How to Invest in Sustainable Companies_1

Financial Freedom: Investing in Sustainable Companies

How can you make a difference? You can make the biggest impact by investing in sustainable companies that help solve the world’s biggest challenges.  It is about putting your dollars to work by buying products from and investing in companies that put the people and the planet first. Together we can create the momentum to encourage others to step up to the plate too.


Invest in sustainable companies

A new and more diverse generation of investors are seeking sustainable solutions for their investment portfolios. The Millenial and Z Generations have greater access to the investment market. Moreover, the cost to enter the market has never been lower.

This lower barrier to entry means that you can invest with tens of dollars, instead of having to set aside thousands just to get started. The result, millions of new stock owners with sustainable ideals that companies cannot afford to ignore.


Socially Responsible Investing:



Socially responsible investing is known in the investment and ETF world as ESG (environmental, social, and governance) funds. More importantly, new sustainable ESG ETFs are cropping up and industry professionals are taking notice.

This is because investors, like you, are concerned with the future of the planet and the treatment of company employees. The public is beginning to speaking out and companies are having to adapt to their demands.

How can you join this movement? By supporting companies through the purchase of ESG stocks.

One of the greatest benefits of investing through an ETF is that you are able to diversify and own a wide range of EGS company stocks.

Both global institutions and individuals alike are taking a sustainable approach to pursuing their investment goals.

The thought used to be that you could only accomplish one goal (sustainability or profit) at a time. Today, statistics reveal that you can achieve both.


Benefits of Investing in Sustainable/Socially Responsible Companies:


According to, here are a few statistics on investing in socially responsible companies:

  • In 2016, ESG made up over 20% of the $40 trillion money management market
  • Companies that deploy ESG strategies tend to show higher return potential and are valued at a premium when compared to their peers
  • Companies with higher ESG ratings tend to show higher profitability and dividend yield
  • Most corporate executives believe that a sustainable strategy is needed to remain competitive

These statistics show that you can have “your cake and eat it”. There is a way to support socially responsible companies while growing your net worth.



ETF’s Create A Low Barrier to Entry: 



Millennials are attracted to ETFs because of their price. For an annual fee, some as low as 0.04%, you can invest in hundreds of the top companies through an ETF.

The average ETF has an expense ratio of 0.44%. While the expense ratio for a mutual fund is falling, some actively managed funds can charge fees as high as 2.5%.   

Millennial investors’ love of doing their own research. Likely, this means that you want to be actively involved with the investment process.

There are a number of ways to incorporate sustainable investing into your portfolio.


Environmentally Friendly Socially Responsible ETF’s:





Jack C Bogle, the father of the ETF and creator of Vanguard, created a company that is arguably the king of low-fee fund offerings. Estimates for fees of U.S. funds are 87% lower than other funds with similar holdings. Likewise,  estimates for international fund fees are 85% lower than traditional mutual fund offerings.

Vanguard recently launched two ESG ETFs. If you own a retirement account with Vanguard, like a Roth IRA, you can trade an unlimited number of their funds without paying a commission.

Typically, brokerages charge a flat dollar amount per trade e.g. Etrade charges $6.95 per trade (price checked on the day of this writing).

Vanguard’s ESG US Stock ETF ticker symbol is ESGV,  while its ESG International Stock ETF ticker is VSGX.  The expense ratio fees are 0.12% and 0.15%, respectively.

The funds incorporate elements of Socially Responsible Investing (“SRI”) by excluding certain “sin stocks”. Companies, such as those in the adult entertainment, alcohol, tobacco, fossil-fuel, and weapons industries are not included in the fund’s holdings.

From there, the funds apply an ESG overlay to the stock portfolios. The fund also attempts to maximize the United Nations Sustainable Development Goals in its investment decisions.





Another company that is offering ESG  ETFs is called ishares.

This company evaluates and selects companies based on their commitments to positive environmental, social, and governance business practices. All iShares ESG funds screen out stocks involved in firearms, controversial weapons, and tobacco.

ishares has Thematic portfolios that focus on a particular E, S, or G issue. For example, clean energy or the diversity of a company’s workforce.

