Revenge investing: How to fight Trumpism with your money

Trump is headed back to the White House, and more than 74 million Americans who voted for Kamala Harris are wondering how to cope. Boycott companies associated with him and his allies? Switch grocery stores based on the owners' politics?

Feeling hopeless and overwhelmed can spur you to take action and make some small differences between now and the next election, and fighting a second Trump term with your finances is an option to consider. 

From investing in causes you care about to shopping at places that share your values, here are some tips on using your money to make your point.

Environmental, social and governance funds

ESG funds are an investment strategy focused on companies' financial performance as well as those that consider environmental, social and governance issues. Investors might put their money into funds that consider a company's efforts to improve air quality and conserve energy, or its equal employment opportunities and ethical business practices. Some ESG funds exclude oil companies or tobacco and weapons manufacturers.

These managed funds are a way to support left-leaning causes while still investing in the general stock market, said certified financial planner Gordon Achtermann, of Your Best Path Financial Planning.

“If you care about climate change, you can only turn out so many lights, or plant so many trees, or forgo so much meat,” he said. “But when you divest from a company that works and lobbies against any progress toward a low-carbon economy, you are reaching a sector that has been unreachable until now. In our capitalist economy, your money is your voice. ESG investing is the only way to be fully heard.”

ESG funds come with risks. Some say they're too limited, while others believe they're more of a marketing ploy to attract investors. Profit takes priority over social responsibility in ESG funds, critics say. 

Also, not all ESG funds are created equal. For example, financial expert and author of “Green Money” Kara Perez says the SHE fund supports companies with gender diversity. However, it includes companies that others might find anti-ESG, like Exxon, Bank of America and Chevron.

“It’s a bit of greenwashing,” she said, referring to the practice of misleading the public about environmental efforts.

Some ESG funds have higher fees and lower performance results than regular funds. And if you’re solely investing in your 401(k), you may only have a couple of ESG fund options that aren’t ideal. This means you may have to make an uncomfortable decision between your values and your finances.

“Critics fail to understand that when you diverge from any benchmark, your investment performance will not correlate precisely with that benchmark,” Achtermann said. “For example, in 2020, the energy sector lagged the rest of the market, so many ESG funds beat their benchmarks. Then, in 2022, the trend reversed, and those funds that outperformed in 2020 now underperformed.”

Direct indexing

If you want more control over your investments while reaping the benefits of an index fund, you can try direct indexing. Instead of buying shares from an existing index fund, you would buy shares of the same companies directly. So instead of owning a few shares of an index fund, you might own partial shares in hundreds of different companies.

But instead of replicating the index, you can be choosy about which companies you add. For example, you can exclude Tesla because of Elon Musk’s support of Trump. You can also remove companies whose CEOs or founders have given money to Trump’s campaign.

“Investors who wish to execute a specific political strategy would need to ask their adviser if they offer direct indexing and the ability to blacklist individual stocks from their portfolio,” Achtermann said. 

While this may be more of a hassle, it puts you in the driver’s seat when it comes to allocating your dollars.

Other ways to push back

Consider changing banks. If you’re worried about climate change under the next Trump administration, you might consider moving your checking and savings accounts, especially if you’re with a bank that funds fossil fuel projects, Perez said. She suggests using local credit unions instead of major national banks.

“Credit unions are on the ground institutions in communities,” Perez said. “Your money is going to stay in your community. If you use a credit union in Iowa, your money’s going to stay in Iowa.”

This can also help your finances, since credit unions often offer higher interest rates on savings accounts than major banks. Another alternative is a community bank.

“You have to see your dollar as a vote,” Perez said. “I do believe your dollar is actually more powerful than your vote. Your dollar is a direct hit or a direct line of support.”

Shop local. Shopping locally doesn't require an all-or-nothing approach. For example, if shopping at your neighborhood grocery store or bookstore is more expensive, consider making one out of every five purchases there. Knowing the politics behind certain stores can inform your decision-making.

You can also support local businesses for free by leaving positive reviews, mentioning them to your friends or sharing their posts on social media.

Live sustainably. People often imagine giving up plastic straws or switching to recycled paper towels in order to help the environment. Instead of focusing on small individual changes, Perez recommends joining a group.

“One person can’t make much change on a systemic level, but a group of people can,” she said.