10 Mistakes Ebook

10 MISTAKES that Could
Jeopardize Your Financial Future

And How You Can PREVENT Them
JAY PERONI
From the Author of The Faith-Based Millionaire

10 Mistakes that Could Jeopardize Your Financial Future
2010 Edition

Table of Contents
InfroducfIon Why MIsfnkos Mnffor.............. 4

Chnfor l Iny Mo ow nnd Iny Mo !nfor.... ......................... 13
Big Mistake #1: Paying too much $$$ in fees
Chnfor 2 Tho IIInd !ondIng fho IIInd............ 20
Big Mistake #2: Getting advice from the wrong places

Chapter 3: Right Road, Wrong Vehicle .............................................. 27
Big Mistake #3: Choosing the wrong places to store wealth

Chnfor 4 SomoInco IIso................... 35
Big Mistake #4: Failing to plan ahead

Chnfor 5 Moof Throo VIIInIns............ ............... 43
Big Mistake #5: Failing to properly account for inflation, taxes, and long-term
health care

Chnfor 6 Inffon Your WnIIof.................. 52
Big Mistake #6: Spending more than you make

Chnfor ? !Isky IusInoss.................... 58
Big Mistake #7: Failing to properly understand risk
Chnfor 8 SkInny IIg...................... 64
Big Mistake #8: Failing to save regularly
Chnfor 9 !osf Cnusos...................... 70
Big Mistake #9: Using debt to consume rather than to conserve.
Chapter 10 Como on !ucky # l0................. ?8
Big Mistake #10: Gambling with your assets instead of investing

ConcIusIon So Whnfchn Connn do ............... 84

www.faithbasedinvestor.com,2010, All Rights Reserved
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Meet Jay Peroni, CFP

Author, Speaker, and Financial Advisor.

Featured on Crosswalk.com, TheStreet.com, and ChristianPF.com, Jay
Peroni, started FaithBasedInvestor.com to help investors find investments they
can be 'Proud to Own. As a renowned Iinancial advisor and author oI The
Faith-Based Millionaire and The Faith-Based Investor, Jay is an expert
authority on the subject of "Faith-Based Investing."

As founder of Faithbasedinvestor.com, Jay is passionate about helping people
incorporate their faith into their financial lives. While faith-and-ethics-based
people and groups lobby and stand up for what they believe in, they often
inadvertently support the very interests they try to combat... by giving them their
money!

This trickles down into how we all manage and use our money. Jay shares
his financial wisdom and principles to show us how our faith and beliefs can
unlock wealth . . . or cause poverty . . . in our lives. "How to Unlock Wealth
by Placing Principles Before Profits" is not just his book's subtitle or his
tagline... it's his heart's endeavor. Let him deliver his sharp financial
guidance to you with wit, compassion, and truth.

1ay`s experience

Jay graduated with a Bachelor of Arts in economics and marketing from Assumption College
and a Master of Science in personal financial planning from Bentley College. He is a Certified
Financial Planner professional (CFP) and is a Qualified Kingdom Advisor from Kingdom
Advisors. With more than fifteen years experience in the financial services industry, Jay values
education as a way to promote professional excellence. He hosts The Jay Peroni Show, a weekly
internet radio show and has an active bi-weekly blog dedicated to faith related trends in the
world of finance. He has served as a speaker for the last decade and given presentations to
various industry, church, and civic programs. When he's not in the office, Jay enjoys spending
time with his wife, Karen and their four beautiful children. He lives and works in Mount
Pleasant, SC.

1ay`s vision

Jay Peroni's mission is to help individuals make smart choices about their money, so they can
incorporate their faith into their financial pictures and create better futures for themselves and
their families. He believes in developing investment strategies that optimize returns and lower
volatility. Jay also believes that investment choices should include each individual's personal
morals, beliefs, and values. Faith, according to Jay, should be the cornerstone of an individual's
financial plan.

www.faithbasedinvestor.com, 2010, All Rights Reserved
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2010 Edition

INTRODUCTION
WHY MISTAKES MATTER
TIs s ou c, uc ou uIo ou uunt to Ic - Switchfoot

Competitive giving

ax and Sam were the best of friends and the worst of enemies. They were twin
brothers if that tells you anything. Competitive to the bone and always trying to
one up the other. Sam was Donald Trump to the tee minus the bad part over. Max
was part Robin Hood, part Rick Warren, with a whole lot of Billy Graham mixed in. Both in
their mid 50s they were extremely successful from a worldly perspective. Sam raked in 8.5mm a year
in his import/export business while Max trumped him making 10mm per year in book sales, royalties,
speaking fees, and licensing agreements.