A few funds are specifically focused on investing in companies that have a low carbon impact. For example:



The iShares MSCI Global Impact ETF (MPCT) tracks an index of companies that “derive a majority of their revenue from products and services that address at least one of the world’s major social and environmental challenges as identified by the United Nations Sustainable Development Goals.”




The Take Away:



Today, investors have few excuses to avoid the inclusion of responsible investment holdings in their portfolios.

Evolving government policies are prompting large institutions around the world to put capital towards sustainable investments.

Moreover, investors like you are seeking sustainable investment solutions. The need for sustainable growth and investor’s desires to fund ethical companies has caused businesses to evolve for the better.

You can create an impact on how companies operate, by owning their shares. So get out there and be the change that you want to see in the world.


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Financial Planning_ Tax-Free Benefits from a Life Insurance Policy

Financial Planning: Tax-Free Benefits from a Life Insurance Policy

No one wants to think about when “crap happens”, but the universe isn’t fair. It is better to be prepared than to get caught like a deer-in-the-headlights. This topic is a bit morbid, but one that should be contemplated. The purpose of life insurance is to replace your income for the people who depend on it, in the event of your death.

Financial Planning_ Tax-Free Benefits from a Life Insurance Policy

Basically, you are betting that you will die and the insurance company is betting that you will live. You’re gambling with an insurance company about whether or not you’ll die before a certain age.

In fact, most insurance companies send a nurse to examine your health prior to providing a quote.

The result is that If you lose the bet, you will be out thousands of dollars. If you “win,” your spouse and heirs get a handsome 6- or 7-figure payout upon your death.

Additionally, death benefits from all types of life insurance are generally income tax-free. This is one reason some people use it to pass on wealth (read on to learn how).

Life insurance proceeds can be used to replace lost potential income during the deceased’s working years.

The goal of life insurance is to provide a safety net for your beneficiaries (typically your spouse/children). The payout (known as the death benefit) helps to achieve the family’s financial goals. A few examples might be paying the monthly bills, helping with the mortgage balance, supplying support for college tuition, wedding costs, etc.

Typically, the amount of life insurance is based on the needs and goals of the owner. Meaning that the amount of coverage you will need depends on your specific situation.

The more children or out-standing debts (mortgages, car payments, credit card debts, number of kids wanting to go to college, etc.) the more your survivors will need.


Two Types of Life Insurance



Permanent (whole and universal) life insurance is generally more expensive than term life insurance.


Term Life Insurance:


Term life insurance provides protection for a specific period of time. You pay premiums for a specified term (usually 10, 20, or 30 years), and if you die within that term, the insurer pays your survivors a benefit.

The premium payment amount stays the same for the coverage period you select. After that period, you may be able to continue coverage but usually at a substantially higher premium payment rate.

Term insurance is similar to car insurance… If you stop paying the premiums, you will lose the insurance.

Beware, once you have stopped payments and are no longer covered, you may need to take another medical exam. Moreover, your premiums may change because you are now older and your health may have changed from when you first applied.


Whole and Universal Life Insurance:


Both whole and universal life insurance provide lifetime coverage. Moreover, you earn a guaranteed cash value in exchange or your premium payments. So what is the difference you ask? Read on…



Using Life Insurance to Transfer Wealth Tax-Free:


Universal life insurance is often used as part of an estate planning strategy to help preserve wealth to be transferred to beneficiaries.

This is because universal life insurance policies are flexible and may allow you to raise or lower your premium payment or coverage amounts throughout your lifetime.

Should you need to transfer more tax-free wealth upon your death, you ask your life insurance company to increase your coverage amount. This means that your premium will likely increase as well.



A Comparison of Life Insurance Policy Types:


Here is a great comparison table of how life insurance plans work, provided by Fidelity.


Life insurance table comparison



Term life Insurance to Pay-off Student Debt


Over 44 million Americans collectively hold $1.5 trillion in student debt. Nearly 70% of college students graduate with a significant amount in loans. Shockingly, the average student loan borrower has $37,172 in student loans, which is a $20,000 increase from 13 years ago.

