10 min read

A Breath of Fresh Air

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Happy Thursday!

Things may be finally cooling down, with the weather and the economy. Gas prices are at their lowest level in over 5 months. Higher mortgage rates are already pointing to a saner housing market, with fewer buyers and builders slashing prices.

Lately signs of slowing inflation have been like a pleasant breeze on a hot day to the stock market. Investors hoping this all means the Fed will go slower on rate hikes have pushed share prices higher. In fact, the S&P 500 has risen for each of the last four weeks. Time will tell if this is a bit of summer heat-induced delirium or if things are really moving in the right direction. Our only advice to FWIW readers is to remain focused on the long-term and not the daily ups-and-downs of the market. And drink lots of water.

This week also saw the Inflation Reduction Act actually signed into law. For those interested in a brief overview, we discussed it last week and this is a great chart of all the energy transition tax credits and incentives in both the IRA and the Bipartisan Infrastructure Law passed in November. For those looking to see it in action, the Department of Energy was super speedy in almost immediately releasing a list of EVs that may be eligible for the up to $7,500 tax credit included in this bill.

Also noteworthy for investors is the 15% minimum tax rate for large corporations and the first ever tax on stock buybacks. Analysts say these won’t adversely affect most companies or change their behavior. But as one columnist writing on stock buybacks put it, “The horse has left the barn.” Stay tuned.

News you can use

Graphic of newspaper with magnifying glass

Do I need a financial advisor?

Graphic with a computer, folder files, papers, a piggy bank and coins.

Asking if you need a financial advisor is kind of like asking if you need a wedding planner. Sure, having expert help can do wonders for your stress level and ensure that you don’t overlook crucial details, but is it really worth the money?

Here are a few situations when it probably makes sense to consult a professional when planning for your nuptials financial future:

1.     You don’t know where to begin

When you’re just starting out, the decisions can be overwhelming. How do you accomplish all your short-term goals — like paying off debt, buying a house or having kids — while setting yourself up to make your money work for you over the long-term? How do you make sure you’re not over-exposed to any one market? Even an initial meeting with a financial advisor can help put you on the right track. You’ll get tips on how to balance your investments across asset classes and set realistic targets so you know what kind of returns to expect.

2.     You can’t keep your emotions in check

If every market move makes you want to reshuffle your investments faster than Julia Roberts ran from the altar in “Runaway Bride,” your long-term performance could suffer. As FWIW readers know, investing for the long haul requires that you resist the temptation of day trading and focus on the bigger picture. An advisor can bring logic and data to your decisions, helping you stay the course.

3.     Your situation is complicated

Searches can help you figure out some investing basics, but sometimes even the best keyword search on Google or TikTok won’t turn up the answer you need. Perhaps you’re deciding how to handle an inheritance, combining assets with a new spouse, or working through multiple income streams from your different gigs. An advisor will help you sort through the messy situation with an eye toward both immediate tax implications and long-term returns. A financial advisor will help you figure out how to maintain the right balance of investments over time, decide the best timing to buy and sell to reduce tax impacts and keep a watchful eye not only on your investments, but larger market trends.

4.     You just...can’

Not everyone likes managing money (and that’s ok!). If you’d rather focus your mental energy on other things, it’s better to find a trusted partner to help you make investment decisions than just stay out of the markets altogether. Look for an advisor that provides clear, regular reporting so you can stay on top of where things are without needing to invest a lot of time yourself.

Types of advisors

Meeting with a financial advisor doesn’t mean sitting in a wood-paneled office across from a suit. You have more options than you might think.

A traditional advisor can meet with you in person and offer personalized advice. That, of course, comes for a fee — often around 1% of your assets under management. And some advisors will only work with you if you have a minimum dollar amount to invest, such as $250,000 in assets.

If you’re looking for a less financially taxing route or don’t have six figures to invest yet, consider a robo-advisor or online financial planning service. Robo-advisor platforms like SoFi and Acorns have democratized finance by making it more affordable and easier to access investment recommendations. Fees are lower and many platforms require no minimum balance. Just know that you’re depending on an algorithm to pick investments for you, so it might not be the best option if you have a complicated situation.

An in-between option is to talk to an online financial advisor through a firm like Facet Wealth or Personal Capital. You’ll get personalized advice but can stay in your pajamas for the chat. An online advisor typically charges a lower fee than a traditional one. Some do require you to keep a balance of $25k or more, but you can find some with no minimum investment.

How to find your financial partner

If there’s a Tinder for financial advisors, we haven’t found it yet, although there are a number of lists and directories that can help you narrow the playing field, including these:

Once you’re considering an intro date with someone, be honest about whether they’re a match. You’ll of course want to know about their credentials, but personality is important too. You should feel comfortable opening up to your advisor; if you don’t have rapport, swipe left. Also make sure you understand their fees. Most advisors charge fees based on how much money you have invested with their firm, but some charge an hourly rate or project fee.

