Faith Based Investing

TAX THE RICH TO PAY FOR HEALTH CARE?

That’s part of the plan. How will you be affected?

In 2013, wealthy Americans will pay extra Medicare taxes. Congress, President Obama and the IRS are putting a surcharge on the wealthy to help fund the health care reforms.

• Beginning in 2013, joint filers with adjusted gross incomes of $250,000 or greater and single filers with AGI of $200,000 or greater will have to pay 0.9% extra in FICA taxes (that is, Social Security and Medicare taxes). The employers of these taxpayers face no such increase.
• Also, joint filers with modified adjusted gross income (MAGI) of $250,000 or more and single filers with MAGI of $200,000 or more will be docked with a 3.8% tax on investment income. (Even estates and trusts will be subject to this new 3.8% levy.)

What might the dollar impact be? The Tax Foundation, a politically conservative watchdog organization, thinks that the richest 1% of American families will pay an average of $52,000 more in federal taxes by 2016.

What are the chances of these tax hikes being repealed? Think slim and none. Basically, you’d have to repeal the health care reforms to make it happen.

How can you avoid the 3.8% tax on dividends, capital gains & interest? It won’t be easy. Real estate investors may luck out the most, because federal law characterizes rental income as “active” rather than “passive”. On the other hand, if you sell a home you’ve owned for decades and see a taxable gain above the home sale exclusion ($250,000 single, $500,000 married), you’ll face the 3.8% tax.

Some forms of unearned income won’t be slapped with the tax. IRA distributions and income distributions from 401(a), 403(b) and 457(b) plans will be exempt. The same goes for pension income and Social Security income. Annuities that are part of a pension plan will be exempt. Any income from a business that you participate in won’t be hit with the 3.8% tax. Veterans’ benefits, life insurance payouts and interest earned by municipal bonds will also be spared.

As a result of this tax, you might start to see subtle shifts in financial strategy. You might see more muni bond purchases, more interest in life insurance, and more installment sales. As qualified Roth IRA distributions don’t boost AGI, you might be looking at another factor promoting Roth IRA conversions.³ Everybody will think about taking some capital gains prior to 2013.

The richest Americans have paid less tax in recent decades. Wealth for the Common Good (a liberal non-profit looking at this matter) notes that in 1955, the 400 largest incomes in America paid 51.2% of those incomes back in federal taxes. That led to the “tax shelters” of the 1960s and 1970s. In comparison, the top 400 incomes in America in 2007 paid out only an average of 16.6% in federal taxes.

So how can you reduce your taxes in 2013? It is not too early to think about it. You might want to devote a planning session to this topic, or start to read up on your options.

Find true wealth
Find true wealth by putting God first in your life. Give all things to Him. Hold your wealth in your open hands and give it all to God. Don’t put your trust in worldly wealth. Hard-earned wealth can disappear overnight as economic bubbles burst, companies go bankrupt, and housing markets collapse. Be careful where you place your trust.

C. S. Lewis once said, ―All that is not of eternal use, is eternally useless.‖ This is completely the point of true wealth. It has an eternal purpose. It has a foundation in faith, love, and God. Do you love people and use things or use people and love things? The driving force for accumulating true wealth is to advance God’s kingdom.  Check out www.thriveinyourlife.com

Thrive in your life

Who needs your help? When you look past your self-interests and seek to bring joy to others, God will bring joy to your life. It is more joyous to give than to receive. Make a commitment to live a simple life and use your wealth to support worthy causes. Until you get your priorities straight and focus on the truly important things in life, it will be nearly impossible to put principles before profits.

Once you align yourself with God and place Him first, you will often be ready to make two important mind shifts:

1. You will begin to care more about where you invest His money.
2. You will look for ways to multiply His money to help more of His people.

By pursuing these two philosophies, you place God first and break the stronghold of materialism. Place principles before profits and focus on people rather than things. This is an important step in the journey toward true wealth.

