Faith Based Investing

Remember the scene in the movie The Great Outdoors where John Candy’s character, Chet, is being chased by a large bear in the woods? Chet finally gets inside the house and his look, mannerisms, and tone say it all: “Bear . . . bear . . . Big Bear . . . big bear chase meeeeeeee . . . !”

Many are often like Chet in that they panic when the markets go down. Unlike the threat of immediate physical danger (a bear), threats to your wealth (a bear market) are only temporary. How you proceed in the bad times determines your overall success or failure.

Increasing market volatility often raises many questions and uncer­tainties:

* Are we heading into a recession?

* Is the market going to continue to decline? Should I take my money out?

* How will my dreams and goals be affected?

Having a solid approach to financial planning can help protect you in times of market volatility. This approach should leverage strategies that can help you stay focused on your long-term plan. These strategies can help you weather the expected ups and downs of the market.

No matter what the current market brings, there are always opportu­nities in the financial markets. The key is to understand how to react and what your mind-set should be when there is significant market uncertainty. It is important to have effective strategies in mind during market volatility. Here are five things to think about when the markets take a turn:

1. Review Your Financial Plan

An ideal financial plan takes into consideration a lot more than your asset allocation. Your savings, debt, insurance, taxes, and retirement planning are also key pieces of a comprehensive plan. If you overlook any one of these elements, your dreams and goals may be in jeop­ardy. Market downturns are the time to discuss how market volatility could affect your plan and to determine if you need to make adjust­ments. You should cut back on expenses and try to save more.

2. Take Time to Pray and Control Your Emotions

Up-and-down market movement is a fact of life. God is in con­trol. Lean on Him when things aren’t going well. He will provide strength. Don’t let your emotions drive your decisions. Stay focused on your long-term goals to help ensure your plans stay on track.

3. Diversify, Diversify, Diversify

Diversified investing across stock, bond, and cash investments can help smooth out the inherent ups and downs in the market. Hav­ing the appropriate investment mix based on your goals, risk toler­ance, and time horizon is critical.

4. Be Disciplined

Disciplined investment strategies such as dollar cost averaging can help smooth out market fluctuations. Dollar cost averaging is the practice of investing fixed amounts in equities at set periods of time. Over time, your average price per share will usually be reduced and may help put you in a better position to weather a volatile market.

5. Avoid Market Timing

It can be tempting to react to market volatility by trying to time the market. But effectively timing the market requires you to make two correct decisions that are very difficult to make: exactly when to buy and exactly when to sell. This is a risky game to play. Being out of the market at the wrong time–even if it’s for a short period–can signifi­cantly cost you.

A collaborative financial planning process is built with a long-term view focused on your unique dreams and plans. Keep in mind, diversi­fication helps spread any risk throughout your portfolio, so investments that do poorly may be balanced by others that do relatively better. Diversification and asset allocation do not guarantee overall portfolio profit and do not protect against loss.

People have often said boycotts do not work! Well I am happy to report the McDonalds boycott did! Over the past several months I have kept you informed about McDonalds crossing the line in the culture war – choosing to promote homosexuality. I have encouraged people to avoid buying their company stock and eating at their restaurants. I know my family of six has chosen to eat and invest elsewhere!

As you may recall earlier this year, McDonalds joined the Gay and Lesbian Chamber of Commerce and company Vice President Richard Ellis sat on the GLCC Board. Well with the help of family values organizations across the country, strength in numbers sent a loud and clear message to McDonalds. Their “super-size” attack on family values had to stop!

Ronald McDonald heard the message and changed its ways. This week, McDonald’s agreed to stop financing the homosexual agenda, Richard Ellis resigned from the GLCC, and they issued an email to franchises saying, “It is our policy not to be involved in political and social issues. McDonald’s remains neutral on same-sex marriage [and the] ‘homosexual agenda…’”

I applaud McDonald’s for their courageous act to stay neutral in the cultural war. It is not the role of a major corporation to promote anti-family values. McDonalds made the wise decision. I also thank all of you who used your buying power to encourage values on the menu and in company policy.

This example is a perfect illustration of why I wrote The Faith-Based Millionaire. If millions of Christian investors chose to boycott the stocks and products of other corporations that promote values that oppose our faith, what a difference we could make. It takes a concentrated effort of like-minded individuals to come together, stand for what they believe, and take action! As this boycott has shown, we can change corporate America. We can take America back to its traditional values based on faith, hope, and love. Let us all continue to be involved and not watch from the sidelines!

Let’s Play the Blame Game!

Whether you are Democrat or Republican, you cannot blame Bush for EVERYTHING!  The economic mess that the world is in does not rest solely on Bush’s shoulders.  Here are some facts relating to the US economy:

The 7 1/2 years of George W. Bush’s Presidency:

The first six years of the BUSH years, the economy was fine.
A little over one year ago…
1) Consumer confidence stood at a 2 1/2 year high;
2) Regular gasoline sold for $2.19 a gallon
3) the unemployment rate was 4.5%.
4) The DOW JONES hit a record high: it reached over 14,000
5) American’s were buying new cars, taking cruises, vacations overseas, living large!

