Faith Based Investing

Do You Love Money?

We should seek to be “free from the love of money” and not “fond of sordid gain” (1 Timothy 3:3, 8 nasb). God wants us to love people and use things. Too often we use people and love things. We do not own the things we cannot give away–they own us. To minimize the chances of falling in love with money, a faith-based investment plan is critical. Setting up such a plan consists of four key steps:

Step One: Determine your purpose.

Money without purpose is just money. However, money with a purpose can be used to change the world. It feeds the poor, builds shelters, and changes lives and souls for the kingdom of God. Money with a godly purpose can be revolutionary.

If you desire money solely for material things, you will never be content. Many of the happiest and most successful people in the world have found their purpose in life. They know exactly what money can do to help their families and help others. If you had more money what would you do with it? Who would you help? What would your days, weeks, and months look like? Unless you can envision how you will use money to better the lives of others, no amount of money will fill you up. It is only Christ’s love that fills the void in your life. As you grow closer to Him, He will help you find your purpose–your unique calling.

Step Two: Define your values.

Values form the foundation of who we are. These are what we place above all else, including our own self-interests. Corporations are no different. They project a set of values. If a company values its employees and helping society above profits, then the corporation should protect its employees and others above its own profits. If a company values the environment, they should be willing to minimize pollution and waste even at the expense of profit. Whatever an individual or corporation values should trump all else.

Universal values like love, compassion, justice, freedom, honesty, faithfulness, and responsibility are not optional; they are what keep a society together. We are free to ignore these values, but we must be willing to suffer the inevitable consequences. When you seek only self-interests, you will eventually lose everything you have.

Clarifying your values sets the stage for you to define God’s purpose for your life. He has intentionally put you in certain situations and experiences. Your life lessons are preparation for the “next chapter.” Once you have discovered what you ultimately strive to accomplish, then you will suddenly find additional motivation. A good source of fuel for your burning passion often comes from what you value most.

Step Three: Evaluate asset choices.

When you look at investing, there are really only five choices. Here’s a look at the classes of assets you’ll generally be considering when you invest:

1. Start or Operate a Company: Selling a product or service that meets the needs of the marketplace can be the fastest path to financial freedom. However, this can also be the riskiest and least likely to succeed when you evaluate your choices.

2. Stocks: Although past performance is no guarantee of future results, stocks have historically provided a higher average annual rate of return than other investments, including bonds and cash equivalents. However, stocks are generally more volatile than bonds or cash equivalents. Investing in stocks may be appropriate if your investment goals are long-term.

3. Bonds: Historically less volatile than stocks, bonds do not provide as much opportunity for growth as stocks do. When interest rates rise, bond values tend to fall, and when interest rates fall, bond values tend to rise. Because bonds offer fixed interest payments at regular intervals, they may be appropriate if you want regular income from your investments.

4. Cash Equivalents: Cash equivalents (or short-term instruments) such as money market funds offer a lower potential for growth than other types of assets but are the least volatile. They are subject to inflation risk, the chance that returns won’t outpace rising prices. They provide easier access to funds than longer-term investments and may be appropriate if your investment goals are short-term.

5. Alternative Assets: The term “alternative assets” is highly flexible and is used to describe specific physical assets, such as natural resources and real estate, as well as methods of investing, such as hedge funds and private equity. In some cases, even geographic regions, such as emerging global markets, are considered alternative assets. These are often investments that are unrelated to other asset types.

Step Four: Select sound investments that complement your faith.

Many well-educated, morally and socially conscious in­vestors wind up buying shares of companies whose beliefs and business practices are far removed from their own. Most investors simply haven’t thought about merging their per­sonal beliefs with their investment strategies. Some may not even be aware of where and how their money is invested.

Consider this: When you invest in a company, you own part of that company. Some investors would prefer to sepa­rate themselves from their investments, but any shareholder cannot. So what you really need to consider, based on what the company does and how they conduct business, is whether you would feel comfortable being a partial owner of that company.

How you invest or don’t invest your money can be a significant statement of your beliefs and personal prin­ciples. For example, if someone is strongly opposed to gambling or pornography, they could choose to not in­vest in any company that contributes to those industries. If everyone who opposed those industries sold (or didn’t purchase) shares from those companies, that could po­tentially send a powerful message. On the flip side, if someone firmly believes in eco-friendly alternative energy sources, they could choose to invest in wind farms rather than big oil (for example) as a way to show their support.

