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May 6, 2016 / 28 Nisan, 5776

Posts Tagged ‘finance’

Hiding Money From Your Spouse

Tuesday, January 29th, 2013

Do you have any secret funds or debts that your spouse doesn’t know about? I’m referring here to a hidden bank account or an unknown credit card or debt that you have never told anyone about.

If you do, then you are definitely not alone, as a recent Prudential Insurance company survey showed. When the British newspaper The Telegraph published the results of the survey at the end of November, it revealed that around 20 percent of British citizens have debts that they have not disclosed to their partners. Additionally, a slightly smaller number of people admitted that they had hidden investments and savings that were totally unknown to their spouses.

Those asked gave several reasons for concealing their debts. Many times, the underlying cause was a combination of bad monetary habits and embarrassment – over borrowing money to cover everyday living costs, or needing to pay off debts that shouldn’t have arisen. Some said their overspending had been caused by emotional distress, leading to financial problems. In many cases (22 percent), the reason for hiding savings was the fear of a breakup and making sure that there would be some money if this would occur. Eight percent even said that they hide these funds because they simply don’t trust the way their spouse handles money.

As a financial adviser, I often work with couples who argue with each other about money or who don’t trust each other when it comes to financial matters. Indeed, I noticed that attitudes to money are a huge cause of domestic disharmony. The statistics above definitely bear this out; they certainly don’t provide a very positive view of money or relationships.

The best way to combat these difficulties is to meet them head-on and prevent them from happening right from the beginning. If you have a son or daughter who is about to get married, sit down with the young couple and discuss financial habits, such as budgeting and saving. At the same time, emphasize openness and good communication in marriage. Trust and honesty are not only good values with regard to money, but also for marriage in general.

I recently discussed these issues with Sherrie Miller, co-founder of Choice of the Heart, an organization that prepares couples for marriage. And even if you have been married for twenty-five years, it certainly does no harm to review your financial habits with your spouse and to listen to some good and useful advice. Watch the video of my interview with Sherrie to learn more about financial fidelity and other tips for creating (and improving) a strong marriage.

Doug Goldstein, CFP®

The Two Most Common New Year Resolutions: Weight Loss & Fiscal Responsibility

Thursday, January 10th, 2013

What do anorexia nervosa and financial planning have in common?

The answer is found in one of the most dangerous household items known to mankind – otherwise known as the bathroom scales. How many people, and especially teenage girls, have the compulsion to weigh themselves and then, panicking at the numbers that appear, decide to go on a drastic diet?Sometimes, of course, a person may be suffering from a real weight or health problem and they need to go on a diet. However, many times, these diets are unnecessary. Yet people are so obsessed by the ideal of “thin is beautiful” that they will put themselves through the most awful tortures to achieve it, sometimes to a life-threatening extent.

A few months ago, Israel led the world in the war on anorexia and other eating disorders by enacting a law banning models with a BMI of 18.5 or less from the fashion world. The idea is to stop young women from aspiring to be too thin and even endangering their lives in the pursuit of an unhealthy ideal. This idea has been widely applauded throughout the globe and not only in the fashion industry. It is hoped that more countries will jump on the bandwagon, encouraging people to be healthy rather than painfully skinny.

The healthiest diet is the balanced diet

There’s no need to either starve yourself or overindulge. The same idea applies to your financial plan. Sometimes, you might look at the figures (think bathroom scales!) and feel so overwhelmed that you think you need to slim down your expenses drastically. But is that really what you need to do? Conversely, just as you may suddenly get an urge to eat an entire chocolate cake, you may sometimes find yourself spending excessively without any restraint.

In the world of finance, neither approach is ideal. You’re earning money and investing it so that you can live a good life, both now and later on when you retire. If you “starve” yourself, depriving yourself of essentials that you need and are still able to afford, your quality of life will suffer. And if you spend with abandon, you will soon find yourself “overweight” with debt.

What is the best financial diet?

