MICHAEL'S MONTHLY MONEY MINUTE

May/June2022 | Issue 5

Click the photo above for my Money Minute!

Hot Topics Worth

Sixty Seconds

of Your Time

Tesla & ESG.

Series I-Bonds.

Surviving a Bear Market.

One video &

three articles below to keep you in the loop.

The Reality of ESG

Earlier this month Forbes reported that Tesla (TSLA) was removed from the S&P ESG Index, citing "flaws in its business conduct and, ironically, aspects of the company’s low-carbon strategy". Yet companies like Amazon, United Health, and even Exxon mobile make the cut. This inflamed Elon Musk who proclaimed, "ESG is a scam", but the truth may lie somewhere between two extremes.

Read the Forbes article here.

Click for Tesla's ESG Fact Sheet Here

When we discuss Environmental, Social, and Governance investing there is a distinct difference between how a company should be socially responsible from one investor to another, as well as the criteria for a high verses low ESG rating. Looking more closely at Tesla, for example, according to the ESG snapshot generated through Ethos® we see that it scores very high on renewable energy (not surprising), but extremely low on decent, safe work. For someone who is passionate about investing in companies focused on renewables Tesla might make sense, but for someone who is adamant that their investments support safe working environments, this may not be the best fit. In comparison, we could deep dive into the ESG ratings for Exxon Mobile (XOM) or even look more closely at the SPDR S&P 500 ESG ETF (EFIV) which tracks the index.

Exxon Mobile ESG Fact Sheet

S&P 500 ESG ETF Fact Sheet

There is a less obvious difference between slapping an "ESG friendly" label on a company or fund and looking under the hood at why it was rated a certain way. Sometimes this may have more to do with optics and marketing, than it does with social responsibility, which can give ESG investors a bad rep and devalue the approach. True ESG investing strikes a careful balance between diversification among asset classes and sectors, while taking into account risk tolerance, investment goals, and the causes that mean the most to the individual.

Key Strategies to Prevailing through Stock Market Declines

There is no 'taming the bear' when it comes to contractions of the business cycle like we are currently experiencing, but there are some guiding principles one can follow to make wiser decisions during these times.

This Guide to Market Fluctuations from Capital Group® American Funds® is one of the most relevant pieces for investors I have come across recently. Please give it a read and keep these strategies in mind when considering changes to your portfolio.

Series I-Bonds

By David Maurice Sharp

With the announcement that the variable interest rate on I-Bonds is going up to 9.6% from May to October (as far as I know we are still waiting to see if the fixed rate will remain at 0% or bump up a little) there is a lot of interest in them.

Pro's:

You can purchase them easily directly from the US Treasury at treasurydirect.gov.
I-Bonds can be purchased for as little as $25. and in increments of $.01 thereafter, so are incredibly affordable
Interest accrues on the bonds but you decide if you want to pay taxes on the interest yearly or wait until you cash the bond in.
Interest earned on them is exempt from state & local taxes (if you are subject to the AMT then that may not be completely true)
They encourage long term savings (and exposure to the bond market) because you are required to hold them for 1 year and penalized 3 months interest if you cash them in within 5 years.

David Maurice Sharpe is a Financial Literacy Educator and author of The Thriving Artist.

DavidMauriceSharp.com

Con's:

You must hold them as per the previously mentioned time periods, so the funds are not easily accessible. Therefore, I usually advise that people only put funds into them that they know they won't need in the near term.
The interest accrues, rather than being paid to you directly, so to benefit from the interest gains you have to cash in the bond (i.e. they can't be used as a source of fixed income).

Tips:

Rather than putting a lot of money in an I-Bond all at once, another strategy is to stagger your purchases. For example, instead of putting $1,000 in at once you could buy $200 every three months. Then, once you cleared the 5-year period (or the 1-year if you didn't mind taking the penalty) you would have pockets of funds available to tap into every couple of months.
These can often be good introductory bond investments for cautious people, provided they understand that they should view them as long term.

Michael Raimondi (He/Him)

Financial Planning | Investments | Insurance

Clarus Group, LLC

Office: 201.633.5737

Mobile: 646.872.1288

Email: [email protected]

Clarus Group LLC ("Clarus Group") is a Registered Investment Advisor ("RIA"), with the U.S. Securities and Exchange Commission (“SEC”). Michael Raimondi provides investment advisory and related services through Clarus Group for clients in the State of New York and other states. Michael Raimondi and Clarus Group are not affiliated with the firms in which links were provided above.