If you have graduated with big student loan debts, that a parent cosigned for, you or your parent may want to get a life insurance policy on you to cover the balance of the loans.

A co-signing parent may have helped you take out loans, with the intent that you will be the one to pay them off. Your parents cosigned the loan with your best interest at heart because they wanted you to get an education.

Losing a child is supposed to be one of the worst events a person can live through. To make matters worse, being left with a huge outstanding loan on top of the loss of a child would be tragic.

To prevent this from happening, you can purchase just enough term life insurance to cover the outstanding debt. In your early 20s, this policy should be dirt cheap.

Note that you only need this insurance if your loans have cosigners. If you are the only signer on your loans, your parents cannot legally be held responsible for those debts.



A Word of Caution: 


It’s important to note that: Although life insurance can be used to replace lost potential income, the benefit is paid at the time of death in a lump-sum payment.

Therefore, it is important that the beneficiary carefully reinvest and pay off debts in a strategic way.

A portion of the money should go toward paying off debt that has a higher than 5% interest rate (like credit card debt) and the rest should be reinvested.

The thought behind this method is that the stock market returns an average of 7% per year over any 40 year period, while the average inflation rate is around 2% per year.

In sum, the money would be better off being reinvested in the stock market than paying down any debts with an interest rate of lower than 5%. To create a safety buffer, you may consider paying off any debt with an interest rate of over 4%.

Remember to always set aside 6-12 months in an emergency fund prior to allocating the rest to reinvestment. There are many investment vehicles that produce income, such as dividend stocks, investing in private equity real estate companies, and REITs.



How Much Life Insurance Do You Need?


Here is a great video that explains how much life insurance you should consider purchasing by Investopedia.



Diversification is one of the most important aspects when deciding how to allocate your investment portfolio. Spreading out your risk amongst many different asset classes will help you weather the many inevitable storms to come. Your investment portfolio should include stocks, ETFs, fixed income assets, real estate, and other investment vehicles.



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If you have learned anything new, please remember to share so that I can continue to provide you with more free content!

Feedback is always welcome! Is there a wealth-building strategy that you would like to learn more about? If so, let me know in the comments section.

Long Term Care

Financial Planning: Why You Need Long Term Care

Most people aren’t even thinking about it, but the numbers say that you should be. Ask yourself, “Am I saving enough to take care of myself so that I do not become a burden on my children or left dependent on the government?”. Long term care is one expense that can put your mind at ease.

Financial Planning_ Why You Need Long Term Care


While the costs to pay for long-term care can be daunting to think about, the earlier you start paying into a program the cheaper the rates will be. This article will help explain what long term care is, why it is important to think about your future needs, and tips on how you can prepare now.


Today, Millennials must constantly make difficult trade-off decisions. Our generation has to think about caring for our aging parents, paying for the needs of our children, and saving enough for our retirement. 

According to the U.S. Department of Health and Human Services (HHS), around 70% of people turning age 65 will need long term care services at some point in their lives.



Why You Should Purchase Long Term Care: The Facts


As parents, the last thing you want to do is become a burden on your children. 

According to a 2015 study by AARP and the National Alliance on Caregiving, around 43.5 million people in the US have provided unpaid care in the last 12 months. Typically, an unpaid caregiver is a family member.

On average, caregivers spend 20 hours a week giving care. In relative terms, that is a part-time job! Around 58%  of those caregivers perform intensive personal care activities, such as bathing and feeding.

The average American life expectancy is 78 years. Moreover, the Population Reference Bureau projects that in 2060 nearly 100 million Americans will be 65 or older.

According to the CDC, if you reach the age of 80, you’ll likely live another 8-10 years.

By purchasing long term care, you can feel better knowing that you have taken the proper steps to ensure that your health will be cared for and that you will not run out of finances to do so.

So what is long term care?


Long Term Care:


Long term care is care that you need if you can no longer perform everyday tasks due to a chronic illness, injury, disability or the inevitable aging process.

We all age, and the statistics show that with modern medicine we are likely to live well into our 80’s. Long term care includes the supervision you might need due to common cognitive impairments such as Alzheimer’s or dementia.

