Investors blend ethics with experience
While by no means the majority of ethical investors, more seniors are applying their values to their investments.
Over his six-plus decades, John Santosuosso has cultivated a soft spot for outcast nations, animals, and even plants. But none of that has kept him from earning hundreds of thousands of dollars in the stock market. To the contrary, he says, those values have for nearly two decades guided him to promising companies, often in far-flung places he's researched as a professor of political science at Florida Southern College in Lakeland, Fla. To him, a country known to brokers as an "emerging market" is sometimes "a good place to put money" in a moral as well as a financial sense.Skip to next paragraph
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"These places need capital," Mr. Santosuosso says. "If we are investing in these developing countries, that helps to create a climate where capital is attracted to them, so it's part of my overall socially responsible strategy. I might also add: It has been nicely profitable."
How profitable? His shares in a Brazil-focused DWS Scudder fund, for instance, are worth 10 times what he paid for them in the 1990s. His Templeton Russia Fund likewise delivered a five-fold return on investment in less than a decade.
Looking for profits from the developing world is just one of many lessons learned by seniors such as Santosuosso who have taken an ethical approach to investing. Now, some of these seniors, who've ridden various strategies through good times and bad in their lifetimes, are passing down hard-earned wisdom about what works and what doesn't for reaping profits from socially responsible investing (SRI).
Seniors by no means represent the majority of investors in SRI mutual funds. One 2003 survey, the most recent available, found that seniors make up just 5 percent of investors in Pax World Funds, for example.
But seniors who do take an SRI approach have often been investing longer than their younger counterparts. That gives them more time to accrue tales of what works and what doesn't. And while SRI requires a special intentionality among younger investors, the venture probably comes as second nature to senior citizens - at least when they think about it, according to Ron Manheimer, director of the North Carolina Center for Creative Retirement at the University of North Carolina at Asheville.
"As people get older, they get interested in biographies and history and how they fit into the larger picture of things," Mr. Manheimer says. "There's an interest in, 'What will outlast me?' They're starting to think more long term in terms of legacy. [Ethical investing] may fit in very well with that mind-set if it carries over into what they're putting their funds into."
For Joan Elbert of Chicago, a lifetime of activism on affordable- housing issues has colored a passion for certain types of investments now that she's a divorced retiree. On one level, she's found that mutual funds from Calvert suit her preference for "stable" investments: "It's so good when you get this [statement] in the mail, and it isn't a minus," even during the corporate scandals of 2002 and 2003. And she likes the fact that they shun the stocks of weaponsmakers.
More proactively, she put $5,000 into the Federal Low-Income Housing Tax Credit Partnership about 10 years ago. Investors help finance low-income home construction by committing their dollars for 15 years, taking annual tax credits, and hoping they can sell their stake in an appreciated real estate market when the term is up.
Her contribution wasn't big money, Ms. Elbert says, but it earns her enough of a tax credit on her $39,000 annual income that last year she received a $14 refund from the Internal Revenue Service.