The goal of green capitalism is to experiment with life choices that will provide a supportive financial foundation for the future as well as bolster our green environmental beliefs. I would like to provide a simple overview of how Rob should fund his Roth IRA. I don't want to delve deeply into eco-capitalism. That will come when we start talking about Rob's investments. As a reminder, Rob created his Roth I.R.A. recently. I don’t know if he is funding it however. Currently, the maximum individual contribution that he can make to his Roth account is $4,000 per year. This amount is based on Rob being under 50 years old, not being married, and not making last year’s contributions this year before April 15. There are two methods of routinely funding a Roth in my opinion. The first method is the best, but involves the most money up front from Rob. The second requires discipline, but allows for more flexibility for Rob. The first method is to contribute $4,000 as early in the year as possible. This does a couple of things for Rob, if he chooses this method. First, he is done contributing to his Roth for the year. Secondly, he gets the full benefit of his compounding interest. If, for example, his investment increases by 7 percent in 2007, then the value increases based on the whole $4,000 contribution. The second method is the one I use. Since I am not in a position to contribute the entire maximum limit to my Roth at the beginning of the year, I make monthly contributions. This works out to $333 per month for 11 months and a final $337 for the 12 month. Even in months where I see that I am going to have to be tight with my money, I am still able to make the $333 contribution. This falls within the principle of paying myself first. Though I could have this contribution made automatically, I haven’t taken that step. I like the feeling of transferring the funds under my own free will at the beginning of the month. Manually transferring the contribution demonstrates discipline and allows me to see the strength of my choices. However, I don’t get the larger benefit of compounding interest on a higher balance. My partner Susan wanted to know the what the difference was between the compounded interest on $4,000 over the year versus the Roth increasing by $333.00 each month. Using the example of 7% increase of the investment for the year I created the following comparison.

• Rob's contribution January 1, 2007 $4000
• Rob's principle and interest December 31, 2007 $4,280
• Paul's contribution each month of 2007 $333.33
• Paul's principle and interest December 31, 2007 $4,154

This year's difference may not seem meaningful immediately, only a 3% difference. However, if neither Rob or I added to these investments ($4,154 for Paul, $4,280 for Rob) and the average increase over the life of our the Roth (32 years for Paul, 42 years for Rob) was 7%, the investments would grow to:

• Rob $16,863.20
• Paul $13,458.96

That is a difference $3,405 or 25%! And even more, that would become stupid if I calculated the maximum individual contributions each year. Rob could buy a lot more local, organic vegetables and purchase more carbon offsets than I could in retirement at this pace.

Rob has two things to consider for 2008 after maxing out his Roth in January 2007. He should develop a plan to be able to make a full contribution in 2008. This may mean that he sets a side a monthly or quarterly amount of his earnings currently to have enough money come '08. The other benchmark he must meet is the the higher maximum individual contribution limit in 2008 of $5,000. It looks like Rob will be socking away $416.67 a month this year. Rob could blend these methods and max out his contribution in 4 months. That would still allow him more flexibility each month by not tying up as much of his income into making the Roth contribution. He still stands to benefit more from the compounding interest by making the greatest contribution(s) as early as possible over the method of spreading them over the year.

The goal is to examine my financial decisions and social consciousness - a contribution to a Roth IRA does not challenge these. However, I should test whether or not I could make greater contributions earlier in the year. I may have gotten myself into a rut by spreading the Roth contributions over the year.

Lets see what Rob does: I still may be ahead of him.