Why the Financial Goalposts Are Always Moving
.Why the Financial Goalposts Are Always Moving
Posted July 12, 2022 by Ben Carlson
In 1980 the life expectancy in China was just 67 years old. It’s now up to 77 years old.
In that time, the Chinese economy has grown by nearly 10% per year. GDP per capita and household consumption each grew fourfold between 1990 and 2005. Researchers wanted to see if the economic progress in China was accompanied by a similar increase in life satisfaction. Becoming a richer country did not make people any happier:
Yet during the same period, life satisfaction levels in China demonstrated very different trends—in particular dropping precipitously in the initial stages of rapid growth and then recovering somewhat thereafter. The drops in life satisfaction were accompanied by increases in the suicide rate and in incidence of mental illness.
Why the Financial Goalposts Are Always Moving
Posted July 12, 2022 by Ben Carlson
In 1980 the life expectancy in China was just 67 years old. It’s now up to 77 years old.
In that time, the Chinese economy has grown by nearly 10% per year. GDP per capita and household consumption each grew fourfold between 1990 and 2005. Researchers wanted to see if the economic progress in China was accompanied by a similar increase in life satisfaction. Becoming a richer country did not make people any happier:
Yet during the same period, life satisfaction levels in China demonstrated very different trends—in particular dropping precipitously in the initial stages of rapid growth and then recovering somewhat thereafter. The drops in life satisfaction were accompanied by increases in the suicide rate and in incidence of mental illness.
She actually found people in fast-growing countries tend to be less happy than people in slower-growing countries. Rapid change tends to make people unhappy.
Why is this the case?
More wealth brings about inequality and insecurity as different skill sets are rewarded in a faster-paced economy. When more wealth is created, it becomes easier to make relative comparisons to those around you.
The New York Times interviewed dozens of millennials from around the country to help better understand their fears and anxieties about money.
One person talked about what happens when you start making more money:
I’m starting to get my financial footing. My goal used to be, “I want to hit $100,000.” Then you hit $100,000 and it feels like the new $40,000.
Moving the financial goalposts is an odd paradox of the human experience.
On the one hand, it’s a good thing we’re so driven to improve our place in life. The drive to get better is what fuels innovation, growth and progress.
But those same attributes can also drive you mad if you never feel satisfied with your accomplishments or blessings.
For Some People Success Only Amplifies Their Worries:
2020 was when I really saw a shift in how much I was making. It was the first year I made over six figures in design projects. And I felt weird and guilty about it. Like, do I need to give it away? Do I need to tell my parents how much I’m making? In Nigerian culture, you give your parents the first money you ever make. I gave my parents my first paycheck when I was a graphic designer at a church.
I’m actually going to counseling about this. My counselor helped me realize that there’s never going to be a number that will make me feel secure. If I make a million dollars this year, I’m still going to be stressed about next year. This phenomenon exists for a number of different reasons but the simplest explanation is the fact that we’re all just human.
To continue reading, please go to the original article here:
https://awealthofcommonsense.com/2022/07/why-the-financial-goalposts-are-always-moving/
The Playbook For Films – Theatre and Investing
.The Playbook For Films – Theatre and Investing
Jun 23, 2022 by Ted Lamade
Guest post by Ted Lamade, Managing Director at The Carnegie Institution for Science
Maverick is back and given the Top Gun sequel has raked in more than $800 million to date, it is already the biggest blockbuster of Tom Cruise’s career. A lot has changed since the original nearly four decades ago, but the secret to its success lies in what hasn’t changed — its “playbook.”
When one of the movie’s producers recently described how his team approached the script, he highlighted a conversation he had with Cruise shortly before the project started. The message was clear. Cruise said,
“This is a competition film. It’s about family, emotion, and the characters. We have to stay true to the original.”
The Playbook For Films – Theatre and Investing
Jun 23, 2022 by Ted Lamade
Guest post by Ted Lamade, Managing Director at The Carnegie Institution for Science
Maverick is back and given the Top Gun sequel has raked in more than $800 million to date, it is already the biggest blockbuster of Tom Cruise’s career. A lot has changed since the original nearly four decades ago, but the secret to its success lies in what hasn’t changed — its “playbook.”
When one of the movie’s producers recently described how his team approached the script, he highlighted a conversation he had with Cruise shortly before the project started. The message was clear. Cruise said,
“This is a competition film. It’s about family, emotion, and the characters. We have to stay true to the original.”
While the Top Gun sequel employed modern technology and implemented a plot to fit the times, Cruise knew that its ultimate success (or lack thereof) would boil down to how well it followed the playbook that made the original so successful. The producers executed on that vision.
