Make Money Jot

Wealth by Stuart E. Lucas

Stuart E. Lucas is really good point of contact for everything to do with wealth. He is a fourth generation heir to the Carnation fortune from the company that his great-grand-father, E. A. Stuart founded. Additionally, Lucas has been a professional wealth manager for the past 25-years. So drawing from the perspective of having and managing his own wealth and from the perspective of helping others manage their wealth, Lucas wrote the book, Wealth: Grow It, Protect It, Spend It, And Share It.

In this 356-page book, you will learn about t eight principles of strategic wealth management and viewing wealth as an industry with pitfalls that can be avoided.

From Publishers Weekly

Wealth: those who have it want to keep it, but what’s the best way to ensure it doesn’t run dry? Lucas is ideally suited to answer the question. A Harvard Business School graduate who’s worked at wealth management firms, and a fourth-generation heir of E.A. Stuart, the founder of the Carnation Company, Lucas counsels readers who have, or are planning to have, at least a few hundred thousand dollars in the bank. His book teaches them to manage their wealth so it grows, or is at least maintained, for as long as they want, whether that’s one lifetime or several generations. Lucas focuses principally on investing decisions, spending decisions (like whether to engage in philanthropy) and emotional issues. He provides a good balance of in-depth financial guidance and tips on negotiating financial decisions in the family. Though the subject is dry, Lucas keeps the book interesting by using examples taken from his own family’s experience with fortune, a tactic that lends both credibility and intimacy to his advice. With its frequent plunges into the minutiae of investment options, this book is definitely not light reading. It is, however, a helpful guidebook for those faced with the task of growing, protecting, spending and sharing a large amount of cash. (Mar.)

From Newsweek

Newsweek, March 20, 2006 issue - Wealth: Grow It, Protect It, Spend It, and Share It by Stuart E. Lucas Congratulations! You’ve just come into some cash. But what to do next? With $1 trillion per year expected to pass from one generation of Americans to another over the next decade, it’s a question more people than ever are facing. Writing from the perspective of one who has managed wealth for clients, as well as received it (he’s an heir of Carnation Foods’ founder), Lucas shows step by step how to set investment goals that match your needs and values, pick the right advisers, manage taxes and avoid the pitfalls that shrink fortunes and fracture relationships.
~John David Sparks

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Take a quick walk through the streets of Rome and you will note two “not good” things.

1. The city center of Rome has a not so pleasant smell to it; at least it did when I was there at the end of April last year.
2. There are a lot of homeless and beggars.

I am not going to write about Rome, but I will say this: it’s a great city to visit and everyone should see it at least once.

Rome

I don’t know why the city center of Rome smells. It may be due to large populations of people living there for thousands of years, to include times when sewage systems were not very advanced. It may also be attributed to a large number of homeless people. That one took me a bit by surprised at first. A couple hours after I arrived, I was walking and went from the city center across the Tiber River; that’s when it hit me. Where else is it a “better” place to be homeless then in a year-round warm climate and the home of the world’s largest and wealthiest church.

Vatican City

The Vatican City, with its stone walls, marble steps, gold chandeliers, its own diplomatic corps, and focus on tithing and charity, is a force of problems, not solutions. Give your money to the church and then the church will give your money to the poor (after they build large monuments of marble and gold or course).

Giving

Bill Clinton has even written a new book about giving. The 256-page book outlines his new focus on philanthropy and “how each of us can change the world.” I don’t think so.

There are some things that can have a definite impact on poverty, hunger, and “third world” status, but I don’t thing philanthropy, in itself, will change that.

“Anything that is given has less value than the same thing when it is earned.” ~Jonathan Frye

This is my three step process:

1. Get rid of governments that are not “of the people.”

There is a lot of debate as to whether democracy can work in the Middle East and I must admit that if it can then it will take time. One of the major obstacles to entrepreneurship, success business, and individual wealth creation is governments – corrupt governments, totalitarian governments, and overly bureaucratic governments.

Anyone is welcome to try and disagree with me, but America is the best example of a government that works. We are not perfect by a long shot, but we are better because we are a government “of the people, by the people, and for the people” (Abraham Lincoln’s Gettysburg Address). There is no ruling class or royal family, but ordinary people doing extraordinary things.

2. Teach people to work.

Allowing people to get something for nothing stifles them learning to get that thing for themselves. People need to learn to work. People need to learn to earn what they need and, then, what they want. Even if you start at a lowly fast-food job, if you start then you can finish better. There are too many people not willing to work. I suggest you follow the 7 Steps of How to Make More Money.