In order to find the best financial “diet,” create an effective financial plan. As they say, “information is power,” and just as you learned about nutrition to fuel your body properly, learn about budgeting and investing to fuel your finances.

Start by reading some informative personal finance articles.  Once you mastered the balance between “starving” and “overindulging” your finances, you can look forward to a healthier life and retirement.

Doug Goldstein, CFP®

Pairwise Matching Revisited (Podcast)

Monday, December 24th, 2012

Professor Robert Aumann, winner of the Nobel Prize for Economics in 2005, returns to Goldstein on Gelt to share more of his insights on pairwise matching, what this means, and how to apply its logic to making everyday decisions.

Doug Goldstein, CFP®

The Importance Of Strong Management In Day Schools

Thursday, November 1st, 2012

One of the hottest topics across all spectrums in the Jewish community is the financial sustainability of Jewish day school education in America. Schools have invested a lot of time and resources to train their professionals in the art of fundraising, developing donor relationships, and launching effective capital campaigns. And there has been a concerted effort among Jewish educational organizations to establish programs to assist day schools in improving their governance and developmental practices.

In early 2011, the AVI CHAI Foundation, along with local foundations and federations in various Jewish communities, provided support to Yeshiva University’s Institute for University-School Partnership (YUSP) to launch a broad-based program to improve growth and performance. The goal of the program was to collect data from a pool of approximately 35 schools and then use that data as a comparative benchmarking tool to identify opportunities for revenue enhancements and expense reductions at a minimum of 10 percent of their respective budgets. Collectively these schools have a budget of $225 million, so a 10 percent improvement translates to $22.5 million.

In addition, Torah Umesorah is scheduled to begin a training program to educate yeshiva day school executives in effective leadership and management skills, including an emphasis on board development and fundraising.

And the Partnership for Excellence in Jewish Education (PEJE) recently announced the launch of MATCH, for the fourth time since 2004. This program, which went into effect on August 1, is designed to strengthen Jewish day schools by broadening the community of donors. To accomplish this, the program provides first-time donors the opportunity to leverage a donation of $10,000 or more at a matching rate of 50 cents to the dollar, up to $50,000.

These approaches are highly innovative and have the potential to be successful and helpful to many schools. However, programs that focus on fundraising and development can only be effective if there are no cracks in the school’s administrative foundation. A ship can only set sail once there are no leaks in its hull; otherwise it will not get very far.

I know of a school that found itself in dispute with local storekeepers for thousands of dollars in merchandise. There was general confusion concerning what was purchased and what was owed. As is the case with many schools, principals and teachers would purchase goods on credit, often forgetting to submit the bill to the finance office. At other times, the stores would mail the invoice to the finance office, which was unaware a purchase had been made. The invoices would not be paid right away so the store would then fax in the invoice. Over time, no one knew what was ordered, what was actually received, or what was paid. Sometimes the same invoice would be paid twice, even three times.

All this could have been avoided had some simple and easy internal controls been in place. Ultimately, that is exactly what the school did. First, it authorized one person to do all the purchasing of goods and services for the school and put a strict ban on all staff from making any purchases on credit. A letter was then sent to local stores informing them of this new policy. Storeowners were warned that if they accepted a purchase on credit from anyone other than the school’s authorized purchaser, they would be sent a tax receipt for the “donation.” Faxes would no longer be accepted either. Payments would only be made from the original invoice.

A requisition form was also introduced for all purchases of goods and services. Approval from the executive director was required before any purchase was made. When goods arrived at the school, they were counted and matched to both the invoice and the approved purchase requisition form. The school’s administrators were surprised to see how many times the quantity of items stated on the invoice was greater than what was actually received. A lot of money was saved by catching these errors. Even the shopkeepers were happy when they started getting paid on time.

To be clear, there are a great number of schools that do operate at a very high level of competency. Their administrations take seriously their fiduciary duty to parents and donors to operate their schools in the most professional and financially efficient manner. They have their finance offices humming along like well-oiled machines and their lay leadership is to be commended. For these schools, the YUSP benchmarking and strategic planning program, as well as other pioneering programs, would not only work but could ensure their viability and sustainability for decades to come.

