How much of an influence should your personal beliefs have on your money values and choices? Patricia Aburdene, author of Conscious Money: Living, Creating, and Investing with Your Values for A Sustainable New Prosperity, explains why making financial choices in accordance with your conscience may help you become a better investor. Find out what “conscious money” is and why doing a value review should be an important step in deciding how you invest.
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Watch Conscious Money on YouTube.Read the Transcript
Interview with Patricia Aburdene
Patricia Aburdene, author of Conscious Money, explains why values are an important component of investing. How do you reconcile your beliefs with your financial choices?
Douglas Goldstein: I’m very excited to have Patricia Aburdene on The Goldstein on Gelt Show. She’s a number one New York Times bestseller, and her most recent book is called Conscious Money: Living, Creating, and Investing with Your Values for a Sustainable New Prosperity. Patricia, do a lot of people deal in unconscious money?
Conscious Money Choices
Patricia Aburdene: It benefits us to be more conscious about money, because everyone’s concerned about money. Conscious Money is about having a positive life-affirming relationship with money. You achieve that when your values are in sync with your money choices. I certainly don’t advocate making money choices just based on values, but when your heart and your head are in balance, you make better choices.
Douglas Goldstein: Do you mean that you should invest green if you like trees, and you should invest in oil if you believe in fossil fuels, or is there more to it than that?
Patricia Aburdene: There’s more to it than that, although those are certainly legitimate points of view as an investor. Step one of Conscious Money is to really start within yourself and know what your values are. I have a fun exercise at the beginning of the book where I invite people to scan a long list of human values and choose 5 or 10 or so that interest them; the ones they feel most attracted to. I then ask them to bring it down to three, and ask them to pick the one value that’s the most important to them.
Douglas Goldstein: Do you have some specific examples?
Patricia Aburdene: Human and practical values like compassion, social justice, and freedom. That’s kind of a practical value. Integrity is certainly an important human value. I’ve spoken to a couple of women lately who did that process and were very surprised with the value that they came up with, but then when they thought about it they understood why.
I was talking about Conscious Money with a woman who is a radio show host, and she mentioned that her most important value was freedom. She had been working at a corporate job where her point of view was challenged by people. She didn’t have the freedom to say what she really thought about financial matters. So she broke away from the corporate job and created a radio show where she could talk about human consciousness in a way that really meant a lot to her. Personally, I discovered my top value wasn’t compassion or love, or any of those things. It was resilience, which is a very practical value.
Douglas Goldstein: When I think of freedom, I think a lot about freedom from an oppressive government. I think about freedom as not investing in companies that are using slave labor around the world. Am I thinking about it in the wrong way? I wasn’t thinking about my personal freedom that I can have a better job.
Patricia Aburdene: People are going to look at these things in entirely different ways. You really have an investment mindset, which is great for your clients, and so is mine. Mine was resilience. How could I use that in investing? My second-to-largest holding is Intel. How could you connect Intel with resilience? Intel is going through a big transformation now, since it missed the boat on mobile technology. It’s now reinventing itself. It is a great example of resilience because this isn’t the first time it has reinvented itself. That capacity to do so, that resilience, is baked into its DNA as a company, and that’s why I am invested in Intel.
Douglas Goldstein: Your position here is that resilience is an important characteristic of a company that would be good to invest in, and therefore you think it’s a place to invest your money?
Conscious Investing Is Key
Patricia Aburdene: I actually connect to its background in resilience as being a very good thing for business. But I also check with an investment advisor and ask what they think of Intel as an investment. What is its free cash flow like? What’s the dividend? That’s the balance.
If you start with your suggestion about being sure that you invest in companies that don’t traffic in slavery, that might not be enough if you really want to be a successful investor. There also needs to be ‘the sweet spot’ of conscious investing, which is the company being strong on human values as well as being strong financially. I would expect that many, many companies would fit the bill on that, where they are both successful financially and very strong in human values.
Supposing I wanted to invest in a tobacco company, I would look up all of the companies and industries that have the same investment level, and see how I could invest in that company without violating my values.
Douglas Goldstein: You start with the value that you have as the launching point, but then you’d go on to further research. What if you are dealing with a company that is resilient or that fights for freedom, but it’s not terribly profitable? What do you then?
Patricia Aburdene: Assuming that you’ve done your homework on both of those and that your heart and your head are both satisfied, you would certainly put it on a list of companies that you’re considering investing in. Personally, I’d start following the company, get a feel for how it works in the markets, and then start with a very small investment and see how it goes.
Douglas Goldstein: Why is it that this model of values will make somebody a better investor? Why not just screen for companies that are trading at a low price-earnings ratio or that have a high dividend?
Values Always Shape Our Choices
Patricia Aburdene: First of all, it must be savvy. Conventional wisdom holds that values should play no role whatsoever in our financial choices. But if you think about it, values shape our choices whether we are conscious of those values or not. Values also write the story of our life; the story of success or failure. Aim to satisfy your heart and your head when you’re making an investment decision. The same applies if you’re trying to save for retirement, or trying to get out of debt, or looking for a great company to work for. When your heart is satisfied, it steadies your emotions. It gives you the sustenance - the emotional sustenance - to make more long-term choices and stick with them.
Douglas Goldstein: Are you saying this is a psychological thing? If you’re investing in something you believe in, you’re able to hold onto it longer?
Patricia Aburdene: Precisely. It is important in investment, but it’s also important if you’re trying to get out of debt. Many people are bummed with debt. They have to make a commitment to cut their expenses, and that’s no fun, but that’s where freedom comes in - freedom from debt. What more wonderful financial situation is there than that? If you can remind yourself what meaning that financial choice has for you, then you can hang in there for the long term.
Douglas Goldstein: Often, people become long-term investors simply because they’ve been told to be, but they don’t really see why. They don’t see what the connection is. I’m going to start telling people that their portfolio is in something they believe in, a quality portfolio, and that it’s worth sticking with.
Patricia Aburdene: My net worth is now a great deal lower than it was 10/15 years ago, but back then, I didn’t have a good relationship with money. That is how I came to write this book. I made a lot of mistakes, spent a lot of money, and made some very poor investing decisions. The worst ones were when I invested in companies that I didn’t really believe in, or when I relied too much on the advice of other people without checking in with myself. I certainly seek plenty of financial advice, but I have to sift through it. Over time, my financial choices are more reflective of who I am at a deeper level.
Every time I had to make a financial choice, whether it was to purchase an investment, I asked myself, “What if the right decision for me from a strictly practical point of view, a good financial choice, was also the right decision for me from a values point of view, from within myself?” It’s got to be both for me. I kept coming back to this again and again, and over time my financial life transformed. Overspending became ridiculous. Why would I do that?
Investing, instead of being a minefield of confusion, became a way to start reading up on companies and have fun learning about them. I was interested in that because of conscious capitalism, which is an important business megatrend in the U.S., Europe, Israel, and Asia. It’s an important global megatrend.
Douglas Goldstein: How can people follow you and follow your work?
Patricia Aburdene: They can visit my website: www.patriciaaburdene.com. They can also connect with me on Twitter or find me on Facebook.
Douglas Goldstein: Patricia Aburdene, thanks so much for taking the time.
Patricia Aburdene: Thank you Douglas Goldstein, it’s been a pleasure.