Top Gun’s playbook is simple — appeal to the nostalgia of those who saw the movie in the theaters in the mid-80’s. Remind them of the time they bought their first aviators after seeing Maverick wear them on the runway at Miramar, echoed the line “you can be my wingman anytime”, and rolled down their car windows, cranked up the volume, and driven a little faster when Kenny Loggins’ “Danger Zone” came on the radio.
The journalist Rich Eisen said it better on his show a couple weeks ago after seeing the movie,
“I cannot tell you how awesome this movie is. It was spectacular. It made me feel like I was back in high school again in 1986. It was great. Just terrific. It gives you everything you want, everything you are hoping for. You get the sunrise over the tarmac, Cruise on a motorcycle, Kenny Loggins singing Danger Zone, and the script is straight out of the original Top Gun. The flying scenes are incredible and Cruise looks the same. You have to see it in the theater. It is everything you’d want out of a sequel. I was just flying man, literally and figuratively.”
The key to Top Gun’s playbook is that it did not require the perfect backdrop, environment, or ideal release date to be successful. After all, it has generated nearly a billion dollars at the box office despite Covid-19 still making parts of the country hesitant to attend the movies. It just needed to stick to the durable themes from the original script, echo those emotions, and highlight the characters in the film that reminded the viewers of Goose, Slider, Charlie, and others. It has done just that.
Investing Playbooks
The same is true for the most effective investment playbooks. They are not constrained by or dependent on a certain time period, geography, sector, or interest rate environment. Instead, they are effective across a wide variety of situations and circumstances.
Few in the investment world have implemented a better playbook than David Swensen. When Swensen took over Yale’s endowment in 1986, coincidentally just months before the original Top Gun was released, he believed the university could generate stronger returns with similar (or even less) risk by taking advantage of the “illiquidity premium” that existed in the private markets.
As a result, over the next three decades he and his team transformed Yale’s endowment from one invested 100% in liquid securities to one that is nearly 70% illiquid today. It was such a novel concept that it even received a new moniker - “The Yale Model.”
Yet, while Yale’s “liquidity trade off” has been an integral part of the endowment’s strong performance, Swensen still did not consider it the “secret” to Yale’s success. If not, what has been?
To continue reading, please go to the original article here:
Anyone Can Be A Billionaire If You Have The Right Structure
.Anyone Can Be A Billionaire If You Have The Right Structure
Notes From the Field By Simon Black June 28, 2022
On the November 27, 1095, Pope Urban II gave an impassioned speech at the Council of Clermont in central France, calling for Christian warriors to take up arms in a Holy War against the invading Seljuk Turks. This was the start of the First Crusade. And over the next few centuries, several more would follow.
Soldiers from across Europe joined up and traveled great distances to fight in the Holy Land; quite often they were away from home for years at a time. Eventually these fighters— and particularly the land-owning nobles— realized that they needed to arrange their business and personal affairs appropriately before leaving for war.
Anyone Can Be A Billionaire If You Have The Right Structure
Notes From the Field By Simon Black June 28, 2022
On the November 27, 1095, Pope Urban II gave an impassioned speech at the Council of Clermont in central France, calling for Christian warriors to take up arms in a Holy War against the invading Seljuk Turks. This was the start of the First Crusade. And over the next few centuries, several more would follow.
Soldiers from across Europe joined up and traveled great distances to fight in the Holy Land; quite often they were away from home for years at a time. Eventually these fighters— and particularly the land-owning nobles— realized that they needed to arrange their business and personal affairs appropriately before leaving for war.
They wrote wills, they appointed property managers. And in some cases they actually transferred ownership of their estate to someone they trusted— someone who would have the full authority to act as lord of the manor in the nobleman’s absence.
Upon the knight’s return, however, it was expected that the property would be transferred back to him.
This legal precedent developed into what we know today as a Trust.
The idea behind a Trust is that a “Grantor” or “Settlor” hands over legal ownership of assets to a “Trustee”, who then manages those assets on behalf of “Beneficiaries”.
Sometimes a Trust can be revocable, whereby the Grantor can shut down the arrangement and take back the assets, just like a Medieval knight fighting in the Crusades.
Other Trusts are irrevocable, meaning they are permanent. Irrevocable trusts have substantial benefits when it comes to asset protection, which is a big reason why they are popular.
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Trusts also allow you to easily pass on assets to your heirs while minimizing bureaucratic legal proceedings associated with wills and probate court. The Trust seamlessly distributes your assets according to your wishes, with all the legal work done ahead of time.