As many of you know, I have a weekly column over at ChristianPF.com. This is  great resource for those looking for financial and debt help.

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Bye-bye Passion

“Bye-bye, Miss American pie.
Drove my Chevy to the levee,
But the levee was dry.
And them good old boys were drinking whiskey and rye”
Singing, this’ll be the day my passion dies
This’ll be the day that my passion dies

I changed the lyrics a bit there, but it is so true! So many are letting their passion die! They are staying trapped in the box, playing by rules that corporations and the world say you have to play by. Play it safe, don’t take risk, color inside the lines, and taking a leap of faith is not right for you! Just do as you’re told! We know what’s best for you!

Like puppets on a string, many of us play along. We stay in our cubicles, trade time for money, punch the clock in and out, go home and watch TV to dull the pain, then wake and repeat. Why do so many stay in dead end jobs for so long?

I was that way for years, but there was something missing…How did I become a wage monkey? How did I let this happen? Why am I not being paid for my performance? Why doesn’t anyone let me make the decisions? My corporate mentaility was killing my passion. All these ideas were trapped in my head, but the companies I worked for were set in their ways and not open to my fresh ideas. Oh no that won’t work, we don’t do it that way here, just follow the rules, don’t offend anybody, make sure everyone likes you, and you won’t get hurt. I did get hurt! You killed my creativity! You just killed a part of me!

Then it all changed! No more Mr. Nice guy! No more Mr. Corporate politics guys. I needed to go into business for myself. I started speaking what was on my mind and living out my passion and found new opportunities kept popping up. Was it coincidence? I believe everything happens for a reason. You control your destiny while God clears the path! We can either sit back and watch life pass you by or you can go out and make life happen! The choice is yours!

So…Where is Your Passion?
Why do so many people have trouble finding their pas­sion? Often it is so far beneath the surface that it is out of sight and out of mind. If you have a relationship with Jesus, are you passionate about Him? Money tends to be the primary motivating factor for many as they choose a profession, but most would not identify money as their true passion.

In his book Marketplace Christianity, Robert E. Fra­sier says:

For people who are passionate for Jesus, there are dozens of well-trod paths into ministry but few into the marketplace. Have you ever heard someone say, “I’m so passionate for Jesus; I just have to go into business”? Why don’t we hear that? Because, without ever saying so, most Christians believe that a marketplace vocation and passion for Jesus are mutually exclusive. This is one of the great tragedies of modern Christianity, and it has robbed millions of people of their passion and purpose, and robbed the Son of God of His inheritance in us.

God has instilled a passion within you. He has pro­grammed within you a desire to participate in activities that are natural, rewarding, and fulfilling. Some find these early on. Others never truly discover their passion. Almost every successful person I have met found a way to consistently tap into his or her passion. Once they found a way, they also discovered how to earn a living through it.

If you discover what your interests and passions are, you will always be far more successful than if you just go through the motions. Take some time to search yourself and determine what really makes you tick.

Want to hang with others looking to live out their passion?

Check out 48days.net.  This site is a great place to conjugate. Dan Miller is such a great example of creative thinking for increased personal and business success. He believes the most effective life plans are achieved by integrating natural gifts, unique personality traits, and one’s own values and passions.

If you haven’t read No More Mondays , Dan writes, “I believe every one of us has a unique calling. It’s certainly not something re­served for a chosen few who end up as pastors, priests, or monks. We all fulfill that calling being excellent as we ex­press or talents and abilities, and our dreams and passions. Anyone can do a job, but a calling is lived out by a person who has tapped into wisdom that goes beyond education and intelligence.” Dan is active in helping individuals redirect careers, eval­uate new income sources, and achieve balanced living. He believes a clear sense of direction can help us become all that God designed us to be.

The question for you is. “Are you letting your passion die?”

What is Your Purpose?

Money without purpose is just money. However, money with a purpose can be used to change the world. It feeds the poor, builds shelters, and changes lives and souls for the kingdom of God. Money with a godly pur­pose can be revolutionary.

If you desire money solely for material things, you will never be content. Many of the happiest and most success­ful people in the world have found their purpose in life. They know exactly what money can do to help their families and help others. If you had more money what would you do with it? Who would you help? What would your days, weeks, and months look like? Unless you can envision how you will use money to better the lives of others, no amount of money will fill you up. It is only Christ’s love that fills the void in your life. As you grow closer to Him, He will help you find your purpose–your unique calling.