Max was a Mother Theresa through
and through. He couldnt see using
more than he needed to live on so he
became a reverse tither - living on
10% and giving 90 percent away.
Sam, on the other hand, was a
generous giver, but didnt go to the
same extremes as his brother Max. He
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tithed (gave away at least ten percent annually) and also gave more, as he felt led. Sam was a big
investor and entrepreneur.
Not too long ago, both lives ended prematurely during a tragic plane crash on the way to a family
reunion. You should have seen all the people gathered for the memorial services. The streets lined
with all of the lives they touched. It even made the headline news - from Fox News to
Google to YouTube! They were everywhere!

Here is where the story gets interesting. Many
assumed Max won the giving game. Not that we
keep track, but being competitive brothers, they
made a friendly bet in their early forties. Max vowed to
give away more of his fortune than Sam. Sam claimed it
was not possible. The prize? A ministry formulated in
the name of the winning brother upon the death of one or
both brothers.
Other than Max and Sam, Charles their lifelong CPA
was the only other soul entrusted with knowledge of
the secret wager. Charles kept track annually and reported back to each brother. Im sure Max
smiled each year as he saw more and more of his income going to kingdom work. Truth be told, he far
outpaced Sam while the two were alive. In fact, Max gave
away nearly $56 million since the bet was made versus the $14
million Sam gave away. What looked like a clear victory for Max
quickly turned to Sams Iavor when the story unIolded.

How could this be? Max gave 90 percent and Sam gave 10+
percent. Maxs living giIts were 42 million dollars more.
Heres how Sam won. Max gave 90 percent oI his income away
and spent most of the remaining 10 percent. His estate upon
death was a modest $2million of which was given away bringing
5
D
body of Christ is
missing the
boat on some of
the greatest
opportunities

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his lifetime total to $58 million dollars. Sam on the other hand gave away about 15-20 percent
per year, lived on 20 percent and invested nearly 50 percent oI his income aIter taxes. Sams
estate including life insurance, real estate, investments, and business interests totaled well over
$1 billion.

FiIty percent oI Sams estate was given away immediately ($500 million) while the other $500
million was set up to give away 5% or 25Million per year for at least the following fifty years. Sam
was thus able to keep giving even after he went home to heaven.

Though this story is fictitious, the principles are not only possible, they are biblical. God has helped
man create tools and strategies to multiply the blessings He provides. The challenge is getting
enough people to pay attention. Not everyone will become a Donald Trump, but 50,000 here, a
$100,000 there, a million over there.it all adds up!
True some of us have children and grandchildren to consider, but my point is the body of Christ is
missing the boat on some of the greatest opportunities available. Take for example Martha, who
before she met me was going to leave all oI her estate to her wealthy sister or George who didnt even
have a will. His fortune was going to be fought over by distant relatives he never met. You see the
Church doesnt want to be involved in the advice
business so fortunes and estates are leaving the church and going
into the hands of strangers who may or may not fund kingdom
activities.

What iI at least 10 oI every church members estate went back to
churches and ministries upon that members demise? Think
churches and ministries would still be suffering financially?

Do you like what you see?

Nearly every person who is rich is not overflowing with talent,
charm, education, or skills. They often look just like you and me. In fact, they often become rich
because they want to be rich. Is the desire to be rich a sin?
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Many within the church believe so...
Jesus gave commands regarding our attitudes about wealth, but left us with principles when it came to
money and possessions. He never instructed us not to have wealth, but to avoid putting our trust and
love into money. Yet, many think we should give everything away today. Live on what we need and
give the rest away.

Is this the proper way to handle wealth?
Christ was clear when he said, "Do not lay up for
yourselves treasures on earth" (Matthew 6:19). But
then Paul instructed Timothy, Command those who are
rich in this present world not to be arrogant nor to put
their hope in wealth, which is so uncertain, but to put
their hope in God, who richly provides us with
everything for our enjoyment. Command them to do
good, to be rich in good deeds, and to be generous and
willing to share. In this way they will lay up treasure for
themselves as a firm foundation for the coming age, so
that they may take hold of the life that is truly life. (1Timothy 6:17-19)
If being wealthy is so bad then why were some of the greatest men in the Bible wealthy? The
problems are not the wealth in itself, but the attitude toward wealth! If we all committed to
loving God and loving people we could change the world. Money is merely a tool to carry out
Gods plans. We have a responsibility to take care oI our Iamilies and bless more oI His people.