This is a common use of trusts; people will often establish a trust and transfer assets like stocks, real estate, cash, etc. Years later when they pass away, the Trustees distribute the assets to the Beneficiaries (children, grandchildren, etc.), and then the trust is would up and dissolved.
But REALLY far-sighted individuals set up something called a Dynasty Trust.
Unlike a typical trust used for estate planning, a Dynasty Trust doesn’t distribute all of its assets and dissolve once the original Grantor passes away.
A Dynasty Trust is a legacy asset that’s designed to last for generations… or even forever.
In other words, you can establish a Dynasty Trust, move assets into it, and know that your future descendants who won’t even be born for decades will benefit from your long-term thinking.
And that’s the thing about a Dynasty Trust: it forces you to think very long term.
In establishing a Dynasty Trust, you essentially have to create your own Constitution. You have to think about how you want the assets managed, how you want the money distributed, how new Trustees and managers are brought in.
Now before we go any further, let me say this is NOT just for the super wealthy who already have generational wealth.
If you’re thinking, “This sounds great, but I don’t have enough money to do this.” Well, guess what— you absolutely do! You just might not have it yet.
Never discount the time value of money. Even if you have, say, $50,000 to start with today, you could establish a Dynasty Trust that does nothing else but invest in a portfolio of assets that YOU designate.
It might take a while— 100 years or more. But eventually, decades of compounding returns will grow that $50,000 into hundreds of millions of dollars (in today’s money).
If you had an ancestor set up a Trust back in 1872 with just $2,500 (worth about $50k today) and order that the money be invested in the S&P 500, that $2,500 Trust would be worth $1.4 BILLION today.
Sure, it took 150 years, but that’s the amazing thing about a Trust: you can leave whatever instructions you want to allow your wealth to grow long after you’re gone.
You can also stipulate that, once the Trust’s assets reach a certain level, to begin making distributions to your future descendants, or charities, or anything else that you think of.
There are virtually limitless options in what you can choose to do and how you can set up the Trust’s Constitution.
You can decide that, once the assets reach $5 billion, to endow a new university or art museum named after you.
Or you can decide that future Beneficiaries must have read George Orwell’s 1984 and have a Cholesterol level below 200 before receiving any distributions.
It’s your money, so they’re your rules. You can decide whatever you want.
You can also elect that the Trust operates like an investment fund— where professional managers oversee a portfolio of business and real estate investments. You can come up with rules for how those future professional managers are selected, i.e. create your own voting laws that the Trustees and Beneficiaries have to follow.
You could also have the Trust run like a family office, which owns controlling stakes in private companies.
Your future descendents could then have the opportunity to join those companies and work their way up to senior leadership positions, growing the businesses and creating even more value for the Trust.
The possibilities are really endless. And, again, you don’t even need to be wealthy to do this. You just have to be able to think very long-term.
If you want to learn more about how Trusts can help you leave a legacy for your family, protect your assets, and make it easier to pass on your wealth without death taxes, join Sovereign Man: Confidential today.
(If you’re already a member of Sovereign Man: Confidential, you can read more about Dynasty Trusts here.)
PS: Alternative residency or citizenship generally forms the backbone of any robust Plan B. But there are WAY more things to consider. That’s why we created our 31-page Ultimate Plan B report to help you get to grips with this topic, and you can download the full, unabridged report here - 100% FREE.
How To Conduct a Financial Checkup
.How To Conduct a Financial Checkup
By Jim Probasco Updated March 21, 2022
Here's a simple system for assessing your fiscal fitness
Many experts suggest that people make a point of conducting a personal financial checkup on an annual basis or after a major life event (such as a marriage, divorce, birth, or death). The question is, what does that mean exactly? To make sure you don’t miss something critical to your financial well-being, here are the main topics you should plan to cover.
A financial checkup is a systematic look at the complete state of your finances.
It can be useful to perform a financial checkup annually and after any major life event, such as a marriage, divorce, birth, or death.
How To Conduct a Financial Checkup
By Jim Probasco Updated March 21, 2022
Reviewed By Andy Smith Fact Checked By Yarilet Perez
Here's a simple system for assessing your fiscal fitness
Many experts suggest that people make a point of conducting a personal financial checkup on an annual basis or after a major life event (such as a marriage, divorce, birth, or death). The question is, what does that mean exactly? To make sure you don’t miss something critical to your financial well-being, here are the main topics you should plan to cover.
A financial checkup is a systematic look at the complete state of your finances.
It can be useful to perform a financial checkup annually and after any major life event, such as a marriage, divorce, birth, or death.
Your checkup should include your retirement accounts and other savings, your debts, your estate plan, and your insurance coverage, among other topics.