I shared this in The Faith-Based Millionaire and these principles are even more important today!

TEN DAILY PRINCIPLES TO LIVE BY

1. Make it your daily mission to find your true financial purpose. Your priorities may shift over time and you may find new purposes. Always fully understand why you are saving, what you are saving for, and what the end results mean. Have this purpose engrained into your mind and do not lose focus. Always look to ignite the flame.

2. Make new choices daily. Remember that each dollar that comes into your hands is won or lost by the choices you make each day. Choose to be wealthy instead of letting endless dollars slip away.

3. Associate with positive, like-minded individuals. If you have negative influences and negative people in your life, try to minimize your exposure to those people and things. Attitudes are contagious. Being around someone who is negative will bring you down. In order to make new changes, you need a new positive attitude. Find other positive people to encourage and motivate you.

4. Educate yourself daily. Try to learn more about your finances, how investing and financial markets operate, and how to gain advantages in your financial situation. Make it a habit to learn more each day. Even if it is only spending ten minutes a day learning one new concept, begin your quest to learn more. Get good at one concept and then move on to new areas.

5. Practice self-control. Do not let impulses and emotions drive your decisions. Make it a new habit to evaluate major purchases and financial decisions with a more disciplined approach. Analyze how each decision will add or subtract from your wealth. No more guessing. Develop a new process.

6. Hire a team of advisors. I cannot stress enough the value of a good tax planner, legal mind, and financial advisor. There is much power found in good advice. Find individuals who succeed at what they do and pay them well. The money you pay for their expertise should save you a hunk of money in mistakes avoided and add to your wealth through their value-added benefits.

7. Develop the habit of analyzing your expected return on each investment you make. Often the profit potential does not come from the sale of an investment, but rather in the purchase. If you pay too much for something, it will eat away at the profit or tie up your dollars for a longer time period.

8. Don’t try to look wealthy, look to become wealthy. Remember to buy assets and not liabilities. Remember, assets are items that pay income to you. Liabilities, on the other hand, require that you make payments. Minimize payments that are required by you and find ways to get more payments coming to you.

9. Give generously to others. Share your time, money, and assets. Seek to find those with less knowledge, those who are less fortunate, and those who need a helping hand. Educate, liberate, and provide hope to the hopeless. Make it a goal to have a better financial situation so you can help others rise above their current situations.

10. Most important: Always stay true to your principles. Always make sure that principles come before profits. Make it a habit to understand what you own, where your investment dollars are going, what values your money represents, and develop a plan to align your morals, beliefs, and values with your financial plan.

Money without purpose is just money

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?

When you live out your life’s purpose, live with passion, it will lead to a prosperous life!  This was proven by Srully Blotnick.  In 1960, he began a study of 1,500 people representing a cross section of middle-class America. Throughout the twenty-year study, they lost almost a third of participants due to deaths, moves, or other factors. Of the 1,057 that remained, 83 had become millionaires. When Mr. Blotnick’s team interviewed participants at the beginning of the study, the most widely shared impression they found was that “great wealth can come to you only as a result of doing things you don’t want to do.” They also noted that from the start, most participants assumed that chance would play a decisive role in determining who became wealthy.
They found that the 83 successful people shared five characteristics: they were persistent, they were patient, they were willing to handle both the “nobler and the pettier” aspects of their job, they had an increasingly noncompetitive attitude towards the people with whom they worked, and their investment activities—aside from their main career—consumed a minimum of their time and attention.
Blotnick admitted, “We originally expected the people in our sample to become wealthy by taking the money they earned at work and investing it wisely, in such things as stocks, bonds, and real estate . . . we thought there’d be no way for [them] to become rich unless they used their surplus income to generate more income . . . It didn’t work out that way. . . . More often than not they made little or no money investing.”

