Latest news with #retirementsavings
The Guardian
3 days ago
- Business
- The Guardian
A guide to greener banking: I divested my personal finances and you can too – here's how
What if your money was quietly fuelling the climate crisis – and you had no idea? If you bank with one of the big four or have retirement savings in superannuation, there's a good chance it is. In Australia, many major banks and most default super funds continue to invest in fossil fuel companies and their coal, oil and gas projects, driving global warming. That's where the global divestment movement comes in. Divestment means shifting your money out of harmful industries and into more ethical, climate-positive alternatives. It's the opposite of investment – you simply pull your capital out of companies or funds that contribute to environmental or social harm. Over the past few years, I've delved into divesting my personal finances and learned some key ways this shift can make a real difference. If you only tackle one area of divestment, make it your super – it's often your largest pool of money beyond property, and too often it's channelled into fossil fuels. The climate lobby group Market Forces estimates $150bn of Australians' retirement savings – roughly $6,200 per member account on average – could be tied up in 190 global companies driving the most climate damage. And such investment is growing, meaning our retirement savings are increasingly being used to create a more polluted world to retire into. One way to find a better option is to use the Market Forces comparison tool. It profiles more than 70 fund options, pinpointing just seven that fully exclude fossil fuels and the so-called 'Climate Wreckers Index' of the world's worst polluters. Using this type of information, I divested from a large Australian super fund which has known investments in fossil fuels and moved to a fund that excludes major polluters such as Woodside, Whitehaven Coal, Santos, Origin and AGL. Justin Medcalf, co-founder of Ethical Advisers' Co-op and Unless Financial, says to beware the 'devil in the detail'. For example, some funds use a tiered threshold screening, which may allow investment in companies earning limited amounts of their revenue from coal mining. 'A lot of investors assume that having a screening process in place means zero exposure to fossil fuels. It can be a rude surprise to discover there is still exposure,' Medcalf says. 'Ultimately, there is no perfect portfolio. For now, it's 'how do we create the best version of something that isn't perfect?'' All four of Australia's big banks – ANZ, Commonwealth Bank, NAB and Westpac – pour billions into fossil fuel projects each year, as do many other major players. In 2021, when searching for my first mortgage, I saw the chance to divest from a big four bank and switch to a more ethical option. I told my broker I wanted a home loan that was both competitive and backed by a bank that doesn't fund fossil fuels. We landed on one of the few with a cleaner track record. To find out where your bank stands, use Market Forces' Compare Banks tool. It includes a 'tell them to stop' button, so you can quickly send a message and easily demand change. That's crucial, says Medcalf. 'A lot of people move their money but don't say anything, so the bank never knows why. A key part of the divestment movement is communicating,' he says. And it works. Just last year, Commonwealth Bank broke ranks and announced it would stop financing fossil fuel companies that don't comply with Paris climate goals. 'That was quite a considerable win and a lot of that is attributed to the divestment movement,' Medcalf says. If you're investing in shares, ETFs or managed funds, beware of greenwashing. Many mainstream investment products – even those labelled 'sustainable' or 'balanced' – still include major polluters. Tools like the Responsible Investment Association of Australasia's certification and the Ethical Advisers' Co-op's Leaf rating can help you find investment products and services that meet high standards of environmental, social and ethical performance. 'We need a mindset shift,' Medcalf says. 'Rather than thinking 'what can I avoid?', think 'what can I actively invest in?' Yes, we want to avoid industries that aren't creating a positive future, but we can also get behind the industries of the future.' And divesting doesn't have to mean missing out financially – it may even boost your returns. RIAA's 2024 Benchmarking Report shows responsible investment funds have outperformed mainstream ones by 3% over 10 years, and 1.5% over five years. For long-term investors, especially those in their 30s and 40s, Medcalf says it makes sense to start factoring in environmental risk. Fossil fuel assets are increasingly seen as vulnerable, with tightening regulations and the growing risk of becoming 'stranded' and unprofitable. If you want to go a step further, consider strategically buying into a polluting company along with fellow shareholder activists who then band together to demand change from the inside. You can get started with as little as $500 using the Sustainable Investment Exchange (SIX) platform. Whether you divest, reinvest or become an activist shareholder, the point is the same: your money is powerful and you can actively choose whether it props up harmful industries or helps build a better future.
