6 Biblical Principles of Success

1) Spend less than you earn. Seems like a no brain-er, however few do it including the government.

2) Avoid use of debt. The ancient text tells us the borrower becomes slave to the lender.

3) Liquidity cushion. Easy to acknowledge yet few set aside for emergency or unexpected stuff that happens to us all. Proverbs tells us to observe the ant who works to store up for the winter months.

4) Set long term goals. Goals and vision keep us focused on doing the next right thing. With many counselors your plans will be established.

5) Have eternal perspective. God owns it all and brings the increase. Ps 24:1 and Det. 8:18

6) Rejoice in generosity. The one who waters will themselves be watered. Give and it will be given unto you.

So if we know what is right and we do not do it does it count for anything? This reminds me that for years I had a gym membership and did not go. While I knew it would good for my health that was not enough to improve my health. Actually it was worse as I paid the membership and did not use it. Get accountable to someone or hire someone to help you. Here are a couple of faith questions for you. What do you think God thinks you should do about this_______? What would your spouse say about it? We all need someone to speak into our lives biblical or transcendent wisdom.

There are only 5 short term uses of money. Your income flows only to 5 choices in the short term. 1) Giving 2) Taxes 3) Saving/Investment 4) Debt Payments 5) Lifestyle. Try this stewardship exercise by looking back over the last three months of your check book/ATM/Credit cards to see your 5 buckets. Take an inventory and reflect on what happened. Ron Blue of Kingdom Advisors say, “Your use of money reflects your goals, values and priorities and your spiritual convictions.”

Online giving resources

One of my favorites is Generous Giving library tools. Another is National Christian Foundation and they have local offices that could be great resources as well. There are lots of books on giving and it depends who is the intended reader and the context to get best suited read. One of the simple and small books “The Treasure Principal” By Randy Alcorn is one of my favorites. Randy has a newer book great for Christian Perspective called “Managing God’s Money“.

Another resource is Crown Financial Ministries. I was not so ready when I went through Crown 25 years ago. I have since come to respect and trust the Crown methods and teachings. One group I am involved with monthly is Kingdom Advisors and great to invest time with other advisers encouraging right steps in the counseling process of Biblical Stewardship. Currently Peace University is popular in many churches for helping members get their debts under control and take action to get out of debt.

Lower expenses as part of good stewardship

I have discovered recently that in the financial services area annuities especially “investment annuities” a.k.a. variable annuities sold by securities representatives are gold mine. Gold mine for who? You decide in 2007 report done by Morningstar Associates variable annuities average 1.35% mortality and expense charges annually. On top of that the average variable annuity has investment manager expenses. The insurance carriers selling these offer commissions in lots of different flavors. Some are heaped in the first year 5-9% is common. Some are spread over first few years and some for the life of the contract.

What if there was an annuity without mortality and expense changes and just a flat rate. I found three of these “flat fee” companies not only provide potentially impressive savings on the insurance costs but on the investment costs as well. One has hundreds of investment choices from low cost indexes to advanced strategies portfolio’s. How do they make money? Flat fee annuities earn money from the low flat fee and then make small amount on investment company record keeping as well and this can vary a lot.

Again according to Morningstar in 2007 the average variable annuity at 1.35% and the average balance of $165,000 in their survey would mean over $2,000 a year savings to the average flat fee annuity investor. This is a newer trend and I predict it will get bigger. I have one of these flat fee annuities myself and found it refreshing and clean and I enjoy the flexible choices of hundreds of investments. No sales commissions, however some states do require a licensed agent like Florida requires. Check with your state to see what is available. Doing a search online is great place to start. $165,000 X 1.35% = $2,227.50.

