Joan Koonce, Ph.D., AFC®

Extension Financial Planning Specialist

Three Green Questions

Presentation Overview•Can money be saved by going green?

• Is the amount saved significant enough to improve our financial future?

•What does it mean to invest green?

Green Savings

Transportation Savings Behavior Change Annual SavingsSmaller fuel efficient car $884Hybrid car $1,147Biodiesel fuel car $800Proper car maintenance $798No car $8,580One less trip per week $215

Source: Bach, David (with Rosner, Hillary). (2008). Go Green, LiveRich. Broadway Books: New York.

Green Savings

Home Energy SavingsBehavior Change Annual SavingsHome energy audit and $720 (Up to 30%) subsequent changes ($2,400 bill)Seal leaks and add $480 (Up to 20%) insulation ($2,400 bill)Changing your thermostat a few degrees $114

Source: Bach, David (with Rosner, Hillary). (2008). Go Green, LiveRich. Broadway Books: New York.

Green Savings

Home Energy SavingsBehavior Change Annual SavingsUnplug appliances $94Buy energy star appliances $50 (one appliance)Use fluorescent bulbs $9Plant trees and shrubs $177Turn off the water $72 (only

bathroom)

Source: Bach, David (with Rosner, Hillary). (2008). Go Green, LiveRich. Broadway Books: New York.

Green Savings

Shopping SavingsBehavior Change Annual Savings1 less bottle of water a day $500Buy products in bulk $800 (Up to 33.3%)

($2,400 bill)Take your own bags $31Eat less meat $312Make your own green cleaning products $580

Source: Bach, David (with Rosner, Hillary). (2008). Go Green, Live Rich. Broadway Books: New York.

Green Savings

Shopping SavingsBehavior Change Annual SavingsBuy recycled paper products $40 (toilet tissue)Buy green furniture $400Sell unused and buy used instead of new items $210

Source: Bach, David (with Rosner, Hillary). (2008). Go Green, Live Rich. Broadway Books: New York.

Green Savings

Recycling SavingsBehavior Change Annual SavingsPay only when you have garbage $26Save on purchases by

recycling without reading or opting out of catalogs $1,413

Source: Bach, David (with Rosner, Hillary). (2008). Go Green, Live Rich. Broadway Books: New York.

Green Savings

Other Savings at Home and WorkBehavior Change Annual SavingsNurse your baby $2,080Exercise outside $600Pay bills online $400Take lunch to work $2,250Work one day a week

from home $215

Source: Bach, David (with Rosner, Hillary). (2008). Go Green, Live Rich. Broadway Books: New York.

Additional Green Savings

• Grow your own produce• Use green beauty products• Green gifts

•Creative wrapping or recycled wrapping paper•Give e-cards or cards made with recycled paper

• Build or buy a green home• Get a green mortgage

Source: Bach, David (with Rosner, Hillary). (2008). Go Green, LiveRich. Broadway Books: New York.

Additional Green Benefits

•Tax Benefits•http://www.energystar.gov/index.cfm?c=

products.pr_tax_credits#2

Investing Your Green Savings

YOU CAN BECOME A

MILLIONAIRE!!!

Investing Your Green Savings

Green Savings

Amount saved after 25 years @

0%(Interest)

Amount saved after 25 years @

3%(Interest)

Amount saved after 25 years

@ 9%(Interest)

Amount saved after 25 years

@ 12%(Interest)

$2,84825% of Green Savings

$71,200($0)

$104,405($33,205)

$255,281($184,081)

$421,916($350, 716)

$5,69550% of Green Savings

$142,375($0)

$208,773($66,398)

$510,473($368,098)

$843,685($772,485)

$8,54375% of Green Savings

$213,575($0)

$313,178($99,603)

$765,755($552,180)

$1,265,601($1,194,401)

Investing Green: What Does It Mean?

•Referred to by some as socially responsible or socially conscious investing (SRI or SCI)

•SRI or SCI includes investing in companies that protect the environment among other things

Definitions

• No standard definition exists

• SRI: Investing in companies that operate ethically, provide social benefits, and strive to protect (or not damage) the environment

• Companies usually avoid business operations that deal with alcohol, gambling, weapons, tobacco, etc.

Source: Socially conscious investing. InvestorWords.com. Retrieved July 28, 2008, from InvestorWords.com website: http://www.investorwords.com/4614/socially_conscious_investing.html

Definitions

• Green investing: “Environmentally correct investing”

• Investing in companies that try to improve (or not damage) the environment through their operations

Source: Green investing. InvestorWords.com. Retrieved July 28, 2008, from InvestorWords.com website: http://www.investorwords.com/2234/green_investing.html

Definitions

• Environmental fund• “A mutual fund which invests exclusively or

predominantly in companies which are actively working to improve the environment or have otherwise environmentally friendly business operations.”

Source: Environmental fund. InvestorWords.com. Retrieved July28, 2008, from InvestorWords.com website:http://www.investorwords.com/1717/environmental_fund.html

How to Invest in SR or Green Companies

•Stocks of SR or green companies•Bonds of SR or green companies•SR or green mutual funds and exchange-

traded funds (EFTs)•Greater diversification•Currently, only a few SR or green funds exist

Research SR or Green Funds

•Social Funds•Largest personal finance website devoted to SRI•www.socialfunds.com

•Morningstar• Information on all types of funds•Find articles on SR funds•www.morningstar.com

Research SR or Green Companies

• Domini 400 Social Index• Common stock index of U.S. equities. First benchmark

index constructed using environmental, social and governance (ESG) factors.

• http://www.kld.com/indexes/ds400index/index.html

• Calvert Social Index• Broad-based benchmark for measuring the

performance of large, U.S.-based socially responsible companies.

• http://www.calvert.com/sri_calvertindex.html

Research SR or Green Companies

• FTSE4Good Index• Measures performance of companies that meet

globally recognized corporate responsibility standards and facilitates investment in those companies.

• http://www.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp

• Dow Jones Sustainability Index• First global indexes that track the financial

performance of the leading sustainability -driven companies worldwide.

• http://www.sustainability-index.com

SR or Green Investing

•Research SR or green companies, mutual funds and EFTs before investing in them.

•Being a SR or green company, mutual fund or EFT doesn’t mean it is always a good investmen.

SR or Green Investing

•Don’t invest your entire portfolio in SR or green companies, mutual funds or EFTs.• Diversification is still important.

•All SR or green companies, mutual funds and EFTs are not created equally.

Green Investing

•“I believe green investing will be to the twenty-first century what technology was to the twentieth century” (Bach, 2008).

SR and Green Investing Websites

• Websites that might be of interest to you.• www.greengreen.com

• Sign up to receive tips from David Bach on green savings, green businesses and green investments.

• www.climatecounts.org• Provides information for companies in various sectors based on

their commitment to preserving the environment. • www.socialinvest.org

• Find financial planners, banks and others that specialize in SRI. Go to the individual investor’s link for the financial services directory.

Bach, David (with Rosner, Hillary). (2008). Go Green, Live Rich.Broadway Books: New York.