You have to start somewhere. Just start...

To borrow a really good phrase... "Here goes... "
(AKA My official start as a co-author of this blog. )

Sad but true: if all the insects in the world were to die overnight, the Earth's biosphere would not survive. If all the humans in the world were to die overnight, the Earth's biosphere would once again flourish and thrive.

So, having, for better or worse, been born a human not an insect, what is one to do? 

In the face of the enormity and complexity of the issues, do we decide we are but one small individual, utterly powerless to make a difference, and thus escape responsibility?

Or, do we have faith that everything in the universe has been pre-ordained from the beginning of time, that there is no free will, and thus escape responsibility?

Or, do we look back upon the past and note that human ingenuity has managed to save us quite a few times over the course of history and therefore have confidence that a technological or scientific innovation will appear before us at exactly the last possible moment.... and thus escape responsibility?

You see where this is going...

And yet, if we choose none of the above, and start really observing and thinking and trying to do right by the world and our children.... Well, it gets kind of messy. And we find that we are "at war with ourselves" as you say. We look at our own lives and find a mess of contradictions, conflicts, inconsistencies, and, frankly, just plain "bad stuff" that we can't seem to help ourselves from wanting/doing/having/enjoying.

So the idea for this blog is to kind of start from that rather messy place and not try to have a bunch of trite oversimplified answers like installing new showerheads and screwing in a few high efficiency lightbulbs.

Instead, we’re going to wrestle with the mess. I'm both a bit excited and a bit apprehensive about doing this. Sometimes it may come to some order, and sometimes it might not. But at least in the process I'll be taking responsibility and forcing myself to face myself. And maybe by putting it out there in the cloud, others might chime in and add to my thinking process in some way.

The list of themes previously identified is pretty broad, and I hope to explore most of them in my future posts (with one exception - I will almost certainly leave all that dividend investing stuff to Mr. S. REALITY.)  But I'd like to add one more topic of my own – and that is the topic of the next generation. Because none of this would matter if it weren’t for them.  So, how do we prepare and equip our children to take their places in a sustainable reality of the future? How do we help them learn to be independent and creative thinkers, problem solvers, global citizens, leaders who have the courage to do what’s necessary…  

In the end, the ability to envision a better future is what makes us different from the insects (and all other animals). And so, let’s not squander that gift!

Dividend Investing is NOT "Passive Income"

Another blog I follow, TSI Network Daily, discusses how to know how many individual stocks should be in your portfolio. As usual, their advice is simple and wise.

But they, as with nearly everyone else who I've seen post on this topic, miss one key point: the impact your portfolio size has on your time.

If you, like me, are building a portfolio as a sustainable, long-term source of "passive" income, you should be investing a significant amount of time understanding the companies in which you're investing. (If you're not, by the way, your risk is a lot higher than you think. You need only look at Enron, Lehman Brothers, and most of the other largest bankruptcies in history to prove the point - and that list doesn't include the countless cases that didn't result in bankruptcy, but produced sub-par or negative returns).  I subscribe to the Warren Buffett theory here, that is, to not invest in any business you don't understand.

As TSI points out, new investors most often start with smaller sums of money. But they're probably also working with smaller amounts of time; they're likely working full-time, and many will have family and other commitments too (like blogging!). A portfolio of 30 companies represents 30 companies' news to follow, 120 quarterly statements to analyze, 30 annual information filings, etc.

That's a real trade-off between the amount of time you can commit to monitoring your portfolio and the diversification you can achieve. That said, I believe that a thoughtful and patient investor can build a reasonably diversified portfolio in about 15 individual stocks.

Clearly, though, this is not "passive" income. And that's why, until I have a suitable portfolio to live off of indefinitely and therefore I can be a "full-time" investor, I plan to keep my portfolio to 20-25 positions.

Want to stop consumerism? Brag about your net worth.

Why is it that we buy, and buy, and buy, even when it's detrimental to our financial situation?

There are probably a number of factors, but I think it's due in part to the competitive element in human nature - we want to compare our own success to others.  The problem is, we have no good measures to do so.  Society teaches us that success is measured by material and financial wealth.  While I completely disagree (and would suggest that we can find a better way to measure success and progress), for now let's just admit that whether right or wrong, most people measure their success and relative progress in financial terms.   

The truest measure of financial wealth is net worth - what you have minus what you owe - roughly akin to a corporate balance sheet.  (Generally the financial planning world wouldn't include consumer goods that aren't resalable for notable value such as cars and houses, but theoretically they're part of the equation).
The problem comes in the comparison to others.  In the publicly-traded corporate world, companies report their financials, allowing direct comparison of one company to another.  In the world of personal finance, everyone knows their own net worth (at least they have all the info to know it, even though most people probably don't bother calculate it), but because people don't talk openly about wealth, so we don't know everyone else's.  We are usually left with a guessing game to compare our own net worth to that of others, and can only rely on visible indicators - status symbols.  We can see these things, but we can't see people's financial assets, or debts.  As such, we end up comparing our "complete" net worth to just one component of others' net worth - their "stuff".  

In our minds, we probably assume similar ratios, resulting in wildly distorted comparisons.  For example, if 20% of my assets are in "stuff", and 80% are financial, I tacitly assume others are in a similar state.  And if my debt is only 15% of my assets, I assume others have about the same debt burden.

So what happens when I see my neighbour buying a brand new BMW, and moving to a bigger, better home in a spanky new neighbourhood?   Well...   I apply my ratios to his situation based on the "stuff" I see, and conclude I've fallen way behind in life.  Clearly I must be doing something wrong, right?