Review Your Life Changes
To begin with, review any major changes in your life that have taken place since your last financial checkup. Have you changed jobs, gotten married or divorced, welcomed a new family member, received an inheritance, bought a home, moved, or retired?
Each of these life events can alter your overall financial picture. As you go through the sections below, consider how any recent life changes could affect your plans moving forward.
Set or Reset Financial Goals
Building an adequate retirement fund is one example of a financial goal. Others include creating an emergency fund, saving up for a down payment on a car or home, starting your own business, or anything else that requires money you don't already have.
Evaluate your progress toward your financial goals and adjust as needed. Once you achieve a goal, cross it off the list and replace it with another.
Sketch Out a Budget
Your budget is a blueprint for handling your income and expenses on a recurring basis. A budget should be monitored and adjusted as needed.
The idea is to make sure you have enough income to cover all your usual expenses, with some extra set aside for your longer-term financial goals. You can maintain your budget with pencil and paper, a computer spreadsheet, or one of the many available free or inexpensive budgeting software programs.
Assess Your Debt
Review your progress in paying down all debt, including loans and credit cards. If your debt is rising, especially high-interest credit card debt, it might be time to adjust your spending so that those balances start to decline again.
To continue reading, please go to the original article here:
https://www.investopedia.com/personal-finance/how-conduct-financial-checkup/
Secrets to Recession-Proofing Your Finances
.4 Experts Share Their Secrets to Recession-Proofing Your Finances
Heather Taylor Mon, June 27, 2022
Is the United States heading toward a recession?
Amid a high inflation period, many Americans are concerned about the risk and what this might mean for their personal finances. Fortunately, there are certain steps everyone can take now that will enable them to better navigate an uncertain time.
Follow these steps to prepare and recession-proof your finances.
4 Experts Share Their Secrets to Recession-Proofing Your Finances
Heather Taylor Mon, June 27, 2022
Is the United States heading toward a recession?
Amid a high inflation period, many Americans are concerned about the risk and what this might mean for their personal finances. Fortunately, there are certain steps everyone can take now that will enable them to better navigate an uncertain time.
Follow these steps to prepare and recession-proof your finances.
Establish an Emergency Fund
If you have not already created an emergency fund, now is the time to start building one. An emergency fund works to help you weather the storm in the event of sudden job loss or an unforeseen major expense without resorting to liquidating retirement assets or relying on loans or high-interest credit cards.
Adam Deady, CFP and investment analyst consultant with MassMutual, said a general rule of thumb is to save at least three to six months of living expenses in a risk-free, liquid investment vehicle you can easily access. Investment recommendations include a money market account or a high-yield savings account.
Start Eliminating Unnecessary Expenses
You don’t have to wait until a recession hits to eliminate unnecessary expenses from your budget.
Deady recommends using this time to carefully review your spending habits. Then, cut back on any nonessential spending — e.g., cancel rarely used subscription services or do maintenance on your own at home instead of hiring help. You can put the money saved into your emergency fund or an investment or retirement account.
If you’re struggling to determine how much you should be saving, Brittney Castro, financial expert and Mint’s in-house CFP, recommends thinking of saving as a fixed expense and factor it into your budget.
The 50/30/20 rule can help you estimate how much you should be saving — 50% on needs, like food or rent, 30% on nonessentials and 20% on savings,” Castro said. “The most important thing is remembering to live within your means. You never want to end up in a situation where you’re stretched too thin with your finances.”
Pay Down Debt
“Paying off high-interest debt, like credit cards or student loans, should be a priority when the economy is strong,” Deady said.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/4-experts-share-secrets-recession-120004013.html
How Has the COVID-19 Pandemic Changed Money Advice?
.How Has the COVID-19 Pandemic Changed Money Advice?
Jenny Rose Spaudo Mon, June 27, 2022,
Since the start of the pandemic, Americans have endured an economic rollercoaster with fluctuating interest rates, massive layoffs and skyrocketing inflation. It’s no surprise, then, that around half of non-retired adults say the pandemic has made it harder for them to achieve their financial goals, according to the Pew Research Center.
So how can you best manage your finances in today’s uneasy economy? GOBankingRates spoke with several financial experts to see how the pandemic has changed their money advice.
How Has the COVID-19 Pandemic Changed Money Advice?
Jenny Rose Spaudo Mon, June 27, 2022,
Since the start of the pandemic, Americans have endured an economic rollercoaster with fluctuating interest rates, massive layoffs and skyrocketing inflation. It’s no surprise, then, that around half of non-retired adults say the pandemic has made it harder for them to achieve their financial goals, according to the Pew Research Center.