Long term care is not intended to cure you. It is chronic care that you will need for the rest of your life. You can receive long term care in your own home, a nursing home, or an assisted living facility.

According to a Georgetown University study called, “Long-Term Care Financing Policy Options for the Future,” nearly 41% of long term care is provided to people under the age of 65.

This means that a large percentage of people who use long term care have not even reached the age of retirement!

How can this be?

Long term care assists those who need help taking care of themselves due to:

  • Accidents (from a car crash or a sports injury)
  • Diseases (such as multiple sclerosis and Parkinson’s)
  • Disabling events (such as strokes, brain tumors, and spinal cord injuries)
  • Disabling chronic conditions
  • Developmental disabilities
  • Severe mental illnesses

These are examples of injuries and ailments that can happen to anyone, at any age.

Recently, the National Council on Aging has found that 75% of seniors have at least one chronic health condition and that most have two or more. Conditions range from mild arthritis to advanced Alzheimer’s disease.

The National Investment Center (in their 2010 Investment Guide) cited that the average length of stay in an assisted living facility was 29 months.

The point is, it’s not a question of whether you are likely to need assisted care in your life… But will you be financially prepared for when it happens?


How Much Will You Need?


Below are some of the national average costs for long-term care in the United States (from 2016).

  • $225 a day or $6,844 per month for a semi-private room in a nursing home
  • $253 a day or $7,698 per month for a private room in a nursing home
  • $119 a day or $3,628 per month for care in an assisted living facility (for a one-bedroom unit)


You can check the average costs for specific states here.

Daily health care is expensive, so properly planning for the future is critical.


Ask Yourself:
  • Can my retirement nest egg afford $80,000-$90,000 for 2.5 years?
  • Can my children pay for this additional cost?


Why Waiting Doesn’t Pay:


According to the American Association for Long Term Carethe best time to apply is in your 40’s-50’s.

Note, the younger you apply the cheaper the rates. This is because insurers offer discounts to applicants who are in good health. These discounts are locked in, meaning that you won’t lose them if your health changes.



Government Assistance and Programs:


Relying on the government should never be your first choice. Due to strict standards, you may not end up qualifying for government assistance. You could get stuck in a position where you don’t have enough to adequately care for your health, yet make too much to qualify for government assistance.

Medicare does not pay for non-skilled assistance with Activities of Daily Living (which make up the majority of long-term care services).

Approximately 47 million seniors live in the United States, and the senior population will soon double.

What’s more, women are having fewer children. This means that there will be fewer working-age people to provide for each elderly person.

Social security, Medicaid, and Medicare are already strained as it is. With the aging population and low birth rate trends, there will be fewer dollars to go around.

The question is, do you want to leave your health care up to chance? Many people get stuck in the middle where they have too much income to qualify for benefits, but not enough income to pay for adequate assistance.

In sum, you must plan for your own future because relying on the government will leave you under cared for.

Here is a quick video that summarizes what we have talked about (provided by Life Happens).



The Take Away:


Different kinds of insurance help you have confidence in your future and mitigate the risk that is sure to come.

Putting money aside, automatically, through a workplace or individual insurance plan is one of the simplest ways to make sure you’re continuously adding to your nest egg. What may seem like a nagging expense now, may cost you more later.

Having the proper amounts of insurance and planning for your retirement are two key components of creating a financially secure future.

Diversification is one of the most important aspects when deciding how to allocate your investment portfolio. Spreading out your risk amongst many different asset classes will help you weather the many inevitable storms to come. Your investment portfolio should include stocks, ETFs, fixed income assets, real estate, and other investment vehicles.


Like what you see? Stay a while!


If you have learned anything new, please remember to share so that I can continue to provide you with more free content!

Feedback is always welcome! Is there a wealth building strategy that you would like to learn more about? If so, let me know in the comments section.


Tax Free Money: What is an Opportunity Zone?