Paul gave Christians an opportunity to be "rich in this
present world"but this was only advisable if certain
principles were met. The chief among them was a
willing and openness to share wealth when called upon.
Those who are wealthy are expected to live a life of
generosity. It is those who are quick to share, rich in
good deeds, and willing to use their assets for kingdom
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purposes that defeat the biggest trappings of wealth. In doing so, they also layup treasures in
heaven

Loving God and loving people

God gave us two biblical reasons for money: to take care of our families and to bless more of His
people. Only two reasons yet too many of us fail. We fall
in love with money and it ruins us. How do we prosper
without letting money corrupt us? It starts with your
vision, with your plan, and your commitment to love God
and love people. A prosperous journey begins and ends
with the Word of God. To prosper in God's way, a man or
woman must keep God's Word as his or her delight.

Its your vision and attitude that carry ALL oI the weight. Without knowing where you are
heading, its impossible to know when you get there. So who do you want to be and why? II you
could be anyone, do anything, what would it be and why? Do you want to be the best in the world?
Best in your Iield? Someone whos very good? Just good? Or better than average? Maybe you just
want to be plain old average.
KEY VERSE
Whatever your desired outcome, your ambition and drive will
carry you to the finish line. The problem is MOST people
will not make the sacrifices needed to be great. Being good at
something often takes some work, but being great is for the few
and far between. This is because we care too much about what
others think. We care too much about pleasing people that really
have no stake in our game. Being liked is noble, but being great is
far reaching!

You will become whoever you want to be.
To be great, you have to think great!
8

Luke 10:27
You must love the Lord
your God with all your
heart, all your soul, all
your strength, and all
your mind.' And, 'Love
your neighbor as
yourself.'

2010 Edition

First you must aim much higher than where you are today.

Treasure from Heaven
Far too many people pray for financial miracles. They pray for treasure to fall from heaven:
Please God make my MasterCard balance disappear.
Please God deliver me from this mess. Please God get me
a new job.make this stock double.on and on. We pray
for the wrong things.
Instead of praying for miracles, we should be praying
for new mindsets and new opportunities. Yet we
continue to ask God to drop treasure from Heaven. It is
often in our greatest struggles that God does his best
work. When do you see God move most: when you are at the bottom or top? You clearly can see
Him at work all the time, but we are far more likely to grow closer to Him in our greatest time of
need. This is because we finally admit we cannot do it on our own.

Battle scars

Scars show experience.
Scars show the pain that youve been there, done that.
But scars can be the best measure of future success if
youve learned how to use them to your advantage.
When it comes to your financial life, you bear the scars
of your past. You need to understand exactly where
youve been, what mistakes youve made, and what
lessons youve learned in order to make progress.

I often see people trapped in the past, afraid to go
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forward because of previous failings. They are scared of getting burned again so they do
nothing. They expect God to bless the steps they never take. How can God bless your career
when youre trapped in the status quo? How can he bless the investments you never make?
How can he bless the business you never start? Or prosper the relationship you never commit
to?
God can certainly bless anything He desires,
but often He is looking for us to make the first
move. Unfortunately, many of us miss the
greatest blessings that are right around the
corner simply because we let our battle scars
stand in the way.

Why do you want to succeed?

Mike longed Ior more money. He worked
harder and harder, longer and longer. He
longed for days of freedom. When I asked him why he wanted more freedom, he looked at me like
I was crazy. Why would I ask such a foolish question was his insinuation? Yet I was seeking the
deeper reason why freedom was so important. After breaking down his walls of comfort, Mike
finally began to open up.

He wanted more time to do things he enjoyed. Yet when we examined what he did with the free
time he already had, he was perplexed. So in other words he discovered what he was really
saying was he wanted more time to do absolutely nothing. This revelation came after analyzing
the use of his current free time. It essentially was being wasted doing little of significance.

Using the our faith-based principles, Mike uncovered what was most important to him. He
found a new way to live life with fuller and deeper meaning with much more significance. He
discovered myths and false beliefs holding him back and how past failures were keeping him
imprisoned.
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Finally he broke the chains. He was free!