There are also people not able to work for physical ailments or other limitations. Each obstacle can be overcome. If you can walk, you may still be able to think. Acknowledge what you cannot do and then find out what you can do to earn your own paycheck.

3. Teach people how to work better.

This is the process of education. Education is the single greatest differentiator between success and misery. Education is the single greatest differentiator between wealth and poverty. Education is the single greatest differentiator between a successful economy and a third world economy. If there is one area, where giving money can make the largest impact, it is in education.

The worst case scenario

I had a friend tell me about his time in a poor Middle Eastern country. He was with the US Air Force and was given a brief by the military to ignore people begging in the streets. He was told to do that even if it was a child who was maimed and deathly skinny. The reason: parents would purposely maim and starve their children at young ages in order to make them look more pitiful, so they would get more from begging.

AHHHHHHHHHHHHHHHHHHHHHHHHHHHH! It makes me want to scream! I don’t understand how a parent could do that to a child, but I will not do anything that would encourage that ever. I will not do anything that would make a parent think that their child could get more from begging than from learning how to work. I don’t want philanthropy to cause more harm than it does good. So I want to follow the timeless advice:

“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”

Education and work ethics, not philanthropy, can change the world.

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Money Management Tips 

Every Monday is Money Management Tips Day.  I present money management tips for entrepreneurs, business people, and pretty much anyone to use.  Previous tips: Money Management with HSBC Direct Online Savings Account and Online Payment Account, 6 Steps and 3 Reasons to Measure Your Net Worth for Better Money Management, 3 New Reasons to Use Paypal - Monday Money Management Tips, and Convenient 5.05% (no time restrictions) for Those Who Want to Manage Money Better - Monday Money Management Tips.

Discover Card Programs

Discover Card, known for the get money back rewards, credit card program, has a lot more to offer than merely credit cards.  You can now use Discover for bank money market accounts, bank cash deposit (CD) accounts, and, of course, a rewards credit card.

Discover Card’s Rewards Credit Card

Discover Card has four credit card offers:

1. Discover More Card, which is the traditional rewards card for 5% cash back on select categories.
2. Discover Motiva Card, which offer 2 months interest back for on time payments.
3. Discover Open Road Card, which provides 5% cash back for gas and maintenance on your vehicle.
4. Miles by Discover Card, which rewards with airline miles.

Most people know about Discover Card and the quite good programs the company offers, but I don’t think that most know about the other programs from Discover.

Discover Bank’s Cash Deposit (CD) Accounts

1. Terms of 3 months to 5 years for CD Accounts.
2. Yields as high as 5.36% Annual Percentage Yield (APY).
3. Minimum initial balance deposit of $2,500.
4. Your money is FDIC insured.

Discover Bank’s Money Market Accounts

1. Access to your money through a debit card and checks.
2. Interest rates as high at 5.35% APY.
3. Minimum initial balance deposit of $2,500.
4. No long term commitment.

Discover Bank and Discover Card offer good programs for someone to management their money and earn good rates with an established, reputable bank.

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Special Report Series: the Philosophy of Making Money

This is the final entry that I am going to write for series on the philosophy of making money.  For all the other articles, please see: 6 Myths of Making Money – Special Report: the Philosophy of Making Money, 7 Points and 2 Categories of the Philosophy of Making Money, and The 7 Steps of How to Make More Money.

There is a simple formula to follow that is the most powerful formula for creating wealth.

The best formula for making money and creating wealth:

Creating Wealth = Discovering Scarcity + Solving Scarcity

Scarcity

To understand scarcity is not difficult for it’s not a complicated subject, but rather a very common and understood subject.  The difficulty is that most people don’t know how to use scarcity to create wealth.  Scarcity is concept that there are unlimited wants and needs, but there are limited resources to meet those wants and needs.

Example

There is a lot of discussion of different car manufacturer trying to create a “cheap” car to sell in India.  In India, there are a lot of people who want and need a car, but cannot afford most new car prices.  The scarcity is the lack of cheap cars for people to buy.  Solving the scarcity are what car manufacturers are trying to do by creating a “cheap” car.

How to Use

Scarcity creates opportunity.  When you discover scarcity in the economy, you have found an opportunity to make money and create wealth.  All you need to do is follow that opportunity and solve the problem of scarcity.  I suppose that’s a lot easier said than done, but it really can be that simple.  The only difficulty is finding the solution for scarcity – solving scarcity.  That takes creativity or, better yet, innovation.