Matt Bell is a friend of mine. In his first book, Money, Purpose, Joy, Matt talks about ways to find more purpose with your money. Early in his life Matt thought he had found his purpose. Out of the blue he inherited $60,000 from an uncle. He knew he wanted to do something noble with the money and decided to start a business.

READ MORE HERE

Biblical Worldview?

George Barna is one of America’s leading pollsters in matters of religion and morality. In 2004 he measured how many people hold a biblical worldview based on the following questions:

1. Do absolute moral truths exist?
2. Is absolute truth defined by the Bible?
3. Did Jesus Christ live a sinless life?
4. Is God the all-powerful and all-knowing Creator of the universe, and does He still rule it today?
5. Is salvation a gift from God that cannot be earned?
6. Is Satan real?
7. Does a Christian have a responsibility to share his or her faith in Christ with other people?
8. Is the Bible accurate in all its teachings?

Did you answer yes to all of these questions? If you did, you are among 4 percent of the population and 9 percent of born-again Christians. This was what Barna referred to as a biblical worldview. A biblical worldview is based on the infallible Word of God.

If we are to have a biblical worldview, we must develop biblical convictions. Here is the big problem: Living in a self-centered and sinful world, the mantra of the day becomes “If it feels good, do it,” which satisfies our desires yet destroys our souls.

By studying, applying, and trusting God’s truths in every area of our lives–whether it’s running a business, investing money, going to the workplace, or raising a family–we can begin to develop a deep, impactful faith that will stand firm against the unrelenting tide of our cultural ideas and views.

Does your business reflect biblical principles? If so, how are they carried out?

“Do not conform any longer to the pattern of this world, but be transformed by the renewing of your mind.”
–Romans 12:2 (niv)

Why Avoid Tobacco Companies?

Is the act of smoking cigarettes a sin? Should Christians be smoking? What about owning tobacco companies? If you own stocks in tobacco companies, are these the types of companies you are proud to own? For years tobacco companies have been lumped into the “sin stock” category. What are your thoughts?

I have pioneered a process called the Proud to Own Process. This process takes a look at aligning a person’s faith, values, morals, and beliefs into their financial plans and investment portfolios. So I always ask prospective clients if there are any companies or moral issues they would be opposed to investing in. I provide examples such as abortion, pornography, embryonic stem cell research, gambling, tobacco, and alcohol. Tobacco always seems to be an area many never think about.

So Why Tobacco-Free Investing?

Someone recently asked me why I personally never considering owning a tobacco company. My response was I do not feel comfortable investing in a terminal industry, an industry that produces a product that if you follow the directions on the side of the carton, it will eventually kill you. When you look at tobacco as a product, there is no denying that it’s bad for individuals, bad for our country, and bad for our overall economy!

Screening of tobacco companies from an investment portfolio is a traditional values-based and socially responsible investing approach. These investors are concerned with the societal issues of tobacco use, primarily focused on health issues. Other investors may want to avoid companies in the tobacco industry to reduce the risk associated with such investments (lawsuits and liability exposure).

Where we invest is a vote for our values even if you only own a small portion of a company. The source of the profits is more important than the amount of profits, but it is not an ether or scenario. You can have both principles and profits! I’m not here to tell you to smoke or not to smoke, that’s your personal choice. It’s also your choice when it comes to investing in or avoiding tobacco companies.

Individual investors can avoid tobacco through tobacco-free funds, broadly-screened Socially Responsible Investment funds, many faith-based mutual funds or biblically responsible funds, and by screening their stock portfolios. While screening may imply lower performance, there have been no significant studies produced that show avoiding any types of companies (tobacco included) affect the performance of the overall portfolio, either positive or negative. If you or a money manager is good at selecting stocks, narrowing the pool of choices still leaves enough good financial choices to achieve competitive returns.

As a Christian, when we invest, if we are truly incorporating our faith into our investment decisions, we should seek to be Christ-Centered. This means investing in a way to bring Him glory and honor. We should seek out companies making a positive difference in our society and try to avoid companies that are harming our culture and society. This includes companies making products and services that keep people addicted or trapped in sinful lifestyles. With thousands of potential investment choices, why even consider investing in the tobacco industry?

Here is a list of companies involved in the tobacco industry:

Alliance One International Inc (Symbol AOI): Alliance One International buys, processes, stores, and sells leaf tobacco. The company purchases tobacco in the United States, Asia, Africa, Europe, and South America for sale to manufacturers of cigarettes and other tobacco products in more than 90 countries. Sales of flue-cured and burley tobacco for American blend cigarettes compose most of the company’s revenues.