LASTING
WORDS
VutcI ou
thoughts, they
become your words.
Watch your words
they become your
actions.
Now freedom meant living out his dreams, of which he was
committed to do until the day he reached his goals. A prosperous
journey for Mike began and ended with the Word of God. To
prosper in God's way, Mike kept God's Word as his source of
delight.

Introducing the ~Faithful Five

How did Mike make a 180-degree turn? How did he discover:
His true calling?
His career path?
His spiritual gifts?
His proper financial plan?
Watch your actions
they become your
habits.
Watch your habits
they become your
character.
Watch your
character for it will
become your
destiny.

- Frank Outlaw,
Founder, Bi-Lo
supermarkets in
South Carolina

Mike examined five critical areas of his life: where he worked, where he gave money, where he
saved and invested his money, how he viewed debt, and where he spent money.

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KEY INSIGHT
He recommitted to be a:
No one can serve two masters. For you will hate
one and love the other; you will be devoted to one
1. Passionate Income Earner - doing
what he loves
2. Generous Giver - Using Gods
money to bless others
3. Wise Investor - carefully
multiplying the wealth entrusted to
him
4. Cautious Debtor - committing to
only use debt as a last resort
5. Prudent Consumer - spending only
on things in line with values

Potholes slow you down
In order to get where you want to go, you
and despise the other. You cannot serve both God
and money". (Matthew 6:24)
Since I have discovered the financial principles set
forth in God's word, I have seen His truth
confirmed time and time again. He is a faithful God
that sticks with us no matter where we are in life. In
the good and the bad, in the times of rich and poor,
He meets us wherever we are.
There is a huge need and desire for us to be closer
with our God. Yet we are often separated from Him
because of our mistakes with money. The
importance of planning, seeking God's word,
prayer, and how to apply God's word to your
financial situation cannot be overemphasized. I
am confident you can improve your financial
situation if it need be or continue to prosper if you
continue to seek His wisdom.
will need to avoid the major potholes in the road. We will all make mistakes. It is avoiding the major
mistakes that separate the wealthy from the poor. The purpose of this book is to help you avoid some
of the biggest wealth robbing mistakes. I want you to succeed so God can use you in mighty ways. If
you are stuck in neutral, I want to help you get unstuck!
If you keep an open mind, pay attention to the rationale behind each lesson,
you can reach your goals now matter how far behind you may be.
Sometimes our biggest mistakes in life can be chalked up to
expensive tuition at the school of hard knocks. The key is to learn and
move on. My hope and prayer is that the mistakes outlined in this book will
serve as a guide to help you avoid major potholes!

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CHAPTER ONE
PAY ME NOW AND PAY ME LATER
A consutunt s sonconc uIo suucs Is ccnt unost cnougI to u Is fee.
- Arnold H. Glasgow

Big Mistake # 1: Paying too much $$$ in fees

ust because you dont know its there, doesnt mean it doesnt exist. The elephant is still in the
room. Gigantic, outrageous fees are zapping away your wealth! From ATM charges, to credit
card interest, over the limit and late fees, to mutual fund expenses and hidden
charges, to a host oI other Iees you probably dont even know
exist.
The way you handle money, may cost you more than wealth
potential - it may cost you quality of life! I once counseled
Jim, who paid over $3,300 one year due to bounced checks and
over the limit fees from his bank. Another, client Ron was
paying $45,000 a year in annuity fees before he met me.
Dorothy was losing $9,000 per year in excessive mutual fund
fees. And Robert, one of my favorites, paid his advisor $12,000
annually and couldnt even get a return phone call!

Jay Peroni, CFP has dedicated his life to helping individuals
discover their true purpose and passion in life so they can live more
abundantly. Using his unique visionary process, he helps others
unlock their wealth potential.

13

You too, could be
throwing thousands or
even millions of dollars
over your lifetime down
the toilet!
J

2010 Edition

Who's Winning the Battle?
You, The Government, or Financial Institutions?