So how can you best manage your finances in today’s uneasy economy? GOBankingRates spoke with several financial experts to see how the pandemic has changed their money advice.
Be Careful With Easy Online Spending
When lockdowns began, in-person shopping shrank while online shopping rose to new heights. In 2020 alone, e-commerce sales increased by 43%, according to U.S. Census data.
But the ease of online shopping can also make it more tempting to spend, said Tom Siomades, CFA and chief investment officer of AE Wealth Management.
“I believe the pandemic has further eroded people’s ability to gauge value and their view of money,” he said. “The pandemic accelerated all things online. People want stuff now, paying with electronic money. They no longer save or, worse yet, have the discipline to save. They don’t consider the cost–only convenience.”
While many Americans have increased their online spending, Brian Meiggs, founder of the personal finance site My Millennial Guide, said the pandemic is also forcing people to take a more practical approach to their personal finances.
“The pandemic has highlighted the need of having a budget, building emergency savings, and creating a financial plan that suits their lifestyle,” he said.
Timeless Financial Management Principles Still Apply
Christopher Drew, an investment advisor representative with Drew Capital Management, believes it’s more important than ever to follow timeless money management principles. With inflation at astonishing highs, Drew encourages his clients to spend less and save more.
“Be more cautious about your spending habits due to the increase in inflation,” he warned.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/covid-19-pandemic-changed-money-130041569.html
4 Financial Experts Reveal How They Spent Their First Big Paycheck
.4 Financial Experts Reveal How They Spent Their First Big Paycheck
Bob Haegele Mon, June 27, 2022
When you think about financial experts, you might imagine someone who is extremely savvy with their money, meticulously planning and optimizing their every penny for maximum wealth generation. While that can be true in some cases, it’s not as though there is some law or wealth accumulation creed to which every financial expert is beholden.
Sometimes, financial experts spend their money in ways that may seem consistent with how most people spend money. In other words, they spend money on things they want, or even on surprises for their loved ones. Sometimes, they spend their money on nothing more than paying down debt and shoring up their savings accounts.
4 Financial Experts Reveal How They Spent Their First Big Paycheck
Bob Haegele Mon, June 27, 2022
When you think about financial experts, you might imagine someone who is extremely savvy with their money, meticulously planning and optimizing their every penny for maximum wealth generation. While that can be true in some cases, it’s not as though there is some law or wealth accumulation creed to which every financial expert is beholden.
Sometimes, financial experts spend their money in ways that may seem consistent with how most people spend money. In other words, they spend money on things they want, or even on surprises for their loved ones. Sometimes, they spend their money on nothing more than paying down debt and shoring up their savings accounts.
I interviewed a few successful financial experts and, indeed, they spent their first big paychecks on things indicative of someone who is far from rich. Nevertheless, it’s clear they had a few more dollars in the bank than they had in the past.
Debt Repayment
According to the New York Fed, total household debt in the first quarter of 2022 was $15.84 trillion. With such a staggering number, it would serve most of us well to pay down those debts before spending on most other things. So, it’s no surprise that (at least) one expert focused on debt repayment with his first big paycheck.
“This is going to sound boring, but I simply paid down some debts and banked it, enjoying the feeling of not having to live paycheck-to-paycheck for the first time,” said Chris Motola, financial analyst at MerchantMaverick.com. It can be tough to make those debt repayments when you don’t have much. But when you start to earn a real paycheck, it makes sense to start repaying your debt.
Student Loans
Student loans are another form of debt, but they are worth mentioning separately because of how large the national student loan debt burden has become. According to Experian, student loans are now the second-largest type of debt, with only mortgages having a larger collective balance. Many jobs require at least a bachelor’s degree, but the cost of tuition at many schools has risen rapidly. This highlights the need to pay student loans down to avoid falling too far behind.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/4-financial-experts-reveal-spent-120007383.html
Your Financial Liability To Your Government Is Infinite
.Your Financial Liability To Your Government Is Infinite
Notes From the Field By Simon Black June 27, 2022
In the year 1255 AD, a prominent Italian businessman named Orlando Bonsignori launched a new venture that he boldly called the Gran Tavola, or “Great Table”. Despite the name, it wasn’t a medieval furniture shop. Bonsignori came from a family of wealthy bankers who had highly influential political connections across Europe. And Bonsignori’s idea was to create the biggest bank on the continent that would cater specifically to kings, popes, and emperors.
In a way, what Bonsignori created was a sort of proto International Monetary Fund; he took deposits from, and made loans to, governments and rulers all over Europe. And Bonsignori’s Gran Tavola had an especially cozy relationship with the Vatican.