But American’s wanted “CHANGE!”

So, in 2006 they voted in a Democratic Congress and yes–we got ‘CHANGE’ all right. In the PAST YEAR:
1) Consumer confidence has plummeted;
2) Gasoline hit $4 a gallon!
3) Unemployment increased to 5.5% (a 10% increase);
4) Americans have seen their home equity drop by $12 TRILLION DOLLARS
and home prices are still dropping
5) 1% of American homes are now in foreclosure.
6) THE DOW has hit a five year low
7) Over $3 trillion dollars has evaporated from their stocks, bonds &
mutual fund retirement portfolios!

Yes, in 2006 America voted for change…..and we sure got it! …..
Remember the President has no control over any of these issues, Congress has control.
And what has the Democrat majority Congress done in the last two years?   Absolutely nothing.

Now the Democratic candidate for President claims he is going to really give us
change along with a Democratic House and Senate!!!! Just how much more ‘change’
do you think we can stand?

So What Do I Do Now?

I have been in the NH local media recently (various TV and radio shows) with the following message:   It may be a hard pill to swallow…but we all need to hear the truth:

First of all stop blaming others… It’s not all Bush’s fault.  It’s not the government; it’s not your spouse, neighbor, friend, or anyone else’s fault.   It starts with YOU!

You have to start taking some responsibility.  We cannot rely on the government, our companies (unless you’re a business owner), or others to bail us out.  It starts with your faith in God.  Give it all to Him.  Our money belongs to Him.  He is in control. While the world falls apart around us, He has a plan in here.  We are merely His money managers.  All of our possessions ultimately belong to Him.  When we die, our possessions go elsewhere.

Our country was built on faith, hope, and love!  Right now Americans seem to be abandoning all three!  Choose the Big P over the little p:    Prayer over panic!

Next take responsibility for your actions…control what you can control.  There are only 4 variables:

INCOME:  Seek to increase your income:  get a second job, start a business, change careers.  Income is a major way to build wealth.

EXPENSES:  This is the most critical area.  You could make a million dollars a year but if you spend $2 Million you’re in trouble!   Control your spending!  Essential Habit #6 (Chapter 6 of The Faith-Based Millionaire) tackles how to spend money frugally.

ASSETS: Manage and protect the assets God entrusts to you!  Yes, the markets are sharply decreasing; do you have a solid plan?     Essential Habit #4:  Establish a financial plan.  The FPA just recently did a study that those who use a financial planner are twice as likely to feel confident about their financial future.  This is discussed in Chapter three Essential Habit # 3:  Seek Wise Counsel

LIABILITIES: Seek to minimize bad and ugly debt!  In chapter 7 of The Faith-Based Millionaire, I talk about Good, Bad, and Ugly Debt.

pg 121:  “Here are the working definitions of what I am talking about:

Good debt: Good debt involves purchasing something that will gain, retain, or create value. A home mortgage is a prime example of good debt.

Bad debt: To put it simply, bad debt is any debt you incur when buying something that will lose value.

Ugly debt: Ugly debt is debt incurred when purchasing something consumable (meaning it will have no further value). This seems logical, right?”

In Conclusion

Hope in the world is hopeless, but in Christ there is hope!  Give it all to Him and He will get you through the wilderness to a place of peace and rest.   Turn off the TV and the news and turn to His Word!  You will find comfort in these troubled times.

I wanted to pass along the great news.  Dr. C. Thomas Anderson endorsed The Faith-Based Millionaire.  Dr. Tom has authored Becoming a Millionaire God’s Way; Me, My Country, My God; 90 Days to Health, and various other life changing books.  Dr. Tom is the founder and senior pastor of Living Word Bible Church in Mesa Arizona which has over 8,000 members and is one of the fastest growing churches in the Southwest.

Here are his comments on The Faith-Based Millionaire:

“Mr. Peroni has discovered and revealed the powerful truths of God’s Word in his book, The Faith Based Millionaire. It has the potential to assist changing mindsets in the Body of Christ concerning the wealth that God wants His children to have to build His Kingdom and be personally blessed.

Psalm 122:9 (NIV) For the sake of the House of the Lord our God, I will seek your prosperity!”

– Dr. C. Thomas Anderson, Founder and Senior Pastor of Living Word Bible Church in Mesa, Arizona, Author of Becoming a Millionaire God’s Way

The Faith-Based Millionaire will be officially released on October 26, 2008.  Order your copy today!  Here is an advance preview of the foreword by Dan Miller.  Dan is the author of two fabulous books No More Mondays and 48 Days to the Work You Love.  Dan is someone I highly respect and admire.  Check out his website at www.48days.com. It was exciting to have him contribute to The Faith-Based Millionaire.  Here are his comments:

“As a career and life coach, I have seen people make dramatic strides forward as they identify meaningful and purposeful work. In addition to the sense of accomplishment and fulfillment that is released in that process, we typically see the appearance of increased finances as well. And that is where many of these same people are caught unprepared. Responsible management of finances requires just as clear a plan as the business or career that created those abundant resources. Being good stewards of the wealth that explodes when we find our authentic fit in our work is not an automatic process. We must learn how to give, invest, and spend wisely.