National Post
21-05-2025
- Business
- National Post
New Survey Finds 61% of Canadians Are Reconsidering Major Life Decisions Due to Increasing Cost of Living
Article content Article content VANCOUVER, British Columbia — This morning, Canadian fintech Spring Financial released its inaugural Spring Clean Your Finances Report. The report takes a deep dive into how Canadians are approaching big financial goals including emergency funds, retirement savings, major life expenses, and 2025 travel plans. Article content According to the report, over half of Canadians (61%) say that the rising cost of living is making them reconsider major life decisions, a number that's even higher (70%) for parents with kids at home, and a staggering 44% do not believe they will be financially secure in retirement. Article content 'We support millions of Canadians that need financial support, often for unexpected expenses that simply stretch their bank account too far,' shared Tyler Thielmann, President and CEO of Spring Financial. 'To see how many Canadians currently feel unable to save money for an emergency is disheartening which is why we're encouraging Canadians to spring clean their finances this season. This is truly a great time to pause, assess, and make a plan to help set yourself up for a successful financial future.' Article content Detailed report findings include: Article content Saving Stressors Article content 41% of Canadians are not currently able to save money each month after paying for all their necessary expenses. 70% of Canadians have money set aside to use in case of an emergency however 40% of Canadians are financially unable to save enough for an emergency or rainy-day fund. 79% of Canadians feel confident in their financial knowledge and ability to manage their money. Article content Vacation Reservations Article content Over half of Canadians (61%) are planning to cut back on vacations or travel this summer. One fifth (20%) of Canadians shared that they have taken on debt specifically to fund a vacation before. Over one quarter (37%) of parents with children at home have taken on debt specifically to fund a vacation before. Article content Risky Retirement Article content Just over half of Canadians (54%) believe they will be financially secure in retirement. Millennials (50%) and Gen X (52%) are the most likely to feel financially unprepared for retirement Baby Boomers (68%) and Gen Z (53%) are most likely to feel financially prepared for retirement. Article content Parenting Pressure Article content Parents with kids at home are less likely to: Article content have a budget (60% vs. 64%) be able to put money away each month (53% vs. 61%) have an emergency fund already set aside for unforeseen expenses (64% vs. 72%), and be able to save emergency fund money every month (51% vs. 63%). Article content 'For anyone looking to review their finances, we recommend starting with an assessment of your current financial situation and goals,' added Thielmann. 'Reviewing your income and expenses, creating a budget, and planning for major expenses –whether that's travel, buying a home, or building an emergency fund– can help build a strong foundation for your financial future.' Article content For more information about this report, visit Article content These findings are from a survey conducted by Spring Financial from March 13th to March 17th, 2025, among a representative sample of 1,500 online Canadians who are members of the Angus Reid Forum. The survey was conducted in English and French. For comparison purposes only, a probability sample of this size would carry a margin of error of +/-2.53 percentage points 19 times out of 20. Article content Spring Financial provides Canadians with quick access to financing. With a convenient process that can be done entirely on your device, Spring Financial is an easy and technologically advanced solution to securing a loan when the need arises. Customers are given the best-fit option from a suite of financial products that are designed and offered based on their profile. Spring Financial makes borrowing smarter, more transparent and more efficient. Since launching in 2014, Spring Financial has become one of the largest fintech companies in Canada with over two million applicants and 350,000 funded loans. To learn more about Spring Financial, visit Article content Article content Article content Article content Article content Contacts Article content Article content
Yahoo
08-05-2025
- Business
- Yahoo
Your employer's most popular retirement option just topped $4 trillion