Now, I'm not trained in psychology or sociology, so I'm just speculating here based on behaviours I see around me (and admittedly, sometimes my own!).  This thought process definitely doesn't happen consciously, probably because if it did, the thinker would realize how ludicrous it is.  But it all results in people feeling self-conscious about their situation.

And what do most people do when they feel ashamed or self-conscious about something?  They try to hide it.  In this case, they do so by:
  1. Not talking about their financial situation;
  2. Buying more/better stuff so that people won't see their shortcomings; and,
  3. If they can't actually afford the stuff, taking on debt to buy it anyway.
    Notice that in these behaviours, they're probably furthering the same situation for others...

    So in the end, a greater percentage of what they have is in "stuff",  which generally depreciates over time, thereby hurting their net worth.  Plus they probably have more debt, reducing their net worth even more.

    So what should we do about it?

    The answer seems obvious to me (albeit exceedingly difficult to implement):  we should all make our true net worth available for others to see and compare to.  This way we have a real yardstick, and we can't keep up the appearance of success while our lifestyle and our possessions are underpinned by debt.  

    If we did this, the competitive nature of people would drive them to the two things that will maximize their net worth over time (reducing debt, and increasing appreciating assets).  To do that, they'll spend less on stuff, and focus on pragmatic, high-quality, long-lasting stuff for what they do buy.  And that's not just good for their own net worth, but has tangible benefits for the environment, too.

    So, who first?

    Here's where I confess my hypocrisy -- being a fairly private person, I'm not going to be an early adopter of this approach.  

    But the blogosphere hints to me that there is some potential:  Million Dollar Journey provides regular net worth updates, and I'm sure there are others.  So maybe someday more people will start sharing their situations more openly, but for now if you're looking for a benchmark to compare to, there are options.

    There is one thing we can all do, though, right now -- try as hard as we can to stop defining our own success in financial and material terms.  Trust me, it's harder to do than it sounds.

    Personal Sustainability - My relationships with Society, Economy, and Environment

    I started Sustainable.REALITY to explore sustainability in a broad sense, with an eye to how I can - realistically - strive to make my own life "sustainable". But what does that really mean?

    All too often I think that sustainability is mistakenly used as a synonym for "eco-friendly". But I've long believed that there is far more to sustainability than the environment. One only needs to look at the debates over environmental issues, like the Canadian oilsands, to see that pursuing eco-friendliness is usually entangled with trade-offs regarding money, communities, political interests (not to mention other environmental issues).

    So what is "sustainability"? Since I have been thinking about it so much lately, I made a radical move... I looked it up. According to Wikipedia (as of writing, anyways) sustainability for humans is "the potential for long-term maintenance of well being, which has environmental, economic, and social dimensions." Simple enough definition. It makes sense to me. So how do I plan to discuss these dimensions in the context of my own life?

    What I'm really talking about here is what I would call "Personal Sustainability", reflected in the model below. That is, my own relationship with the environment, the economy, and society. It's an acknowledgement that the world the universe is an extremely complex set of interrelated systems, and that one change or action can affect many other parts of the system, often in strange and unpredictable ways (see systems thinking).
    There are no absolutes in the topic of sustainability.  It is a balancing act, where pursuing sustainability in one area often has a negative impact on the sustainability of another:  Eco-friendly products are often more expensive;  social programs cost real money; the best financial investments often are in companies that harm the environment (or society).  It's a world without easy answers.  Priorities shift over time.  Urgency is relative to present circumstances.

    The topic is fascinating, if a bit overwhelming.  While I am looking forward to exploring it further in the coming weeks/months/years (and hopefully discussing it with many other interested participants!), I recognize that not everybody will be interested in all of these dimensions, and therefore I've decided to offer a variety of subscription options.  These include "sub-blogs" on each of these dimensions, and the ability to subscribe to other related topics that I'm passionate enough to write frequently about.

    I hope you'll participate actively, and that you'll enjoy the journey as much as I think I will.

    Ethical Investing

    Great post on individuals' own "rules" for ethical investing by DividendMonk. Check it out, and read the comments. Generating great discussion. Check it out.

    I'm building a portfolio of income-producing investments as part of my personal "financial sustainability" plan. So I definitely plan to post more about this later. Stay tuned.

    Here goes...

    This is take two at a blog for me. Take one didn't go so well, I think because I was trying to make the concept too complicated. So forget the concept. I'm kidding myself if I think this thing is going to be that cohesive.

    So if there isn't a specific concept behind it, why call it Sustainable.REALITY? It's just where my head is at these days. Probably like a lot of people, I'm a bit at war with myself. Sustainability and reality seem at odds.

    I care, deeply in fact, about sustainability. It sickens me that we trash the earth the way we do, and that our whole economy is based on growth, thereby making the real engine consumption. I hate the fact that my own income is inextricably linked with consumption. I loath the wasteful and downright harmful behaviours I see everywhere.

    At the same time, the reality of the world as it is today makes convenience valuable, and that often means wasteful things like disposable products, planned obsolescence, and energy intensive lifestyles extremely valuable. I'm no different than everyone else - I love stuff that makes my life easier.

    So I'm starting to think more and more about how my life - or our lives, since I have a wife and child to factor into the equation, have to change to be more sustainable. But at the same time, I've got be realistic (it's not as if we're going to go live an off-the-grid a commune).

    So, that's why it's called Sustainable.REALITY. Welcome to my blog.

    P.S. For anyone out there reading, or considering reading, this blog, here are some things I'm interested in, and therefore topics that are likely (I say likely instead of "possible" because anything is fair game).

    • Consumerism (and my personal battle with it)
    • Financial planning in a long-term sense (of course, since we are talking about sustainability too).
    • Work-life balance (a term I hate, by the way)
    • International and/or community development
    • Urban planning
    • Whatever else fits with sustainability and reality... loosely.