And yet I frequently see people who just assume the money will take care of itself. Or that money is just material–separate from their spiritual selves. And thus people segment their lives into those areas that are “spiritual” or “secular.” The result is a fragmented life and the misuse of the wealth with which they have been entrusted. Jay addresses this artificial separation and shows the way to a more fully integrated life. Our financial management certainly does reflect our values. The Faith-Based Millionaire is a fresh approach to having an authentic and purposeful life.

How we handle our financial resources is reflected in the biblical story of the talents. The servants who doubled their “talents” were enthusiastically rewarded, while the one who simply maintained his little nest egg was severely reprimanded for not taking advantage of honorable methods of increase.

The Faith-Based Millionaire shows us that “placing principles before profits” does not mean compromising or reducing profits, but rather our congruity in integrating our values throughout everything we have at our disposal actually increases our long-term profitability.

In his engaging style (e.g., Chapter 5: “Raise Your Standard of Giving”), Jay shows how to live an intentional financial life, how to decide to be a success, and then how to experience true success in multiple areas of your life.

He proposes real solutions and investing models that are available to all of us. He offers the encouragement that there are opportunities that “fit” you–based on your unique goals and position.

I urge you to do something special for others and yourself–read The Faith-Based Millionaire. The stewardship of your time, talents, and treasure will allow you to finish well and leave a legacy that blesses future generations.”

Dan Miller, Author of 48 Days to the Work You Love and No More Mondays

www.48days.com

No one can question the popularity of NASCAR racing. Whether you are a fan or not, the fast cars, mega corporate sponsorships, and racer lifestyles attract millions of fans a year. According to NASCAR.com, last year the average Sprint Cup gate exceeded 120,000 people and there are over 75 million Americans race car fans. Whether you watch regularly or have never seen a race: what do you think is more important  – the race car (horse power, weight, design, etc) or the driver (the person driving the vehicle)?

Pretty simple: the driver - as long as he has a manageable automobile. Last week, we talked at great lengths about being a faithful manager. As part of the duties of being a manager, you have a responsibility is to maximize the profit of the assets that God entrusts in your care. You may be called to manage your own businesses. You may be gifted as an entrepreneur. Or you may be called to invest in someone else’s business – whether it is a private or publically traded company or you make your investments through other vehicles like mutual funds.

As long as a company does not operate in an unethical or immoral industry, there is no such thing as a bad business – there are only poor managers. A talented manager can turn a poor company in the right direction while a poor manager can take a profitable business and run it into the ground. Whether you are investing in your own business as an entrepreneur or you choose to make your investments elsewhere, God is calling you to get the highest return on the money He provides you.

Investing is not a game to be won or lost. It is simply a means to an end. It is only important when you give up something (money) in exchange for something of value to you in the future. Investing is only meaningful when you have a vision of what you would like to accomplish. What has God put on your heart? How can you further glorify Him? Goals should focus on God’s purpose in your life. We need to take care of our families, but we cannot lose focus on the real reason we are here on earth: to be a part of God’s plan for the world. Are you doing your part or are you just playing by the world’s rules?

Breaking Rules

If you watched NASCAR today you saw Tony Stewart finish first in the Amp Energy 500 at Talladega Superspeedway. Even though he did not technically cross the finish line first, he was declared the winner because Regan Smith, a rookie, broke the rules: “no passing under the yellow line to advance your position at Talladega”. Even though Regan Smith crossed the finish line first, he was no winner. Just like in this scenario, when you live by the world’s rules you may win the game on earth, but what about the game that really matters in heaven?

God is the ultimate judge and though you may win here on earth, he may declare that you too have broken the rules. Instead follow his plan. It begins with your heart. Make sure your priorities are in line with His will and make investments that do not compromise your faith. By seeking God, He will reveal to you your purpose and where He is leading you.

Invest  God’s Way

There are two investments that God wants us to make. He wants us to invest in our families: 1Timothy 3:5 says, “but if a man does not know how to manage his own household, how will he take care of the church of God?”(NASB) Timothy goes on to make the point even more clear: “But if anyone does not provide for his own, and especially for those of his household, he has denied the faith and is worse than an unbeliever.” These are pretty harsh words. We have a responsibility to invest on behalf of our families to provide for them.

God also wants us to invest in others. Mark 12:31 shows this: “‘You must love your neighbor as yourself. No other commandment is greater than these.” (NIV). He frowns when we become self centered and spend our excess on self indulgence: “Behold, this was the guilt of your sister Sodom: she and her daughters had arrogance, abundant food and careless ease, but she did not help the poor and needy. Thus they were haughty and committed abominations before Me.” (Ezekiel 16:49-50 NASB).

I Need Your Story

I am deep at work on my next book The Faith-Based Investor. If you would like to share a story of how God has made a difference in your finances, please send me an email at info@jayperoni.com.