Altria Group (symbol MO): Altria comprises Philip Morris USA, John Middleton, and Philip Morris Capital. It also owns 28.6% of SABMiller, the world’s largest brewer. PM USA is the largest manufacturer and distributor of cigarettes in the U.S. John Middleton is the second-largest maker of machine-made cigars.

Lorillard Inc (Symbol LO): With annual sales of around $4 billion, Lorillard is the third-largest cigarette manufacturer in the United States. Its flagship brand, Newport, claims a 10% share of the total cigarette industry, and a near 35% share of the menthol category. The firm also competes in the non-menthol premium category with the brands Kent, True, Max, and Satin, and in the discount segment with Old Gold and Maverick.

Reynolds American (Symbol RAI): Reynolds American is the second-largest domestic cigarette manufacturer, behind Altria, with a portfolio of brands that includes Camel, Kool, and Pall Mall. In 2006, Reynolds acquired Conwood, the second-largest domestic producer of smokeless tobacco through such brands as Grizzly, Kodiak, and Levi Garrett. Conwood also manufactures small cigars and roll-your-own tobacco. Another subsidiary, Santa Fe Natural Tobacco, manufactures additive-free cigarettes.

Star Scientific (Symbol STSI): Star Scientific, along with its subsidiary, Star Tobacco, is a technology-oriented tobacco company seeking to develop, license, and implement technology to reduce the carcinogenic toxins in tobacco and tobacco smoke. Star Scientific sells cigarettes under the Mainstreet, Sport, and G-Smoke brands, as well as smokeless tobacco products and powdered tobacco, all containing their cured, lower-toxin tobacco

Universal Corp (Symbol UVV): Universal has operations in tobacco, agricultural, and lumber and building products. It provides buying, processing, packing, storing, and other merchant services for producers of tobacco products. The company’s Universal Leaf Tobacco subsidiary provides tobacco-leaf dealer services.

The other day, I was listening to David Crowder’s version of “Everyone Wants to Go to Heaven, but Nobody Wants to Die!” If you haven’t heard the song…well it sums up how many people feel. They don’t want to talk about death so they avoid planning for after they leave this earth. Legacy planning is a huge area where so many people miss the mark.

What is a legacy?

A Legacy is defined as:

1. Money or property bequeathed to another by will.

2. Something handed down from an ancestor or a predecessor or from the past: a legacy of religious freedom.

Heritage is another area that we need to look at:

1. Property that is or can be inherited; an inheritance.

2. Something that is passed down from preceding generations; a tradition.

3. The status acquired by a person through birth; a birthright: a heritage of affluence and social position

Legacy planning is one of the most critical aspects of the money management area. As Christians, we have a unique need for planning our legacies. However, most Christians have not prepared even the basic documents needed, never mind the fun and creative things one can do. It is estimated that nearly 7 out of every 10 adults do not even have a will. End of life planning is an area that most Christians find confusing, time consuming, and fearful. Many people do not want to think about their demise. Unfortunately, procrastination often leads to a financial train wreck left for their beneficiaries.

Everyone has a limited number of days here on earth. There is a beginning and an end to our life. God knows the exact day and time of your demise. The reality is that every one of us will die someday and we cannot bring earthly riches with us.

In the area of legacy planning, it is critical to understand that it is a process that should begin now. Its goals should be to honor God and advance His kingdom. Since we cannot take it with us, we should begin to plan our legacy for our beneficiaries. You never know when the end may come and you can’t change it once you’re gone.

After realty sets in we all know that we will die someday, we cannot take “things” with us, and we will most likely not know the exact date of our death. This means planning beforehand is critical and cannot be delayed. The confusing part of the planning is dealing with the consequences of passing assets. Some of the most common difficulties include:

1. What are the best ways to transfer assets while alive and at death?

2. How do I deal with sibling rivalry?

3. How do I create a business succession plan?

4. How do I pass wisdom?

5. How will I pass my values?

6. How do I navigate the legal and tax consequences?

7. Should I leave money to my church, a ministry, charity, and my family? What percentages?

Have you spent time thinking through these areas? Do you have a legacy plan? Are you set up properly in the event of your demise? Do you have enough life insurance? Do you have wills, trusts, and proper planning documents? All these questions can be answered to your satisfaction, when you seek a component advisor – preferably one who shares your faith and values. If I can help point you in the right direction, as always, don’t hesitate to email me at info@jayperoni.com.

is your advisor proactive OR

DO THEY HAVE THEIR HEAD in THE SAND?

