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How to build a rock-solid ethical portfolio in uncertain times

Think cash, CDs, and government bonds, for a start.

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Packer: Absolutely. And as you know, the other things that we take a look at [are]: The age of the person, the years toward retirement, and also the personal comfort level with risk.... So it's really a balancing act, we find.

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Are there other conservative strategies that investors with this social perspective should think about?

Wheat: Government bonds are sometimes one of the best things for people to do in conservative times. Often socially responsible investors tend to overlook government bonds as an investment vehicle. But most of the clients I deal with are very comfortable investing in Treasury securities and certainly in municipal bonds as well. Particularly for clients who have higher income levels, municipal bonds – municipal bond funds – depending on what state they're in, are really effective devices. From the mutual-fund perspective, a number of funds across the asset classes that still are doing very well I like to recommend. Parnassas Equity Income Fund is one of them. And TIAA-CREF Social Choice Fund is another one I recommend people have to get the broad-based equity exposure for growth long-term.

The equity-income fund would be fairly conservative, but Social Choice?

Wheat: I wouldn't label it a conservative choice. It's a broad-based choice. It's essentially trying to replicate the Russell 3000, which includes both large companies and small companies, and I think gives investors a good representation of both growth opportunities and value and is helpful in getting broad exposure to the market.

Packer: There's also ... another wonderful choice called community investing. We have a program through the Calvert Foundation, very well-respected, where instead of a CD one can choose an investment for as low as $1,000 and you can choose the interest rate. And that's what's interesting: anywhere from 0 to 3 percent. And this money goes back to build community, goes to community investment organizations throughout the United States and internationally.

Does anyone really take 0 percent?

Packer: Yes! I'm pleased to tell you that we have people who say, "I've gotten it on the growth side, I'm very comfortable taking 0 percent. It's my way of giving back."

Can anybody use these strategies?

Wheat: I think they apply to everyone. And there are actually some things that apply to people with middle income that aren't available to higher-income people. One of the things I recommend now ... is converting an IRA to a Roth IRA. You have a $100,000 income limit in order to be able to do that. Now, while the market's down, is a good opportunity to convert and make sure your taxes are as low as they possibly can be when you make that conversion.

Volatile markets can mean great opportunity. Are you telling your clients to jump in?

Wheat: I really stick to some basics on financial planning, which is develop an asset allocation and try and stick to that. Keep your costs low and rebalance. I really try and hammer that home to my clients both now when things don't look as good.

Packer: We've been holding a lot of cash this past year. But we're beginning to see some good buying opportunities.

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