Your Financial Liability To Your Government Is Infinite
Notes From the Field By Simon Black June 27, 2022
In the year 1255 AD, a prominent Italian businessman named Orlando Bonsignori launched a new venture that he boldly called the Gran Tavola, or “Great Table”. Despite the name, it wasn’t a medieval furniture shop. Bonsignori came from a family of wealthy bankers who had highly influential political connections across Europe. And Bonsignori’s idea was to create the biggest bank on the continent that would cater specifically to kings, popes, and emperors.
In a way, what Bonsignori created was a sort of proto International Monetary Fund; he took deposits from, and made loans to, governments and rulers all over Europe. And Bonsignori’s Gran Tavola had an especially cozy relationship with the Vatican.
Bonsignori raised money for his bank by using a relatively new legal structure called the compagnia, which came from the Latin companio, which referred to the sharing of bread.
The idea behind a compagnia is that individuals could get together and pool their money into a single enterprise (like Bonsignori’s bank), and they would share the profits of the business in accordance with their capital contributions.
This seems like a pretty basic concept for us today. But in the Middle Ages it was quite innovative.
There was just one problem with the compagnia structure: while the partners all shared in the profits of the business, they also shared in the liability.
This meant that, if the venture failed, investors could actually owe MORE than they originally invested. And that’s exactly what happened with the Gran Tavola.
At first the bank was a smashing success; by the mid 1260s, they had become the exclusive financial partner to the Vatican. And that momentum continued for decades.
But by the mid 1290s, long after Bonsignori had passed away, the bank started having serious problems.
King Philip IV of France, angry that the Gran Tavola had backed some of his rivals, confiscated many of the bank’s assets. The bank also lost its Vatican business, which was a huge financial blow.
Within a few years, the bank was insolvent. It was so short of cash, in fact, that there wasn’t enough money to pay depositors.
But since the bank was structured as a compagnia, the bank’s investors were all personally liable for the shortfall.
This was pretty typical back then; the concept of holding shareholders liable to pay the debts of a business goes back thousands of years to Roman law.
But eventually new legal structures were developed. Governments realized that they needed to encourage business investment in order to stimulate commerce and economic growth. And one of the ways they did that was by formalizing the concept of ‘limited liability’.
The Dutch East India Company was one of the most prominent early examples of this structure; it was established in 1602 as a ‘joint-stock company’, whereby investors contributed capital in exchange for shares in the business. But an investor’s financial risk was limited to the amount contributed.
In other words, if the Dutch East India Company succeeded, the investor would receive his share of the profit. But if the company failed, the investor would only lose, at most, his original investment amount. He could not be held personally liable for the company’s debts.
And for the most part, this is still the way business is done today. Shareholders in Apple are not personally liable for the debts and obligations of the business; their total financial risk is limited to the amount of money they’ve invested… but not a penny more.
What’s interesting, however, is that while you cannot generally be held responsible for the debts of any company in which you’ve invested, you WILL ABSOLUTELY be held responsible for the debts of your government.
And local government is a great example.
Over the weekend I was talking with a friend who wanted my opinion about a couple of places she was thinking about moving to in the United States. She has young children and cares deeply about the quality of schools… so we started reviewing the school districts’ financial statements to get a glimpse of the future.
I was pretty surprised at what I saw.
Granted, I only reviewed a small sample of about a dozen school districts in various states. But each of them is heavily in debt-- and these are in generally wealthy suburbs in North Texas, Virginia, Florida, Georgia, etc.
According to their audited financial reports, most of the districts I looked at took on hundreds of millions of dollars in new loans over the past two years because of COVID emergency measures they implemented. And now many districts are under pressure to increase security as well.
This is all financially crippling. Many are losing money or scrambling to come up with new funding sources. Some are considering closing down a few of their schools in order to cut costs. And almost all of them are proposing a tax increase.
This is where the concept of stakeholder liability starts to apply again.
Just like with the Gran Tavola where the shareholders were ultimately responsible for the company’s financial obligations, it’s the local residents who are ultimately on the hook for the school district’s debts.
Sure, a school district’s creditor won’t be able to sue the Jones family on Mulberry Street in order to collect. But citizens are absolutely liable to pay in the form of tax increases and service cuts.
And it’s really the same with all government-- state, local, federal, etc. Whenever your politicians screw up and the government is in financial distress, they pass the buck on to the taxpayers.
But unlike a shareholder in a company who has ‘limited liability’, i.e. your financial exposure is limited to the amount of your investment, citizens have no similar limitation when it comes to government.
Your financial liability to your government is infinite. They can tax you and deprive you of services forever. As long as you allow them to do so.