Innovation in India

The innovation in the example of “cheap” cars for India is how to create a car that:

1. Consumers will buy.
2. Consumers can afford.
3. Manufacturers can still make money (profit).

To read more about this, click here.

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Ah the difficulties of being a young entrepreneur and demonstrating that you are responsible, intelligent, mature, in-control, and committed.  When dealing with banks, other institutions, and business contacts, I try to focus on two things:

1. Solid information (market, product, industry, etc) to demonstrate expertise.

2. The theories and concepts of management, business, finance, etc. to demonstrate a depth of understanding.

The Wall Street Journal published a story (WSJ Story) about the obstacles a young entrepreneur encounters and presented five strategies for dealing with those obstacles.

1. Be persistent

Follow-through, commitment, determination, and perseverance are strong pillars for an entrepreneur.  Time and hard work are required to launch a business, any business, and if you are young, then harder work and perseverance may be critical.

2. Partner up

You never have to go at it alone and there are many opportunities.  You can seek experience, expertise, and maturity in a partnership.  You can also find a partner who can open more doors than you previously even considered.

3. Hire the connections

Money is a major consideration for most entrepreneurs and especially young entrepreneurs, so hiring an expensive consultant or a well-connected lawyer may be out of reach.  Any cost should be assessed with a return on investment (ROI) matrix.  That connection may be the difference of being in business or sitting at home with merely a dream, so the cost may be worth it.

4. Stand out from the crowd

In business, a competitive advantage is pertinent and focusing on the competitive advantage helps to shield a young entrepreneur from unduly speculation.  A differential advantage is common, but an original idea is better than merely a different idea.  Work hard to develop a new, original business and then place focus on that idea.

5. Launch it anyway

The critique of venture capitalist, banks, or investment firms should never determine if you are going to go into business.  You must believe in yourself and be ready to follow step number one and launch your business anyway.  You may find that in a short period of time, investors and others may be more open to supporting your business after you have initiated the launch.

Whatever your strategy for overcoming the obstacles you encounter, the best strategy is always to plan, write it out, and then execute it.

The Book

Live it Up without Outliving Your Money!: 10 Steps to a Perfect Retirement Portfolio

Author: Paul Merriman

Paul Merriman is the President of Merriman Capital Management, a weekly radio talk show host, a syndicated columnist, and publisher and editor of FundAdvice.com, so he’s quite well engrossed in writing, talking, giving, and practicing financial advice.

Planning for Retirement

The book is a quick read at 232-pages, but it is packed with solid advice and clear steps for conquering the ultimate financial hurdle – retirement. I’m not that old (still young enough to chase the elusive night life), but I know that time is the greatest determinate in investing. Time works for you, but it can also work against you. The sooner that you start to evaluate and plan a retirement, or what I prefer to call long-term, investment strategy, the better your chance of meeting and even exceeding your goals.

Why to Start Now – Risk!

Risk is the general measure of the return for a fund and most people who delay their retirement plans tend to take greater risks in order to compensate for the time. However, at the same time, risk is best mitigated THROUGH time; you need time to balance short-term loss and setbacks from riskier investments.

10 Steps To A Perfect Retirement

Paul’s book presents and covers the following 10 Steps:
Step 1: Determine how much you will need to live on in retirement.
Step 2: Determine how much you want to live on in retirement.
Step 3: Determine your tolerance for taking risks.
Step 4: Make all your decisions based on what’s probable, not what’s possible.
Step 5: Determine the kind of assets that will give you the returns you need to achieve your goals.
Step 6: Combine those assets in the right proportions into a portfolio that’s tailored specifically for you.
Step 7: Learn to recognize and control the expenses of investing.
Step 8: Make sure you understand enough about the tax laws to avoid giving Uncle Sam a bigger-than-necessary cut of your money.
Step 9: Establish the right distribution plan that will give you the income you need in retirement along with the peace of mind of knowing you won’t run out of money.
Step 10: Put everything you do on automatic pilot.

Additional Benefits

In addition to the 10 Steps to a Perfect Retirement, Paul also covers 16 Common Mistakes, 12 Lessons from Smart People, investor’s enemies – expenses and taxes, and investor’s biggest adversaries – Wall Street, the media, and your emotions.

Paul also presents solid advice for selecting a financial advisor and avoiding the critical conflict-of-interest problem.

