I mentioned that profits have to do with increased wealth; and increased wealth is not the same as cash. If we fail to understand those differences, we can run into some serious trouble.

I thought I would illustrate what I am talking about. Read the rest of this entry »

What are profits?

I don’t think most of us really understand the concept very well. In fact, I’ll include myself in the number who struggle to understand what profits are.

To illustrate: When you hear that a company made, say, $8 billion last year, what image comes to your mind? –For me, I tend to think: “Oh, wow! They have $8 billion in cash in a bank somewhere–$8 billion that they did not have the year before.” “Profits” mean “cash.”

That’s what many people think. But that’s not right.

I’m sure there are more technically correct definitions of the word profits, but here’s a the best working definition I’ve been able to come up with: Profits are any increase in assets for which a business does not have increased liabilities (or debts) other than to the owners. Put another way, profits are an increase in wealth–and (most important to understand–and something I still tend to forget!) wealth comes in many forms other than money!

I say this because, for the longest time, I thought of profits in the same way I thought of a paycheck: profits are the same thing as a paycheck. You take them, bring them to the bank, and buy stuff with them.

But that’s not the case. Read the rest of this entry »

Shaila Dani, AP Money & Markets Writer, provides a wonderful, concise set of recommendations to help develop children’s “money-smarts” from the very youngest ages (how about beginning at three years old?).

Among her suggestions:

Under 4 years old Display a savings jar and put coins in it. Teach children to delay gratification by not immediately buying them what they ask for.

4, 5, 6 years old When your children ask for something, don’t give in right away. Instead, have them create a list of gifts for the future even using pictures.

Around 8 years Start an allowance but nominate one expense like candy or another treat your children want to spend money on. Then make a “contract” and sign it together. Also have them earmark some money for saving. Choose a share of a well-known company–Walt Disney, perhaps–and give your children pretend “stock certificates.” Have them track the stock’s performance to teach them about the market. . . .

Read more on Yahoo! News.

Boy! Was I naive!

Kind of like my thinking with respect to estate planning ten years ago, I thought writing an Investment Policy Statement should be pretty straightforward. All I needed, I thought, was some professional help to give me the right words.

But I’ve discovered that is not the case at all–a discovery that is both frustrating (because it means I have a lot more work to do!) and happy at the same time (because I made the discovery; I haven’t made any more foolish or irrevocable mistakes in this area . . . yet).

Way beyond getting the “right words” on paper, Sarita and I need to answer some very fundamental questions–questions far deeper than the average investment advisor is likely to ask or help us answer. Read the rest of this entry »

Yesterday I posted a proposed draft copy of an IPS (Investment Policy Statement) our legacy planners gave me. I said I didn’t feel comfortable signing the document without further input . . . from our investment advisor himself and, perhaps, one or two other similar advisors.

Today I thought I would share some of the things I wrote to our investment advisor about the document. So here’s the cover letter I sent him: Read the rest of this entry »

Matthew 6:3-4 records a statement of Jesus:

But when you give to the needy, do not let your left hand know what your right hand is doing, so that your giving may be in secret. And your Father, who sees what is done in secret, will reward you.

This passage has always made me very nervous. I don’t want anyone to know what I have done, especially when it comes to giving!

So, then, why would I write a post like the one I did last Saturday–Strategic giving? I mean, I got into some pretty fine details! Am I not in danger of disobeying this teaching of Christ? Read the rest of this entry »

The following is not exactly a rehash of what I covered in Tithing, Law, Grace and Teaching, a post I wrote nine months ago in direct response to a “challenge” laid down by our legacy planner at the time. But when I ran into this on Saturday, I realized I wanted–and needed–to re-post it, with slight modification, here. This was the first article that caught my eye on Saturday, but, if you saw my post yesterday, you will realize it is the second among my rediscoveries that I am posting.

(Originally posted, in slightly different form, at Tithing: replaced by grace?

Read the rest of this entry »

Every now and then I read self-congratulatory articles about how generous Americans are. This one from World magazine is relatively typical:

Americans are the most generous people on the planet, and they mostly don’t toot their own horns about it.

A new study by the Hudson Institute’s Center for Global Prosperity says that Americans account for 45 percent of all philanthropic giving worldwide. Not only is that significantly more than any other nation on earth, it’s also dramatically more on a per capita basis. One example: The average American gives 14 times more to charity than the average Italian. . . .

“Americans give at least twice as much as anyone else,” [Arthur C. Brooks, a fellow at the Hudson Institute and the author of Gross National Happiness] said. “And we’re giving now more than ever before.” Read the rest of this entry »