This is one of the biggest reasons why it makes sense to have a Plan B.
Without a Plan B, you have no other option, and you’re stuck with a government that will milk you like a dairy cow for the rest of your life.
Part of a Plan B means having another place to go. You might never need to use it. But, like an insurance policy, there’s no downside in having that option identified well in advance.
It doesn’t necessarily need to be a far away place on a distant continent overseas. But at a minimum, at least think about where you might move if you really needed to.
And I would humbly suggest you think about places that are financially solvent, or where you can be disconnected from the local government’s financial liability.
https://www.sovereignman.com/trends/your-financially-liability-to-your-government-is-infinite-35732/
To your freedom, Simon Black, Founder, SovereignMan.com
What to Do When You're Left out of a Will
.What to Do When You're Left out of a Will
By ANDREW BEATTIE Updated May 24, 2022
Reviewed By Andy Smith Fact Checked By Kirsten Rohrs Schmitt
Being left out of a will is not a situation most people want to be in. But sometimes when a person dies and their will comes to light, its contents throw survivors for a loop. The will can exclude people who had assumed they would be included, or in some cases, who were told that they would be included. If you are left out of a will, there are some time-sensitive steps you should take to at least clarify what has happened—and perhaps contest it. In most cases, you must prove coercion, diminished mental capacity, or outright fraud to have a will's terms dismissed.
What to Do When You're Left out of a Will
By ANDREW BEATTIE Updated May 24, 2022
Reviewed By Andy Smith Fact Checked By Kirsten Rohrs Schmitt
Being left out of a will is not a situation most people want to be in. But sometimes when a person dies and their will comes to light, its contents throw survivors for a loop. The will can exclude people who had assumed they would be included, or in some cases, who were told that they would be included. If you are left out of a will, there are some time-sensitive steps you should take to at least clarify what has happened—and perhaps contest it. In most cases, you must prove coercion, diminished mental capacity, or outright fraud to have a will's terms dismissed.
KEY TAKEAWAYS
If you are left out of a will and believe that you should contest it, prepare to face an uphill battle to get a portion of the estate.
Be certain that contesting the will makes financial sense, and that the potential gain will far outweigh the legal costs.
Also make sure that contesting the will makes emotional sense as the process is a long and often stressful one involving multiple steps.
To succeed, you must prove coercion, diminished mental capacity, or outright fraud—all difficult to prove, no matter your personal convictions.
Talk with your attorney about how realistic your chances are of getting the will invalidated and other alternatives that may exist.
Judge the Costs
Before you put a retainer on a lawyer, engage in some sober second thought. If you are not family and were never named in a previous will, you have no standing to contest the will. If the testator (the deceased) discussed an inheritance with you previously, write down as much as you can remember. Using this, estimate the dollar value (whether money or possessions). If it was never discussed but was implied, you will need to give a high and a low estimate on what you could have reasonably received based on your knowledge of the testator's estate.
If this amount isn't enough to cover the cost of a consultation with an estate lawyer, walk away. Even if it is twice as much as the retainer, walking away may still be the better course as some of the worst estate fights cost more in legal fees than the inheritance. So, think carefully before you lawyer up.
Make sure contesting a will is a winnable and financially smart battle—being left out of a will is terrible, but wasting time, money, and emotions fighting a losing battle is worse.
Get a Copy of the Will
To continue reading, please go to the original article here:
https://www.investopedia.com/articles/pf/12/left-out-of-the-will.asp
5 Things to Consider Before Becoming an Estate Executor
.5 Things to Consider Before Becoming an Estate Executor
By Andrew Beattie Updated February 25, 2021
Agreeing to be the executor of an estate is a bigger decision than most people realize. It is important to consider the responsibility of the position before agreeing to take on the role.
Below are five things you should know before signing on.
KEY TAKEAWAYS
While it is an honor to be selected as an executor, executing a will takes a lot of time and work.
Make sure you can handle all that is involved before accepting the responsibility.
5 Things to Consider Before Becoming an Estate Executor
Before you say yes to being the executor of an estate, read this
By Andrew Beattie Updated February 25, 2021
Reviewed By Khadija Khartit Fact Checked By Marcus Reeves
Agreeing to be the executor of an estate is a bigger decision than most people realize. It is important to consider the responsibility of the position before agreeing to take on the role.
Below are five things you should know before signing on.
KEY TAKEAWAYS
While it is an honor to be selected as an executor, executing a will takes a lot of time and work.
Make sure you can handle all that is involved before accepting the responsibility.
When deciding whether or not to accept, consider the complexity of the estate, whether you have the time to devote to the immediate responsibilities required, as well as the multitude of duties that come into play when the testator passes away.
