Socially Responsible Investments I’ve Made in My Self-Directed IRA

Guest blog by investor Laura Oldanie

It feels so good to invest my retirement funds in socially responsible investments, knowing my money is working to solve social and environmental problems instead of causing them. The vehicle that enables me to direct these funds this way is the checkbook control LLC self-directed IRA (SDIRA), which I opened with Advanta IRA almost three years ago. While not all of the investments I’ve made through my SDIRA achieve regenerative status, everything is at least “less bad” than what I would have been investing in had I left my money in traditional mutual funds, even the socially responsible ones.

First, my disclaimer—I am not a certified financial planner and I’m definitely NOT Two hands holding a small plant with rows of crops in the background representing sustainable investments.your certified financial planner or investment advisor. All information presented here is for educational purposes only. Do your own due diligence prior to opening any self-directed retirement account or making any investment. And before deciding if one of these accounts is right for you, consider consulting a tax advisor first.

Moving My Money from Wall Street to Main Street

The first investment I made with my SDIRA was in Streetshares’ veteran business bonds. Streetshares pays investors five percent interest and uses the invested funds to make loans to main street and veteran-owned businesses. This investment appeals to me because I like the idea of supporting smaller, locally owned businesses. I love these types of socially responsible investments.

My First Forays into Crowdfunding

Next I invested in four start-ups with missions that resonated with me through the crowdfunding website Wefunder.com. The first investment was in the form of a promissory note (loan) to Urban Juncture that pays five percent interest. In its own words Urban Juncture is “working in developing commercial real estate and related enterprises that address the needs of under-served communities” in the Bronzeville neighborhood of Chicago.

The remaining three Wefunder investments were all equity or ownership shares. Tradefox, formerly Scrap Connection, caught my attention with its effort to provide software solutions to companies that buy, sell, or broker recyclable materials.

Ganaz bills itself as “the workforce management platform built for agriculture and food manufacturing.” I like that it more easily links seasonal farm and food industry workers to employment opportunities.

The final Wefunder investment I made was in Native American Natural Food Products. I view this as a meaningful way to infuse some more capital and create additional opportunities in an indigenous community here in the US. Plus, this company is a Certified B Corporation, which means they are committed to equally balancing purpose and profit.

Investing in the Circular Economy

With China greatly reducing the items it will accept for recycling, municipalities in the US are scrambling to deal with recyclable materials piling up in their midst. Terracycle is developing some innovative programs and products to help address this situation. While not a Certified B Corporation, Terracycle does claim to be a social enterprise that “reuses, upcycles, and recycles waste instead of incinerating or landfilling it.” They state that by doing so the company is “moving waste from a linear system to a circular one, allowing it to keep cycling in our economy.” Having read positive articles about the company in Forbes and seeing that TerraCycle has won over 200 awards for social entrepreneurship and sustainable business, I decided to take the leap and invest.

A Cooperative Impact Investing Fund Open to Non-Accredited Investors

Kachuwa Impact Fund describes itself on its website as follows: an investment cooperative and public benefit corporation focused on owning and operating “impact real estate” and investing in privately held “impact companies.” Additionally, the fund states it “is similar to a Real Estate Investment Trust (REIT) combined with a mutual fund whose diversified holdings have a positive impact on society and the environment.” These types of socially responsible investments have the potential to make a great impact.

Helping People Stay in Their Homes

American Homeowner Preservation (AHP) is an innovative crowdfunding platform that uses investors’ capital to assist homeowners who are in danger of losing their homes. The company purchases those distressed mortgages with the goal of working with the homeowners in such a way that can potentially allow them to continue living in their houses. AHP requires a minimum investment of $100 and seeks to provide a 10 percent return to its investors.

Investing in the World I Want to See

My ideal business to invest in is a sustainably minded farm working to regenerate people and soil. I’ve been fortunate enough to find two in my area. My boyfriend and I pooled our funds to purchase an ownership share of a relatively new permaculture farm. This ten-acre farm is managed by the premier permaculture instructor in our region of Florida. The vision for the farm is to create food forests and an orchard, with the emphasis being placed on polycultures and perennial (not annually planted) trees and plants that grow well in our part of Florida.

I also made a small personal loan to an ecopreneur friend of mine who stepped in to save Sweetwater Organic Community Farm from closing down and possibly being sold to developers. This is the longest-running certified organic farm in Tampa, FL. You could possibly find some socially responsible investments such as this in your own community.

Soon after this post goes live, I will begin the process of investing in Iroquois Valley‘s REIT Equity Shares. Iroquois Valley (another Certified B Corp) states that it is a “restorative organic farm REIT farmland finance company that provides leasing and mortgage funding with a focus on the next generation of organic farmers.” As their website states, this unique investing instrument allows non-accredited investors in most states to put their dollars to work “supporting family farms and expanding organic farmland acreage” with a minimum investment of $10,183, which secures 17 shares at $599 each.

Your Self-Directed IRA Takeaway

I am happy I can use my retirement funds for sustainable and socially responsible investments. I firmly believe that if we all work together to make small differences as individuals, our actions lead to a large impact that is beneficial to ourselves, our environment, and our community. I hope this information has shed more light on self-directed plans and how you, too, can invest in things that align with your personal values.

To learn more about self-directed IRAs, contact Advanta IRA. They can answer your questions and explain how their process works for socially responsible investments. For me it’s easy. They are professional but also friendly and familiar. I appreciate the fact that I have one account manager that I deal with when I need help or want to invest. They also allow you to invest in all of the different alternative investments that are allowed in SDIRAs (some self-directed plan administrators don’t allow all assets in their plans).

 

Laura Oldanie blogs about her environmentally and socially conscious pursuit of financial independence at Triplebottomlinefi.com.

This guest blog has been provided for informational purposes only and should not be considered as investment, tax, or legal advice. Advanta IRA does not endorse any investment opportunity mentioned in this article. We recommend you consult the appropriate professional for specific investment advice. Advanta IRA is a self-directed retirement plan administrator and as such we do not sell investments or give investing advice. However, we are happy to answer any questions you may have about how alternative assets and self-directed IRAs work. You can contact us by calling 800.425.0653 or by emailing [email protected].

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