So you're building your nest egg, putting money away-maybe into a 401(k) like the millions of other Americans whose employers offer retirement savings plans. And maybe, like so many of us, you are also waking up to the realization that you don't want to just put your hard-earned dollars into obscure index funds that bolster companies or industries that might not align with your values-or your LGBTQ identity.
LGBTQ-identified people like me are more likely to be worried about retirement savings and having enough to live on, according to a 2015 study conducted by SAGE, an LGBTQ organization focused on older adults. And more than two-thirds of all Americans care about social issues and putting their hard-earned dollars to work investing in causes that are oriented towards social good, according to the reputation intelligence firm, RepTrak.
So, how do you ensure that your money is both growing and supporting LGBTQ-inclusive causes?
Learn the landscape
Understanding the landscape is the first step to considering how your dollars can go towards specific and LGBTQ-supportive causes. Unfortunately, it's not easy terrain to navigate. In many ways, so-called "impact investing," or investments made into index funds that are focused on environmental, social or governance (ESG) issues, is in its infancy. Only 3 percent of 401(k) funds are ESG-focused, according to the research firm, Morningstar. That's compared to about 25 percent of all index funds more broadly that are ESG-focused. The good news is that there is growing interest in this space.
"Putting your dollars in ESG and LGBTQ-friendly funds is a great way to send a signal to the market that these issues are important," says Jim Marrocco, a New York-based certified financial advisor at Thinking Big Financial. "A lot of exciting growth is happening in the ESG space, but it can still be a bit of a gray area in terms of being actually impactful, especially when it comes to LGBTQ-inclusive investments," he says.
Some are investing even more deeply than ESG, looking to socially responsible investing (SRI), which examines not only the practices of companies across their environmental, social, and governance, but works a level deeper to eliminate specific investments that might clash with the investor's ethics, including if any have done or said anything that is anti-LGBTQ.
There is also one LGBTQ-specific index fund you can invest in: Dubbed LGBTQ100 ESG Index, the fund was created just about a year ago and is composed of the top 100 companies billed as being the most LGBTQ-friendly. Included in the fund are brands like Tesla, Amazon, Facebook, Starbucks, and Verizon, among others on the list. It has performed well since its incarnation, with returns of about 12 percent.
Look to the experts for help
Your next step after getting some baseline knowledge about the landscape of investing and ESG indexes is to seek out advise from the experts.
"To ensure your money is supporting LGBTQ-inclusive causes, work with a financial planner who supports these causes," says David Rae, who is a financial planner in Palm Springs and Los Angeles and president of DRM Wealth Management, an LGBT-owned firm. "Don't be afraid to ask which charities a potential financial planner supports. I know personally, as a gay financial planner, I put a lot more time into finding ESG funds and LGBTQ-friendly companies than the average financial advisor," he explains.
If you have a 401(k) or retirement savings plan with your employer, the service provider that manages your account often offers with some built-in advisory services for free. Look into whether you can hop on a 30-minute call with an advisor to talk through your options in investing in LGBTQ-friendly and ESG indexes. Or check out any webinars or pre-recorded explainers they may offer.
If you don't have that as an option, consider resources like SAGE's resource section, to help you find LGBTQ-affirming legal and financial assistance. An LGBTQ-identified or specific financial advisor can be a great way to ensure your best interests are at center of your investing pursuits. It also ensures you are giving business to LGBTQ-affirming services.
Consider alternate options
Given the infancy of ESG investing and how difficult it is to separate out LGBTQ-specific causes from the broader umbrella of social impact investing, it may be worth considering an alternate approach. Maybe you can't invest in multiple LGBTQ-specific index funds, but you can still direct your dollars towards ESG causes, where you are more likely to run into LGBTQ and other minority identity groups and causes and have a positive impact on them. Plus, investing in ESG can have a positive impact on the communities-such as people of color and LGBTQ folks, particularly those who are transgender and/or nonbinary-who tend to be disproportionately negatively impacted by disinvestment in those areas.
One alternate option is to buy specific stocks in individual companies. Look to resources like the Human Rights Campaign's (HRC) Corporate Equality Index to see which brands rank the highest of LGBTQ-inclusive policies and benefits.
Another option? "You can donate to charities focused on helping the community or spend your money with LGBTQ-focused businesses," offers Marrocco. Allocate a certain portion of your income each year to tax-deductible donations to the LGBTQ organizations that most closely align with your values and interests.
While that money isn't necessarily directly coming back to you when you retire to, say, pay your rent, there is great value in making an investment in the future for LGBTQ people to access opportunities that those who came before us only dreamed about.