1. The Complexity of the Estate
Taking on the role of executor (also known as a personal representative) is not simply a matter of reading the will and using it as a set of instructions for distributing someone's assets. An executor essentially steps in for the testator (the person who wrote the will) and sees to all of that person's final arrangements—financial and otherwise.
Generally speaking, the larger the estate—whether in terms of property, possessions, assets, or the number of beneficiaries—the more difficult and time consuming it will be to disperse. For example, a house, several bank accounts, a stock portfolio, and possessions will all have different steps to dispersal and hurdles to clear, like completing tax documents. This is why high-net-worth individuals usually use professionals to both set up an estate plan and then help execute it when they pass on.
That said, even small estates with only a few beneficiaries can become problematic if just one person contests the will or is otherwise inclined to throw a wrench into the process. The best way to assess how difficult the job will be is to ask to see a copy of the current will (or a draft of the will if one is in the works).
If there are obvious red flags—unequal distributions to children, trusts, or annuities to untangle, or anything else you feel uncomfortable handling—you might consider passing on the responsibility.
2. The Time Commitment
Being an executor takes time and energy, and requires a lot of attention to detail—in fact, it is almost solely concerned with details.
Before you agree to be executor, you should be certain that you have the time to do the job. If you have a busy professional life or a lot of family commitments, it may be difficult to set aside the needed time.
It is important to make a decision based on your current situation. As long as the testator is alive, you can be added or removed as the executor of the estate.
To continue reading, please go to the original article here:
https://www.investopedia.com/articles/pf/11/before-becoming-an-executor.asp
What's the Average Cost of a Making a Will?
.What's the Average Cost of a Making a Will?
By David Dierking Updated February 04, 2022
Let's face it. The last thing people want to do is plan for their death. There are a lot of important decisions you need to make—decisions you shouldn't leave to your loved ones. These include saving for and planning your funeral, appointing a power of attorney, designating beneficiaries for all your accounts, setting up your kids—especially if they're fairly young, planning your estate, and setting up your last will and testament.
This last one is probably one of the most important things you'll have to do. Below, we've outlined some important things you'll need to consider when you're putting together this important document.
What's the Average Cost of a Making a Will?
By David Dierking Updated February 04, 2022
Reviewed By Khadija Khartit Fact Checked By Suzanne Kvilhaug
Let's face it. The last thing people want to do is plan for their death. There are a lot of important decisions you need to make—decisions you shouldn't leave to your loved ones. These include saving for and planning your funeral, appointing a power of attorney, designating beneficiaries for all your accounts, setting up your kids—especially if they're fairly young, planning your estate, and setting up your last will and testament.
This last one is probably one of the most important things you'll have to do. Below, we've outlined some important things you'll need to consider when you're putting together this important document.
KEY TAKEAWAYS
Setting up a will is one of the most important parts of planning for your death.
Drafting the will yourself is less costly and may put you out about $150 or less.
Depending on your situation, expect to pay anywhere between $300 and $1,000 to hire a lawyer for your will.1
While do-it-yourself will kits may save you time and money, writing your will with a lawyer ensures it will be error-free.
A Complicated Process
Drawing up a will isn't as easy as you may imagine. Most people hear the word will and think it's a fairly simple process. The idea most people have is that it requires a few minutes to designate the recipients of all your worldly belongings. But that isn't true. In fact, there are many important facets to the document you have to consider—right down to how you word it.
If you have a lot of assets, run a business, and have more than one child or grandchildren, you need to take some time to make careful decisions about what happens after you die. Doing so now will help those you leave behind in the end.
Make a list of all your assets—your home, vehicles, any valuables—along with all of your financial accounts such as checking and savings accounts, certificates of deposit (CDs), and life insurance policies. Then jot down all of your dependents and who inherits each asset. Also note that if there are any special considerations you'd like to include in your will such as when minors inherit your assets, how accounts will be split up, or what happens to your home after you die.
You can try drafting the will yourself or you can hire a lawyer to do the work for you. But even if you hire an attorney, you'll still have to make these important decisions on your own. We'll look at the benefits and drawbacks of both a little later in this article.
The Cost of a Will
The fee for having a basic will written can be as little as $150—fairly reasonable and affordable for most people. Consider purchasing a do-it-yourself will creation kit that can be purchased online or in stores for less.
These are generally templates you can fill in with your pertinent information online. If you require more complicated or additional estate planning documents, be prepared to dish out more cash. It can cost $1,000 or more in advanced situations.
To continue reading, please go to the original article here:
https://www.investopedia.com/ask/answers/033116/what-average-cost-making-will.asp