Who doesn’t love tax-free money? I know I do! If you are looking for an investment vehicle that has great tax advantages, look no further. The creation of Opportunity Zones is one of the greatest ways to generate wealth and shelter your income from taxes ever created. In this article, I will explain what an Opportunity Zone Fund is and how it works. I will break down some of the details so you can decide if it’s a good investment opportunity for your current financial situation.

opportunity zone


What is an Opportunity Zone?


The Opportunity Zone investment vehicle was created by the Tax Cuts and Jobs Act (passed on December 22, 2017). An Opportunity Zone is an economically-distressed community where new investments may be eligible for preferential tax treatment.

Essentially, the government wants people, like you, to invest in low-income areas. The government uses tax-incentives to push its social agenda. The goal is to get people to save money, reinvest it, and rebuild dilapidated communities.

Moreover, the Opportunity Zone is a tool which spurs economic development by providing tax benefits to investors who rebuild and create jobs in distressed communities.

In total, there are 8,700 qualified Opportunity Zone tracts in the US and within its territories.

What Tax Benefits Do Opportunity Zones Provide?


Investors can defer taxes on any prior gains when they roll the invested amount into a Qualified Opportunity Fund (QOF). If you hold on to a property within a QOF for 10 years, you will receive a step-up in value.

This means that the cost basis will become equal to its fair market value on the date that the qualified opportunity fund investment is sold or exchanged. You can learn about how a step-up in value works by reading How to Defer Taxes Forever with a 1031 Exchange.

Therefore, if you sell a property after owning it for 10 years within a QOF, you won’t owe any taxes!!!

Should you decide to sell the property before the 10-year mark:
  • If the investment is held for longer than 5 years, there is a 10% exclusion of the deferred gain
  • more than 7 years, the 10% becomes 15%


What Qualifies as Eligible Capital Gains for Investment into an Opportunity Zone?


Capital Gains coming from any of the following investments can be contributed to an Opportunity Zone Fund and receive tax-benefits:

  • The sale of stocks or bonds
  • Income from the sale of a property
  • The sale of an interest in a partnership


An added benefit is that you and other investors can pool funds to invest in multiple assets.



Where Are These Opportunity Zones Located?


The U.S. Treasury Secretary certifies certain zones that qualify for Opportunity Zone investment. For an area to qualify, the poverty rate must be > 20%. In fact, many of the zones have an average poverty rate of nearly 31%.

A list of Opportunity Zones can be found on the US Department of the Treasury’s website (CDFI Fund page).

Here is a quick visual of where Opportunity Zones can be found.

Opportunity zone map

Photo credit:


The Qualifications:


In order to qualify, the fund must intend to engage in ground-up development. Meaning that you have to “substantially improve” an existing property.

Equity over Debt: Capital gains that are invested in a Qualified Opportunity Fund must be equity and not debt. What this means is that you cannot use loans or leverage.

Additionally, you will need to invest your capital gains into a Qualified Opportunity Fund within 180 days of realizing your capital gains from a prior investment. Remember to coordinate with your accountant because you are solely responsible for ensuring your eligibility.



How to Tackle Low-Income Tenant Problems Before they Occur: 


One cautionary mention is that you should be familiar with how to rehab properties (work with contractors) and manage rental properties.  One way to reduce late or missed rent payments is to become a section 8 landlord.

Section 8 tenants get assistance from the government, meaning that a portion of their rent will always get paid. What’s more, is that if a tenant fails to pay their rent on time or is consistently late on payments it will jeopardize their status to continue to receive a Section 8 voucher.

Here is a quick video provided by Shelter Press on how to become a Section 8 landlord.



The Take Away: 


Diversification is one of the most important aspects when deciding how to allocate your investment portfolio. Spreading out your risk amongst many different asset classes will help you weather the many inevitable storms to come. Your investment portfolio should include stocks, ETFs, fixed income assets, real estate, and other investment vehicles.

To learn more about Ray Dalio’s All Season’s stock portfolio, read Stocks: A Diversified Portfolio.


Like what you see? Stay a while!


If you have learned anything new, please remember to share so that I can continue to provide you with more free content!

Feedback is always welcome! Do you know any tax-free tips that you use or want to share? Please comment below!