Let’s look at another aspect of costs reductions in investments. The unwritten rule is that if a portfolio of stocks and bonds has 100% turnover in a year the transaction costs would be equal to about 1% drag on the gross return. So if the portfolio had 200% turnover (bought and sold and bought then sold) the drag would be roughly 2%. Consider that cost of this often non disclosed costs when you invest. If active management is needed for risk purposes that is one thing it is quite another if you get high turnover and little to no risk mitigation. Look at the follow website as one place to calculate costs on turnover Personal Fund.

So if your expenses are lower and your comfortable with making your own informed decisions or hiring a fee adviser for couple of hours then the impact could be really significant. What would you do if your investment annuity has the ability to accumulate more efficiently then it could mean greater results all other items equal. More money means more lifestyle or more gifting and sharing. Do not expect to hear about this from advisers in the business of earning commissions as their is no incentive for them to inform you. Go get informed and look up flat fee annuities online.

How does screening work for values or mission minded investing?

There are first two main types of screens: Positive Screen and Negative Screens. Positive screen is one in which looking for good qualities like sustainable plans, active board to address good labor practices and community engagement. Negative screens may include things like excluding pornographic businesses or tobacco companies.

While I have been actively employed in the investment and securities field for a quarter of century I have learned a lot over the past few years about values screening and it’s impact. When it is properly done to reflect someones core values is has three significant impacts. 1) Mental integrity of knowing that your values are consistent in your investment choices 2) emotionally having confidence that you are doing your part to live your values 3) physically you see the statements online or in the mail with “your values”. No one can nor should they force values on others rather give them reasons they personally choose their values and how that gives them power. Start with What do you own? One useful tool online is from Calvert for social screens is Know What You Own. While this is a good exercise I recommend there is a lot more that can be done to zero in on your values specifically. Often find advanced screening is usually offered only with professionals that are focused on your values. Ask your investment advisor if they have the ability to screen your portfolio for your values. If you want easy to use basic screener try BigMoney SRI.

I personally feel better knowing that values at my core are not being funded by my retirement savings or other investments. I personally get excited knowing that their are positive advocacy work being done to encourage others and I will not profit or earn money from industries against my values. This is newer journey for me and my family.There are hundreds of things to screen for both positive and negative and it may require some rather intensive work to screen properly. You may be best suited to have only individual stocks and you may need to purchase screening software. There are groups that cater to individual investors and others that cater to professionals with much greater details. If you want biblically responsible screen and do it yourself then BRII is a good choice. Another resource you may wish to visit is www.evalueator.com and they have biblically responsible screens for both mutual funds and stocks. If you want tax free income muni’s screened then Aperio in the SF Bay area may be best suited or again see if your investment professional has ability and commitment to this area. We are committed to be ongoing resource and advocate to help you achieve alignment with your values in your investment portfolio.

Stewarding Your Legacy

a.k.a. Don’t let your personal library burn to the ground. If we lived forever it would not matter this idea of capturing your photos/videos/audio/journals. While we capture lots of photos and some video of events and people and places there is more to this library. I love to send my kids over to spend time with grandma and grandpa and prompt them to ask about old photos and the stories that go with them. Having them hear the sadness or joy expressed brings that photo to life for all parties.

If we lived forever then there would be no reason to pass on our values (uh we would still be here). If we did live forever the power of being invincible would likely create selfish and irresponsible and isolated actions. So God is actually being merciful to us to limit our time on earth as it means to move us to act with purpose and meaning. Purpose to share our values with children and others. I’ve heard it said that if we lived forever we would feel no responsible to pass on the wisdom we acquired in life.

J.W. Whitehead author wrote “children are the living messages we send to a time we will not see.” What if you could hear your grandparent that has long passed and hear a words of wisdom or blessing to you? Do you know someone that has their deceased spouse voice still on the phone message at the house phone? I have had several people tell me that calling their grandparents phone to hear the familiar voice is a treasure to hear even if only “leave a message dear”. Why not leave a treasured gift of audio interview to capture your love and blessing to those you love. Why not take some action and be intentional and purposeful and leave your voice recorded for those you love? Don’t know where to start try a couple of these questions as a primer. What was a valuable lesson you learned growing up? What does money mean to you? If you could doing any type of work in the world what would it be and why? Who was your favorite teacher, coach or mentor growing up and why? We have been helping document audio legacy for more than 5 years and our experience has been for those over the age of 60 it has been a priceless experience. For those under the age of 60 it only provides value to those who are reflective and see how leaving this it an expression of love for their family, We love to talk about what your legacy could address and how it could impact the ones you love.

