#1: SUPER… annuation
Challenge Time: 20 mins~
Effectiveness: MASSIVE Impact (26~ tonne CO₂e footprint reduction (Ridiculously Effective)
Question: Do you want to save/make some money?
Benefits: You could be in for an 8.6% increase on super returns going off past performances (not to mention compound interest over time!),
Result: Win/Win
It’s time for you to save a shit tonne on super fees and switch to Vanguard Ethically Conscious Growth (2024 update) or Future Super Balanced Index
x21 times more effective than giving up flying, going veggie and switching energy provider!… AND you could make/save some money!!!
Yes you read that right, changing your superannuation (pension) account to sustainable options could be x21 times more effective than being vegan!? Okay, that number is based off UK figures, where there is £2.6 trillion in pensions. Australia is claimed to be the ‘most successful’ pensions (superannuation) market with $3.4 trillion value, and with a much smaller population than the UK… Australians removing fossil fuels from their super might be greater than x21 times more effective than being vegan! Either way, it’s A LOT.
What’s more, you’re probably going to make money. According to The Australia Institute, you’re probably losing money if you have fossil fuel companies in your super account - ouch! Fossil fuel pollution is a dead weight you don’t need, so why not cut it loose and make some money instead? Maybe you’ve heard the term ‘stranded assets’ used to describe fossil fuel investments… ‘dying assets’ is probably more appropriate!
Fossil Fuels Worst Performing Sector in the Stockmarket
-The fossil fuel sector was the only sector to have lost value over the decade. Excluding fossil fuels from a portfolio of the ASX 300 would have increased returns by 8.6% over the decade to 2020.
Seriously, all the investment is going to renewables
-Renewables covered almost 60% of German electricity demand in 2023, while Ireland and Australia keep breaking records of renewable power generation, reaching 70% of demand.
-118 nations pledged to TRIPLE renewable energy by 2030 at Cop 28, with calls for all countries to copy USA’s inflation reduction act, including investors in Australia.
-Even banks are already making more money from green projects than oil, gas and coal.
The renewables transition is happening, and it’s picking up pace - don’t miss the boat!
Low fees + automated performance
Finance guru and general big dog The Barefoot Investor recommends Balanced Indexed funds to save and make money - apparently Super funds in Australia ‘trouser an outrageous $30 billion a year in fees” - oooft! Basically, Balanced Index funds have low fees and automatically invest in the best companies for you - without you having to follow the stock market's every move - which gets compound interest (see below) working in your favour…
Einstein says compound interest is ‘the most powerful force in the universe’
Seriously, it just gets better and better as time goes on as it reinvests the money you gain from not having dead weight fossil fuels in your super - you want your savings (and climate action) to be that blue line! More on this in The Barefoot Investor.
Balanced Indexed x Ethical Investing = Future Super
Let’s combine these two ideas, a Balanced Index Fund without fossil fuels… there only seems to be one(?), Future Super.
Fortunately they have an offering that divests from fossil fuels (cut that dead weight loose!) and puts your savings on turbo with the most powerful force in the universe - It’s a BIG WIN/WIN… maybe the biggest! Best of all, it should only take you 15-20 mins to switch your Super over… so it’s probably THE MOST IMPACTFUL 15 MINS you can use for Planet A.
Future Super have lowered their fees since 2023 to 0.761% + $60 which are now a stomachable amount for Barefoot (0.85%) though still much higher than the 0.04% + $78 that HostPlus is currently charging. However, maybe because there are no dying fossil fuel pollution assets in the Future Super fund (?), it seems to be performing well. These figures of course will change, and as all of these super funds seem to have as a disclaimer along the lines of, ‘past performance is not a reliable indicator of future performance’ we’ll mention that here too.
Barefoot Loves Vanguard
We mentioned Vanguard in 2023 and now that we’ve got some numbers in we definitely want to provide this consideration. We know Barefoot hates excessive fees and greenwashing, so maybe that’s why he’s such a fan of Vanguard’s Ethically Conscious Growth.
Percentage fees are cheaper than Future Super’s, so this Vanguard could be a really good option.