The book is also filled with reviews of common strategies and balancing (diversification) the strategies. Also, you will find a review of notable investment firms.

Who Should Read

You get a pretty well-rounded and in-depth approach to retirement planning, so the book is valuable to anyone who is planning their retirement, is a little behind in planning their retirement, approaching retirement soon, and already in the midst of the execution of their retirement. Basically, the book is good for any adult who isn’t loaded beyond human ability to spend in a lifetime.

Other reviews:

“Paul Merriman’s new book is a rich and meaty guide to achieving real retirement security. It’s full of wise, easy-to-follow advice that will stand the test of time.”
—Knight Kiplinger, Editor in Chief, Kiplinger’s Personal Finance Magazine and The Kiplinger Letter
“Read, Live It Up! Not only does Paul Merriman know the secret to making your money work as hard as you do, he loves helping people achieve their goals and dreams.”
–Paul B. Farrell, author of The Millionaire Code, The Winning Portfolio and The Lazy Person’s Guide to Investing

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I bought three more books to add to my library; I like to read and anyone who knows me knows it. I don’t always go for the larger books or merely stick to specific topics. Each book is highly selected to meet specific need that I have at the moment in time that I find it.

For example, I was traveling through the airport in Amsterdam a couple of weeks ago and picked up Occidentalism: A Short History of Anti-Westernism. As any American who travels a lot, I give thought to the current world problems of terrorism and what ends up being little more than culture clashes.

The three books that I bought where:
1. Trump University Marketing 101: How to Use the Most Powerful Ideas in Marketing to Get More Customers
2. Trump University Real Estate 101: Building Wealth With Real Estate Investments
3. Trump University Entrepreneurship 101: How to Turn Your Idea into a Money Machine

I bought these book by disregarding the obvious marketing ploy of using Donald J. Trump’s name for marketing; he did not write any of these books. I bought the book because each of the authors who did write the books is a top professional and highly regarded for the topic. Has anyone else bought these books? I will write a book review for each one when I complete it.

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Monday Money Management Tips 

In a previous Money Management Tip, I discussed the Online Savings Account from HSBC Direct.  A reader asked me about the other account option from HSBC Direct, the Online Payment Account, so today’s Money Management Tip is about this other account option.

Up front disclosure, I do not use the Online Payment Account, so I can not give you a first hand review.  I have been using the Online Savings Account and these are the only drawbacks that I have identified.

Only Drawbacks

1. There is a daily transfer limit of $300,000.  This is not a problem
for me, but if this is a problem for you, can I get a grant?

2. This is online banking.  You will not have a branch office that you
can go to withdraw or deposit money.

3. You need to have a US checking account with a financial institution
that offers ACH transfers.

4. Each ACH transfer takes 3 business days, M-F, except holidays.

The Online Payment Account is designed to be paired with your savings account and to replace having to keep money in a checking account to pay bills.  There are several benefits as noted on the website for HSBCDirect.com:

Take care of bills and other payments.
• Send one-time payments or schedule recurring payments.
You control who you pay and when. Add as many companies or people as you like.
• Pay electronically. It’s paperless, fast and efficient.
• Make purchases or get cash at more than 395,000 ATMs nationwide with a debit card.

If you use a non-HSBC ATM in the U.S., we’ll reimburse the first 3 ATM surcharge/convenience fees each month.
Earn interest where you may not have before.
• Your money will grow 9x more than in traditional checking accounts.±
• Get 2.50% APY** on your Online Payment Account balance.
• Reach your savings goals even faster.
Even your spending money will be helping you save.

Link to your HSBC Direct Online Savings.
• With both accounts, you can earn interest in two places.
You’ll be making more of all your money, not just your savings.
• Transfer money to your Online Savings account to earn more, instantly.
Transfers take seconds instead of days, so there’s no time or earnings wasted.
• Both accounts in one place means more control over your money.
It’ll be easy to manage your expenses as closely as you do your savings.

And, know you’re putting your money in a good place.
• Your money’s FDIC-insured to the maximum permitted by law.
You should never open an online deposit account if the institution isn’t insured to protect your funds. For more information about FDIC insurance, visit www.fdic.gov.
• You’ll be banking in a secure online environment.
Your information is password protected and encrypted with the latest security technology.
• Kiplinger’s Personal Finance magazine named HSBC Direct “Best Online Savings Account” in 2006.

To look into this option for your personal money management, go to http://www.hsbcdirect.com

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