Here’s hoping your financial consultant has kept up with the times.

The memory is indelible: in the last two quarters of 2008, investors with short- to mid-range time horizons cringed as their portfolios lost 20%, 30%, even 40% of value. This bear market was not only a test of investors … it was also a test of financial advisors.

Did your advisor respond to the changing environment?

When the market corrects, a good financial advisor stays on top of things. As things turned bearish in fall 2008, many portfolios went the way of the market, with numerous investors moving to the money market for cover. Yet other investors found themselves making money during the downturn. Was it luck? Or simply the right strategy?

Some market conditions demand a change.

In late 2008, was your advisor sharp enough to meet with you and alter your financial strategy to one appropriate to the bear market? Did he or she offer you an approach that could exploit opportunities in that market with your goals in mind? An astute advisor recognizes that being proactive in a changing market can potentially change the client outcome – for the better.

The market is dynamic.

More bull and bear markets will follow. What do you think your current financial advisor will do next time? Sit back and relax when conditions improve? Mysteriously ignore you when the markets slump?

The nonprofit National Bureau of Economic Research (NBER) has recorded five recessions since 1980 and three since 1990. If you are investing by a 20-year or 30-year financial plan, you may ride through a handful of recessions over the next two or three decades if history is any guide. If recessions and bear markets rear their heads, will your investment strategy be updated? What is the risk of having it set in stone?

Today, anyone frustrated with current portfolio values has reason to consider a new financial advisor. If you feel that inattention and misdirection characterize your relationship with your current advisor, perhaps it is time for a change. You are not forbidden from changing advisors. You may look back one day and realize that the change helped your portfolio.  Want to incorporate your values into your financial plan, go to www.jayperoni.com or send me an email at info@jayperoni.com.

The Faith-Based Millionaire Mind-Set

After going through the process of aligning your values with your finances, you may begin to discover and wrestle with questions you’d never before pondered. You will begin to get a glimpse into the mind of the faith-based millionaire. The mind-set of the faith-based millionaire often differs greatly from the mind-sets of others I have counseled. To help you further gauge your mind-set, here are a few foundational questions:

* Do you have faith in God or money?

* Do you rely on God or on your own abilities?

* If you have faith in God and rely on Him, do you place your full trust in Him?

Thinking like a faith-based millionaire will help you become one. There are some common ways of thinking that influence how those who have been faithful and are wealthy approach money. This thinking is quite different from that of the general population.

The mind-set consists of four core beliefs:

1. God Created Everything

This means that you believe it all starts and ends with God just as stated in Genesis 1:1: “In the beginning God created the heavens and the earth” (niv). If you believe that God created everything from the planets to the earth to life to humans to, more specifically, you, then this should be the foundation of your faith. Who is in control of everything?

2. God Owns Everything

Psalm 24:1 shows us that “the earth is the Lord’s, and everything in it, the world, and all who live in it” (niv). This belief comes from a life of trust and reliance on God. Your faith is your greatest asset in this world. As your faith continues to grow, your reliance on God should increase as well. If you believe God owns everything, this motivates you to a whole new level. This also leads to an important question: Who does your money really belong to?

3. We Are God’s Trustees

First Timothy 6:17-18 exhorts, “Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment. Command them to do good, to be rich in good deeds, and to be generous and willing to share” (niv). This helps to form the mind-set of a trustee. A trustee is one to whom property is entrusted. The belief that God entrusts you with wealth carries greater responsibility and a higher purpose. This mind-set also looks to shift from your self-interests to God’s interests. If you believe God created and owns everything and He has entrusted the things of this earth to you, isn’t your money really His money? He allows you usage during your lifetime, but He is still in control and the ultimate owner. That line of thought leads to another important question: How should you manage His money?

4. Managing Money Involves an Emphasis on Honoring God

The core of this belief is to look at how God would want His money invested. This involves an understanding of what God would support or condone. You may believe that issues or causes are not just black or white. You may believe that there are gray areas. Do you think God sees in gray? There is right or wrong. Man uses gray to justify his lifestyle. Rather than be convicted of wrongdoing, man often changes what God intended to suit his needs rather than God’s desires. How should God’s money be invested?