her teacher pension, which stopped receiving contributions when she left her job.
Angela is hesitant to modify her children’s education fund since she worked with a financial coach to create the funds when they were born. She trusts the work she created and doesn’t want to tackle more than she can handle all at once.
Angela is also loath to make changes to her pension for fear of entering into any paperwork required by the state government.
She’s encouraging her husband, Roy, to revisit the investments he selected in his 401(k), but otherwise leaving the account to his management.
Instead, Angela decides to isolate her social justice lens to a new wealth-building account she’s creating through a DIY investment platform. She has the most freedom in this segment of her portfolio to orchestrate her personal vision for investment success. For Angela, this means pushing past her otherwise low-risk appetite to be more aggressive in pursuing investments with higher returns, including evidence of social justice advances. Since she feels secure that her family’s baseline financial needs are met, she can flex other investor muscles in a separate account.
Angela knows she is not an expert in propelling social justice, but she knows she wants to invest in people with her dollars. So she decides that any and all investments in her DIY wealth-building account will apply a social justice framework targeting returns that support Black and brown communities across the United States.
Angela does not have precise geographic footprint and is not focused on a specific subset of social justice advancements. Instead, she focuses on generalist social justice investments targeting organizations that deliver products and services designed to advance Black and brown people’s ability to reach their full potential.
Utilizing a macro asset allocation approach enables Angela to isolate her social justice investment framework to the segment of her portfolio in which she has the most freedom to align her objectives with her values.