Regardless, consolidating your Superannuation will almost certainly be better for your finances in the long run - just ask Barefoot. So why not go ahead and just get that sorted (seriously, consolidating your Super into a low fee fund is in STEP ONE of the Barefoot Investor’s nine steps - get that sorted out if you haven’t already!). Massive life hack. Your future self will be forever grateful when you retire (more comfortably). Also, there’s plenty of other ethical options if Vanguard or Future Super isn’t for you, I’m just suggesting this one because they seems to be the only (?) Balanced Indexed Ethical Funds. And because I use Future Super though I think I’l make the switch to Vanguard given the cheap fees. Other than that I have no affiliation with them whatsoever and don’t take endorsements or even bribes! It’s just a really good offering.
If you know a better performing balanced indexed ethical fund I’d love to hear it, seriously!!! Especially if it has lower fees!
So, when and where in your week can you find 10 mins to get your Tax File Number and head to the Vanguard or Future Super to help reduce the climate crisis?
Put it in your diary!
And put your money where your mouth is -
use your *super* powers!
PS, tell your previous (?) Superfund to stop greenwashing
Bizarrely, even though finance gurus like Barefoot say that the most popular question they get asked is “What ethical investing funds do you recommend?”, Market Forces have found that Australia’s superfunds are undermining their own climate commitments by voting against initiatives to accelerate the transition away from dirty fossil fuels - toxic behaviour!
Send them a note to act in the interests of shareholders (you!) via this quick and easy form Market Forces have put together,
Feeling Nerdy?
Compare Bank Table: Fossil fuels – where does your bank stand? - Market Forces
If you’re looking to invest outside of your super, ie, the money in your bank, Barefoot Investor recommends Vanguard Ethically Conscious Australian Shares Fund (VETH.ASX) and has some more thoughts on ethical investing (and green washing) here,
PS If you want to do some more reading, this challenge is based on a UTAS assignment I did called ‘A WIN/WIN: MAKING MONEY AND MITIGATING CLIMATE CHANGE, WITH THE INVISIBLE HAND AND THE MOST POWERFUL FORCE IN THE UNIVERSE’. 4 min read, tonnes of references and links.
PPPS Barefoot Investor and pretty much every financial outlet also say something along the lines of ‘this advice is general in nature and may not suit your specific needs, so best to chat to your financial advisor before making any decisions!’
Especially big thanks to Katherine Rossetti, Jade Soh, Chel Sea, Stijn Potums, Bianca Gawith, Pene Lope, for their insights on this challenge, and especially UTAS!
References / Bibliography / Further Reading
What some much smarter people have said…
Dirty Secret: Fossil Fuels Worst Performing Sector in the Stockmarket - The Australia Institute
Ethical super: doing good and performing better than ‘standard’ funds - John Collett (The Age/Sydney Morning Herald)
Victorian coal plants likely to close early with new emissions target, analysts say - Jarrod Whittaker and Mim Cook
The Barefoot Investor - The Only Money Guide You’ll Ever Need (2017) - Scott Pape
The Barefoot Investor - My thoughts on ethical investing (note, investing is technically different to Superannuation… you can read all about that in the Barefoot book above!)
Energy has gone nowhere in the past decade, and it could get worse before it gets better - Keris Lahiff (CNBC)
The Carbon Club - Marian Wilkinson
The Prize: The Epic Quest for Oil, Money, and Power - Daniel Yergin
Make My Money Matter (UK relevant figures… and Australia is claimed to have a more successful pensions market than the UK)… more on that in my aforementioned assignment
The clean money revolution changing the world - Sharon Verghis
Fossil fuels: where does your bank stand? - Market Forces
Ethical Banking: How Your Money Can Help Save The Planet - Nicole Lutze
Eliminating Tobacco Companies From Investment Portfolios - Bronwyn King (TEDxSydney video)
Contact / Feedback / Ideas
We’re always keen to hear your thoughts and constructive feedback, please get in touch!
Email us at gonefishin2030 {at} gmail {dot} com
Let’s hang…