In short, what the study unveiled was that the main source of wealth for the successful participants was that they found something they loved to do and they did it well. “In case after case,” wrote Blotnick, “they did increasingly well occupationally, while their pursuit of investment profits proved to be largely a waste of time. In the long run, it was their work which made them rich.” Blotnick concluded that investing in yourself, what you do, and with whom you do it are the most important determining factors of wealth.

Source: Getting Rich Your Own Way, Srully Blotnick (Jove, 1982).

How will you use your wealth?

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 book, Money, Purpose, Joy, Matt shares his story. You can read about Matt at www.mattaboutmoney.com. 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.

He looked at what he was passionate about and ended up developing a golf newsletter. He played some of the best courses in the world and wrote about them. The only problem was he had a very limited subscriber base and wasn’t making any money. This continued for years until Matt had not only burned through his inheritance, he’d racked up $20,000 in credit card debt.

With this experience under his belt, Matt sought to study how money works and how to develop financial purpose. Matt recalls, ―A person who can turn a $60,000 blessing into a $20,000 debt has a lot to learn about money. This fueled me to want to learn about wise ways to use money for a better purpose. With his newfound learning, Matt worked his way into the corporate world and quickly made his way up the ladder. A high-paying corporate job was not his purpose, however; he knew he wanted to be able to write and speak full-time.

What are you doing to live out the magic formula?  I’d love to hear you share your story! Comment below.

Is your financial house built on rock or sand?

I have been advising and counseling others on how to build true wealth for the past fifteen years. I have seen my personal share of ups and downs and witnessed thousands of others. The 2008-2009 financial crises was sure a wake-up call for many investors as they watched the financial system they trusted for their future collapse in a few short months.

It got me thinking about how many people, Christians included, built and continue to build their financial houses on sand. I am reminded of Matthew 7:24-26:

“Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock. But everyone who hears these words of mine and does not put them into practice is like a foolish man who built his house on sand.”

Five steps to help you build a solid foundation

Early this year I set out on a journey to see who thrived in 2009 and who barely survived. I conducted nearly 600 interviews to determine if there was a solid difference between those who did well in difficult times and those who fell apart. The numbers were alarming! Only 5% thrived and moved forward financially during the difficult times in 2009 while 95% of those I interviewed took major setbacks and fell deeper into debt or lost major ground.

Of the 5% who thrived, there were some major common threads:

• They identified what they valued most in life. They had spent time finding what they loved to do and how to get paid generously for it.
• They discovered their meaningful purpose in life. They concentrated on using their key strengths and abilities to add value to the world and bless others.
• They designed their compelling vision for their future. Most had three, five, and ten year goals almost memorized! They knew where they were heading and had a good idea on how they were going to get there.
• They had a real personal mission statement. Though many of them did not call it a “mission statement”, they lived their life like they were on a mission. Their financial and business lives had clarity and purpose; they created a sense of urgency, and were persistent in their attempts to succeed. If your personal goals and dreams have deep meaning to you then you are far more likely to succeed financially.
• They not only set goals, they created an action plan. This helped them implement their mission, live their values, and work toward achieving their vision. They hired a good team of advisors and had great council and accountability to set their paths straight.

Because of my key learning and my desire to help others see how they can thrive and not just survive, I just finished an eBook called “Thrive in Your Life – Creating the life you were meant to live”. It describes the Five to Thrive Principles I uncovered as I interviewed those who were succeeding financially.

Thrive Principle One: Become a passionate income earner

Of those who become wealthy, very few become wealthy from the stock market itself. By far, the number one way to becoming wealthy is through finding a way to get paid doing something you absolutely love.

Thrive Principle Two: Become a generous giver

Many fail to give back to our society because they insist they have the lack of two precious resources – time and money. However, those who are most successful often give more than 10% of their income away and spend countless hours volunteering and sharing their time and talents to bless others.