The 'retirement savings vehicle of choice for Americans' just reached a towering new height. Target-date fund assets soared to a record $4 trillion in 2024, according to Morningstar's new 'Target-Date Fund Landscape' report. 'That's an enormous number, and people may have a hard time grasping the magnitude of that,' Janet Yang Rohr, Morningstar's director of multi-asset and alternative strategies, and lead author of the report, told Yahoo Finance. 'These funds are basically the retirement savings vehicle of choice for Americans. When these funds started, roughly 15 years ago, it wasn't really obvious that these were going to be as important as they are.' Now, nearly all 401(k) plan sponsors and most state auto-IRA programs use target-date funds when they automatically enroll workers in a retirement plan. In fact, their dominance stems in many ways from that default status for new contributors to 401(k) plans. 'Retirement plan sponsors and the government took a leap of faith on (target-date funds) and allowed these to be the default investment for many retirement plans,' Rohr said. 'And by doing that, money basically poured into these funds, and they have done really well for investors. 'It's been a win-win for everyone.' Read more: How much should I contribute to my 401(k)? With a target-date retirement fund, you choose the year you'd like to retire and buy a mutual fund with that year in its name (like Target 2044). The fund manager then allocates your investment between stocks and bonds, typically made up of index funds, tweaking that to a more conservative mix as the target date nears. Many people simply pick the year they'll reach their full Social Security retirement age as the bulls-eye. For most of us, that's 67. If you have a higher risk tolerance, you might go with a later date for a more aggressive mix, meaning a higher exposure to stocks, or an earlier one if you lean conservative. Read more: What is the retirement age for Social Security, 401(k), and IRA withdrawals? Target-date mutual fund portfolios that primarily hold index funds have lower costs than those that are actively managed. Their average expense ratio is 0.26% compared to an average expense ratio of 0.79% for primarily active-based target-date funds and 0.58% for those that use a mix, according to Morningstar data. (At the other end, Vanguard's popular S&P 500-tracking index fund has an expense ratio of just 0.04%.)The expense ratio fee, which includes management, marketing, sales, and other costs, is deducted from your investment returns. For most of us, that may well be a price worth paying. 'Target-date funds help 401(k) participants invest with an age-appropriate allocation and automatically rebalance,' David Stinnett, head of strategic retirement consulting at Vanguard, told Yahoo Finance. Savers 'navigating uncertain markets may find peace of mind in knowing that their portfolios are well-diversified within and across asset classes and are built for long-term investing goals like retirement — in many cases, without having to lift a finger,' he said. Investing in a target-date fund 'is one of the easiest things that you can do for yourself,' Rohr added. 'I invest in these, too, because I don't have time to change my allocations when markets change.' The love affair with these funds is rampant. At Vanguard, for example, last year more than 8 in 10 of participants in its 401(k) accounts used target-date funds. About two-thirds of all 2024 contributions from the 5 million people in 401(k) plans went into these funds — an all-time high, according to Vanguard's 'How America Saves 2025' report. If you're one of the record number of Americans turning 65 this year, invested in a Target 2025 fund 15 years ago when they first entered the mainstream, and kept investing whether markets went up or down, well done. The average annualized returns for all the 2025 target-date funds that existed throughout this time was 7.3% through the end of 2024, far surpassing expectations of 6.3% over the past 15 years, per Morningstar data. From the market's 2025 peak on Feb. 19 through its low on April 8, the S&P 500 (^GSPC) lost 18.6%. Over that period, the target-date 2025 Morningstar Category average lost 7.6%. In Morningstar's model scenario, a retirement account investor was age 50 in 2010 and had been in the workforce for almost three decades, made about $75,000 in annual salary that kept up with an annual inflation rate of 2%, saved 7% per year in the target-date fund, and had a retirement nest egg of about $300,000 to start. Those 2025 Target funds did the job they were supposed to do, Rohr said. 'All of that together made for a great formula for success for these investors,' she said. 'And so now these workers are in a good spot for retirement.' Remember how jangly you felt a few weeks ago when you looked at your sinking 401(k) balance? In the last month, the discipline of investing in target-date funds stands out. 'When you have all the volatility that we've seen, then you really see why you need to diversify,' Rohr said. Year-to-date losses for the S&P 500 through May 7 stand at 3.9% versus a gain of 1.8% for the typical target-date 2025 fund and a gain of 1.4% for overall target-date funds, according to Morningstar data. 'People in these diversified funds saw losses, too, let's not gloss over that, but it was much lighter and much more tolerable,' she said. And let's be honest, diversification isn't always easy for the average saver who doesn't manage money every day. 'Target date funds are not necessarily magic — there's no magical wand here — but the reason why they work is because people use them and save in them regularly,' Rohr said. Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work" and "Never Too Old to Get Rich." Follow her on Bluesky. 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