Jake Goldstein

How to Avoid Being the Next Ponzi Scheme Victim

Tuesday, September 11th, 2012

One of the main headlines in world financial news this August has been the fate of ZeekRewards.com, an online company that offered investors the chance to get rich quick. Interestingly enough, I heard about ZeekRewards before this company hit the headlines, when one of its salespeople contacted me and asked me to represent them. The very pushy salesman nagged me to set up a meeting, but the more he pushed me, the more uneasy I felt. So I decided to follow my mother’s adage of, “If it sounds too good to be true, it probably is,” and I didn’t meet him.

Reading the headlines, I’m very relieved with my decision. ZeekRewards offered promises of returns such as 1.5% of the investment at the end of each day and shares of 50% of the daily profits. Wouldn’t everyone want that kind of deal? However, this August, the Securities and Exchange Commission (SEC) filed an emergency action in a North Carolina federal court because this investment project was yet another Ponzi scheme.

The owners of ZeekRewards must have realized that many of these potential investors were going to ask questions. So, in a bid to protect themselves they added a clause for new users stating that they were not purchasing stock or any kind of “investment or equity,” and they even labeled the whole thing as an “e-commerce subscription.” The SEC saw through their ruse and said that this was not the case and in fact the company was offering its subscribers false securities. However, the average investor did not have the knowledge to understand what they were getting into, and the abovementioned clause probably sounded fair enough.

As people kept subscribing and playing the company’s game, investing and reinvesting, the company’s cash outflows began to exceed its total revenue, leading to a collapse and many unhappy subscribers who were left with nothing.

This time, there are more than 1 million victims of the scheme, making this the largest such bankruptcy case, with around $600 million at stake.

Interestingly, many observant Jews, both in Israel and America, have fallen prey to this scheme. It’s not the first time that Jews have been hit hard by Ponzi schemes (think Madoff).

This raises the question of why Ponzi schemes such as ZeekRewards are tempting to the religious Jewish community. One possible answer is that many religious Jews have large families and in this economic climate finances may be tight. Offer a person who is trying to find legitimate ways to support his family a way to make some extra money, and it’s tempting to find out more.

Sadly, as stated above, ZeekRewards is not a one-off story. Apart from desperation to make more money, another possible reason people fall for these schemes is that the scammers may have gotten smarter.

However, there are three basic measures that you could follow to protect yourself from falling victim in a financial scheme:

1. Remember my mother’s rule: “If it sounds too good to be true, it probably is.” ZeekRewards offered high gains for pressing a few buttons and looking at some ads. This is the first sign of something suspicious. When something sounds too good to be true, ask yourself, “What’s the catch?”

2. Do your research. One potential investor who decided against investing with ZeekRewards said that when he heard about it, he did his homework. He discovered that the company’s securities offerings were not registered with the SEC as required by U.S. federal law. Recognized authorities monitor investments for a reason; their absence speaks volumes.

3. Don’t feel pressured. If the company/salesman/friend keeps nagging you, saying that the investment opportunity will be gone if you don’t “buy now,” it may be wise to let the opportunity pass.

While there are no guarantees in the world of finance, taking these three steps will provide a basic level of protection against becoming a victim of the next Ponzi scheme that rears its ugly head.

If you are interested in hearing more about the biggest investment fraud in history, watch this TV interview that I did on the subject of Bernie Madoff. Although this was four years ago, the points remain the same. If anything, there are more frauds out there and we need to be more careful than ever. So be wary and tread with caution.

Doug Goldstein, CFP®

Transferring Wealth with Stocks, Bonds, and Bicycles

Friday, September 7th, 2012

Wealth transfer is a hot topic in financial planning. Thinking about how to pass funds from one generation to the next can be emotionally difficult. Perhaps the older generation doesn’t approve of the way the younger spends the money, or the younger generation isn’t involved in the family business. Furthermore, tax and legal issues can complicate matters.

