For someone who has decided to invest an IRA in a transformative mutual fund, here are some suggestions on how to do it.  Remember, I am not a professional financial advisor.  This page gives standard, conventional suggestions, but talk to your financial advisor if you have one.

Things You Can Affect

First, read a prospective fund’s material to find out what particular concerns they have, what they try to do.  Their concerns should overlap with yours, because once you put your money in a fund it is the fund that chooses the agenda, not you.  Keep searching until you find a fund that works on issues that you are concerned about.  Having found a fund that shares your concerns, confirm that it works in a transformative way, as described elsewhere on this website.  (Exception:  If some particular concern is very important to you, and no mutual fund is paying attention to it, you can contact asyousow.org, which will act as an agent for individuals who want to negotiate with a company about some particular activity.)  

After verifying that a fund follows all the steps of a transformative fund, it is vital to investigate to see how it has performed financially in the past.  This is no guarantee of the future — surprises will surely come — but it gives an idea of which funds are more likely to grow in the future.  This topic is too complicated to discuss here, but two generalities are the following:  bond funds are more predictable than stock funds, but in the long run grow more slowly; and a broadly diverse stock fund is less volatile than a fund with just a few stocks.  But for any fund, you will have to look at its prospectus and investigate its performance history yourself.  The investment choices made by a fund are the biggest factor in how well the fund will grow.

Warning: some funds, or some brokers selling funds, charge a “load”, an extra fee for buying or selling shares.  Stay away from those unnecessary expenses unless they are very small.

Things You Cannot Affect Much

An additional consideration is the convenience or inconvenience of withdrawing money from the investment.  After reaching a certain age, owners of traditional IRAs (but not Roth IRAs) are required to take minimum distributions, which are normally taxable.  The owner may wish to make a number of such withdrawals each year, because when the withdrawal is given to a charity the amount is not counted as taxable income to the owner.  Unfortunately, it is almost universal that withdrawals paid by a mutual fund to a third party, such as a charity, require a “medallion signature guarantee,” a moderate inconvenience.  Any modifications of this requirement are mentioned where information is given for individual investment firms.

Also, every mutual fund charges some fees, either explicitly or absorbed as overhead expenses.  The lowest fees are for index funds, which try to mimic some industry standard and rarely change their holdings.  Every other fund will charge somewhat more, to pay for active management of the contents of the fund, or the work of shareholder advocacy, or the work of selecting environmentally targeted bonds.  Competition keeps these fees within a small range; the differences among them are much smaller than the differences that result from the various investing decisions made by the funds.

However, those who are comfortably retired, or on their way to it, can absorb such fees, regarding them as payment for environmental benefits.  These people have the means to both do well and do good, choosing to put their money into transformative funds that will encourage industries and corporations to work in more environmentally sustainable ways.  It is to these people that this write-up is directed.