As a values-based investor, you have an additional layer to consider — will the advisor work with you to align investments with the things you care about? This may be trickier than you think. According to a recent survey from the Journal of Financial Planning and the Financial Planning Association, just about one-third of advisors are using or recommending ESG strategies to clients in 2022 (that’s down from a peak of 38% in 2020).

Ask whether an advisor has pursued any specialized education in areas that align with your values. For example, if socially responsible investing (SRI) is important to you, you might want to know if they’ve completed the Chartered SRI Counselor (CSRIC) program. You can also quiz them about what kind of research they do on the issues that are important to you.

Only you know if working with a financial advisor is the right choice, but we hope these tips help as you decide whether to take the plunge. And hey, if you’re trying to figure out if you need a wedding planner or not, we think our 4 tips above apply to that decision as well.

Trash Talk

Graphic of miscellaneous plastic items – including bags, bottles, cups, caps and toothbrushes.

Plastics are everywhere, and we don’t mean the new “Barbiecore” aesthetic or “Mean Girls” memes. Synthetic polymers are in our credit cards, the packaging of our groceries, the plumbing in our buildings, our clothing, toys, and even the oxygen masks in hospitals.

It’s hard to comprehend how recent this invention is. Basic scotch tape and toothbrushes with nylon bristles were created in the 1930s. Disposable diapers? Not until the 1960s. In a little more than a century, plastic has transformed almost every aspect of human activity. It's been a remarkably useful, almost miraculous, invention.

But in this short span of time we’ve lost control of the debris. The durable man-made material can take anywhere from 20 years to 1,000 years to decompose, and we have produced, and are still producing, so much of it, it’s clogging and choking the planet.

The stats are astonishing. Every minute one garbage truck worth of plastic enters our oceans. A plastic bag has an average “working life” of 15 minutes and we use 5 trillion a year. Scientists have found microplastics in vegetables, rain drops, the placenta of newborns and Arctic snow. Plastic also contributes to climate change — its production accounts for about 4-8% of global annual oil consumption, the refining process releases greenhouse gasses, and we burn tons of it every year to dispose of it.

Recyclable ≠ Recycled

You’ve probably noticed recycling symbols on items when you shop. Buyers tend to believe that as long as they separate their garbage there’s no harm to the environment. But the truth is less than 10% of plastic waste generated globally is recycled. The US reportedly recycled just 5% of post-consumer plastic waste last year. The rest goes to incinerators and landfills or enters oceans.

Recycling plastic is complex, not possible for many items like the ubiquitous clamshells, and definitely not economical. Experts say we need to reduce consumption with wide bans on single-use plastics like straws, bags, and utensils.

Divest from polluters

If you’re looking to align your portfolio with a responsible green future you may want to check the plastic footprint of your stocks. Just 20 petrochemical companies are said to be responsible for 55% of the world’s single-use plastic waste. You can also look at top banks and asset managers providing funding to this industry. Further down the supply chain are packaged goods sellers. In 2020, Break Free From Plastic collected 346,494 pieces of plastic waste from 55 countries and identified the biggest polluter brands.

Invest in solutions and progress

Sustainable investors concerned about the plastic problem can look to companies that are positioned well to both help the environment and benefit from efforts to save it. (Stocks mentioned below are only examples and not recommendations.)

  • Bioplastic: The market for biodegradable plastic made from renewable materials like corn and sugar is small — it represents just 1% of global plastic production, per AP – but it’s an area to watch. One pioneer is Danimer Scientific, which sells straws and drink stirrers to Starbucks and Dunkin’ Donuts.
  • Sustainable packaging: Almost 40% of all plastic produced is used for packaging, so investors can target brands acting responsibly. For example, CVS vowed to reduce virgin plastic in its store-brand packaging by 50% by 2030. Primo Water Corporation claims each of its refillable five-gallon bottles of water saves around 1,500 single-serve bottles from landfills and oceans. Plant-based, recyclable PET bottles with low carbon footprints are also being introduced from the likes of Origin Materials.
  • Protect marine life: The Newday Ocean Health ETF (AHOY) invests in firms that combat plastic pollution in oceans, like Tetra Tech, Clean Harbors, and Agilent Technologies.
  • Brands using recycled plastic: Big and small brands are including recycled plastic in their materials. For instance, the laces on Allbirds sneakers are made of recycled bottles.
  • Plastic recyclers: You can invest in plastic waste management and recycling with companies like Casella Waste Systems and Republic Services.
  • Chemical recycling: Big Oil is introducing new advanced recycling technologies and may have the scale and market power to make a real difference. We get that many may be wary of investing along these lines and we recommend doing your research around your specific values and priorities before taking any actions. However, we remain in the “progress not perfection” camp (particularly when so much progress is needed) and we will keep an eye on progress in this area.

Before you go -

In the ultimate revenge of the nerds, Airbnb has developed “anti-party” tech. Good luck convincing an algorithm it’s just a quiet gathering of a few friends with some music and food.

** FWIW team members own shares of Apple.