Thrive Principle Three: Become a wise investor

Investing does not just mean haphazardly investing in a mutual fund. Most investors hand over their hard earned dollars to let someone else handle their investments. This can often be the worst thing you can do. Those who are successful invest rather than gamble. Warren Buffet, for example, does not invest a dime in anything unless he is quite certain it will go up in value. That is investing. Gambling, on the other hand, is committing money to a stock, a mutual fund, or something else without a clue as to whether it will go up or down. Too many people gamble rather than invest.

Thrive Principle Four: Become a cautious debtor

If 2008-2009 didn’t teach us anything, debt can be a huge deterrent from gaining wealth. There are good, bad, and ugly uses of debt. Far too many American use debt foolishly and it keeps them enslaved rather than reaching the desired destination – financial freedom!

Thrive Principle Five: become a prudent spender

Those who succeed financially evaluate each spending decision from a variety of angles. They look at price, value, durability, and how it lines up with their life purpose. Just because you have more money doesn’t mean you can or should spend more, especially if your spending doesn’t line up with you life’s values. Those who are successful, despite having wealth, still carefully analyze. Want to the results of being wealthy and missing this principle? How many lottery winners, sports stars, actors and actresses, and other celebrities go bankrupt after earning millions of dollars?

READ THE EBOOK

A good coach can bring light to your situation

After 6 years, Tiger Woods recently made a major change.  Before you start with the infidelity jokes, I’m talking about major changes in his career – professional golf.    Tiger got to the top of his golf game with a little help from his coach.  However after six years of coaching, Tiger called it quits.

Why is Tiger Woods parting ways with his golf coach?  The reality is Tiger needed to make a move.  When something isn’t working, it is really frustrating – for everyone involved!

I talk with hundreds of people each month via the telephone, email, and in person. Money always seems to be a hot topic!  With the stock market back on a roller coaster course – people are more dazed and confused!  Many coaches, financial advisors, and stock brokers are asset gatherers not asset managers.  They have a vested interest to keep you invested in the markets even when it may not be the best choice for you.   Is your coach part of your team or do they have a hidden agenda?  Why not find an advisor who help bring light to your situation?

It may be time for you to change coaches too

Just like Tiger, it may be time for you to change coaches. The sharp ups and downs recently in the markets are a shocking reminder of what we saw in 2008 and 2009.  Don’t go back down that path! If you have found that you are not where you need to be financially or not getting the help you desire, it may be time for a coaching change! Take control of your future today.  Email me at jay@jayperoni.com for a FREE 30 minute evaluation of your financial situation!

With over 15 years of experience, I can look at your:

• Investment strategies
• Retirement plans
• Business ideas and ways to grow business
• Estate and legacy plans
• Tax efficiency (or lack thereof)
• Savings and spending
• Debt management
• And how all these tie together with your faith and values

I want a ‘do-over”!

We could all use a mulligan in life. You know what I’m talking about? Just like in golf when you get a second chance to take that shot you muffed. We all sometimes need a”do-over” or a fresh start. The past can be a painful reminder of previous failures. We have all been burned by something!

Like a child who touches the burner on the stove, we refuse to go back. It hurts, it’s painful. It’s a real struggle, but we have to get back up on that horse and ride again!

How many times have you tried to start a business and failed? I know this group has it’s share of entrepreneurs so we probably have all the war stories under the sun. But you know what? Today is a clean slate. God still has you here for a purpose and you will find success if you keep at it.

My good friend, Steve, is the classic inventor type – always has his hands in something…looking for his next best idea! Sometimes they come daily, but other times it takes much more time: he has to keep plugging away, keep trying, and keep failing. Yes I said failing. You see, each failure brings him closer to success. Just like Thomas Edison when asked how it felt to fail 10,000 times before inventing the light bulb, he replied, “I have not failed. I’ve just found 10,000 ways that won’t work.”

What about you? In what area do you feel like you keep banging your head up against the wall?

Sometimes sharing your struggles with a great group like this can give you just the fresh ideas you needed to move forward and take your next shot!