Enviromental Cleaners for the household?

Cleaning with green friendly products makes sense. Sometimes the smell of vinegar in the bathroom catches me off guard and has me running the opposite direction. So where can you go to get cleaning advice that is practical and economical. Not a site selling a bunch of fancy packages and fragrance laced expensive cleaners. We found a very extensive website on this from Annie B. Bond Care2 . I now have more appreciation for baking soda and vinegar. Found another well done site on recycling Living Green by Yahoo.

This site Care2 has very well done article on lighting I urge you to look over and consider your own stewardship. Often the heat factor off lighting costs more you think. Go check this article out by Beth Buczynski “Understanding How Lighting Affects Home Efficiency“.

Where is the Money?

Many of you know the name Willie Sutton. Why? He is the guy when asked why he robbed banks His reply “That’s where the money is”.

I have had the opportunity to ask several community benefit organizations this year about their focus and current trend in their organization. The reply was almost verbatim “with real estate values down and stock market off our giving is way down”, or the other reply is “corporations are cutting back on giving and really hurting our efforts”. Either way they say it with frustration and without much hope. Next I ask “are you incorporating planned gifts like bequests in your efforts?” We tried to get that started or we are not well staffed; besides (pause) it takes a long time.

According to Center on Wealth and Philanthropy “retired households on average own 58% more assets, but earn 35% less income than non-retired. The retired group gives 69% more to charitable causes. Of the assets owned only 9% are cash so 91% are non-cash. Where is the money? Non-cash assets. The study goes to say that donors over age 50 could give 2-4 times as much ANNUALY by gifts from assets instead of cash and not affect their lifestyle!

So you’re a donor with reduced capacity but still a big heart to give. Why not take the first step and see if your favorite charity is open to non-cash assets. Mortgaged properties, art, collectibles and intellectual property are tougher to give away but it can be done. S-corp. stock can be great if given prior to sale or if thoughtfully integrated into long-term plan. If you charities refuse your assets gifts we would love to know and in doing so we could build new friends along this journey.

When Public is Private and Private is Public

Does it seem odd to anyone that Private charities like the Private Family Foundation is require to be fully disclosed? So, if you have a Family Foundation the checks out the door are required Public Disclosure form called a Form 990 by the Treasury. On the other hand does it seem odd to anyone that a Public Charity like Donor Advised Fund or Community Foundation does not have to disclose its distributions? There is a way the Private can keep things private by using the pass through process of donor advised fund to pay out it’s required minimum 5% payments.

A good place to learn about non-profits and the Foundations is GuideStar . Your local Community Foundation may also have resources for your local market. If you on the other are looking at starting a Private Family Foundation then why? Start with the way? If it’s about getting family members involved realize there are less expensive and effective ways. If your why is about control and management then you are thinking correctly and just need to understand the costs and limitations for gifts. Another important consideration is the time horizon for the Foundation. There are start up and closing costs and annual filings and administration fees. Regulatory headaches are one of the key barriers to setting up and running such a organization. One book I found helpful early on in this evaluation process is “Creating a Private Foundation” The essential guide for donors and their advisors published by Bloomberg Press and Silk and Lintott.

Remember there are lots of people offering advice on technical issues and the biggest failure we have seen comes from soft issues not hard issues. Family dysfunction, distrusting advisors fighting, ego battles on control and who get to make even little decisions. We have found having a family therapist or third party engaged to see the soft issue resolved may be the best investment return for those wishing to help others with a Private Foundation.