While estate and inheritance planning can be complex, other wealth can be transferred more easily: the wealth of knowledge. My grandmother successfully passed a financial education to my mother, who transferred it to me, as I am a proud third-generation licensed broker. My maternal grandmother Miriam Rosofsky struggled against social norms to enter the work world. But eventually she had the distinction of being one of the first women to hold a U.S. Securities license. She started as a secretary in a brokerage firm, but then began picking up her own book of clients. My mother Rhoda Goldstein was an associate vice-president in Dean Witter. Dinner-time conversation around my childhood table alternated between medical issues (my father was a surgeon) and economic discussions. I saw how both my parents helped people gain and maintain their physical and financial health. It was therefore only natural for me to begin my financial career partnering with my mother on Wall Street.

After I made aliya, I founded Profile Investment Services, Ltd. with the aim of helping people living in Israel create financial plans and maintain U.S. brokerage accounts. I try to follow in my mother and grandmother’s footsteps in transferring the wealth of financial knowledge to my own children. Even though none have announced their desire to be financial planners (but my wife recently became a licensed U.S. broker), they do check stock prices regularly.

We frequently discuss fiscal responsibility, budgeting, and other economic topics at our dinner table.  Some of the kids are reading books on behavioral finance, and others are reading books about loyalty, fidelity, and trust. My mother, keen to pick up on children’s natural curiosity about money and the way the “grown up” world works, recently came out with a book geared for young adults about how the stock and bond markets work, and how an entrepreneur can raise the funds necessary to fulfill his dream. If you’re interested in sharing this information with your children and transferring the wealth of financial knowledge to them, visit my website to get her new book Stocks, Bonds, and Bicycles. Let me know if you recognize any of the characters in the story.

Doug Goldstein, CFP®

Tishrei: A Time to Examine Your Deeds and Your Portfolio

Tuesday, September 4th, 2012

What did you do when you built your portfolio? Did you invest the money and then simply walk away? Did you then expect to take another look in ten years’ time and find that you had miraculously become rich?

The financial world, like many other things in life, is always subject to change. Markets go up, and markets go down. What if there is a war in your part of the world, or a huge banking crisis? The financial markets are affected by so many outside factors, a lot of which are not necessarily as dramatic as the above two examples but still have their ramifications upon investments. For this reason, it is always a good idea to take a periodic check of your portfolio to see if the level of risk is still appropriate and if you need to readjust your investments in favor of something that would be better for your present circumstances.

This fiscal check could be compared with the annual reevaluation that Jews are supposed to make at this time of the year. The months of Elul and Tishrei are a time to examine your deeds. You look at what you have done over the past year and where you are going. Are the decisions that you made in the past for yourself and your family still right for you, given the circumstances in your lives that may have changed during the year? How have various challenges that you may have undergone affected the way that you live your life? When you look at the future, what do you see? Although you cannot predict what will happen, there are certain things that you may need to keep in mind and prepare for. Are you prepared for these events?

Spiritual accounting is similar to the financial accounting. In order to be an effective investor, it’s a good idea to sit down once a year with your financial adviser and ask:

– What has happened over the past year that might have changed the balance in your portfolio? – Which of your investments have become more or less risky as a result of market performance? (Learn more about assessing whether high or low risk is good for you.)

– What are your goals for this year, and do you have the means to accomplish them?

– Do you need to change anything in order to improve your financial situation? And if so, exactly what?

– What are the pros and cons of any possible financial move that you may be considering, in terms of hidden costs and taxes, as well as potential profits?

With best wishes in starting the New Year with renewed spiritual strength…and a reevaluated, stronger portfolio.

Doug Goldstein, CFP®

Printed from: http://www.jewishpress.com/blogs/goldstein-on-gelt/tishrei-a-time-to-examine-your-deeds-and-your-portfolio/2012/09/04/

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