Financial
Institutions:
Make money through:
1. Interest
2. Profits, Fees, Charges
3. Illiquidity
4. Innovation
5. Price Increases
6. Legal Advantages

YOU

Govenment
Institutions
Make money through:
1. Inflation
2. Taxes, Fees, Charges
3. Restrictions
4. Licenses
5. Regulations
6. Requirements
7. Fines,Tolls
8. Courts

Gain
Control
Gain
Make money through:
Control
1. Avoid, Reduce, Recover
Costs
2. Shrink Institutional
Domination
3. Regain Competitive
Advantages
4. Accumulate Wealth Faster
5. Reduce Risk Of Loss

Fight back! Look for ways to reduce your fees, charges, commissions, and unnecessary expenses.
Your bank, credit union, insurance company, mutual fund, brokerage firm, and many others are
taking money out of your pockets and lining their profits. Commit to becoming a smarter consumer.
A great read Ior some practical ways to reduce Iees is David Bachs Fight for Your Money.

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Let`s look at three culprits!
As an investor, there are a plethora of choices fighting for your attention. When it comes to your
money and the different investments available to help reach your long-term financial goals, there is no
shortage of salespeople lining up to offer you a solution. But buyer beware! .Each
investment choice has two costs:
1) The total fees you pay (upfront, ongoing, and upon selling)
2) The opportunity cost - what you potentially lose by having
your money tied up in said investment,
No matter what investment you choosestocks, bonds, mutual
funds, CDs, annuities, etc it is vital to understand how fees and
expenses affect your investment and return. Like a vulture stalking
your account, fees can eat you alive!

Selecting the appropriate investment to meet your objectives, of
course, involves much more than looking at fees. You also need to
consider your risk level, time frame, and the expected return before
investing.

Culprit #1: Mutual Funds
Exhibit 1: Three percent per year?
Is your account
getting eaten
alive by fees?
There are the widely publicized expenses reflected in the prospectus of the mutual fund listed under
the expense ratio. But there are also trading costs, commissions, and other fees that you can find only
in what is called the Statement of Additional Information (SAI). These additional expenses are
difficult to determine, but a 2007 analysis by Virginia Tech, the University of
Virginia, and Boston College revealed that the average SAI charge is 1.44 percent per year. This
is in addition to the 1.56 percent charged by the average Annual
Expense Ratio. In other words, the total charge of the average mutual fund
is 3.00 percent per year!

:HOO RQ WKH EULJKW VLGH DW OHDVW
\RX DUHQW EHLQJ UREEHG DW
JXQSRLQW

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Exhibit 2: Poor performance

Most mutual funds fail to keep up with their respective benchmarks. Imagine, you have a
minimum standard at work and you fail to meet it each and every year, would you expect a raise? Yet
many mutual fund fees continue to skyrocket!
Loads or Sales Charges
Some funds charge a commission to be paid to brokers
when you buy or sell your shares. In the prospectus,
iIcsc cIargcs, connonly lnown as loads, are
includcd in sIarcIoldcr fccs. By law, total front-end
and back-end loads, which are explained below, may
not exceed 8.5 percent of your initial investment (wow
thank you for protecting us!)
Front-end load (sales charge when you buy)
Back-end load (sales charge when you sell)
Level-load (sales charges administered each
year)
No-load (no sales charges)
Annual Fund Operating Expenses
Annual fund operating expenses pay for the ongoing
costs of running a fund and other services. They are
sIown in a fund's rosccius crcsscd as a
crccniagc of iIc fund's avcragc nci asscis as ioial
annual fund operating expenses. These expenses also
are broken down into certain categories:

Management fee (for managing and selecting
investments)
Distribution (12b-1) fee (marketing expenses)
Additional Fees

Statement of additional information fees:
Trading costs
Other additional costs incurred by the mutual
fund company passed on to you.

To learn more check out this article:
Do you lnow iIc iruc cosi of your advisor?

Exhibit 4: Failure to disclose the full holdings
During the five-year market cycle
from 2004 to 2008, the S&P 500
outperformed 72% of actively
managed large-cap funds, the S&P
Midcap 400 outperformed 76% of
mid-cap funds, and the S&P
SmallCap 600 outperformed 86%
of small-cap funds. (For small-
company investors, thats a huge
difference!)

These results are similar to the five-
year cycle from 1999 to 2003,
according to Standard & Poors
Index Services.

Exhibit 3: Failing to reflect your
values
Most mutual funds do not screen
their portfolios to get rid of
tobacco, alcohol, gambling,
pornography, abortion and other
sin stocks. Exposure to these
industries can be profitable at
times, yet can face more lawsuits,
product boycotts, and bad publicity
which can hit the bottom line.
When companies like Enron, WorldCom, and Lehman Brothers collapse overnight, wouldnt it
be nice to know how much you own in your mutual fund portfolio? If you own several mutual

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funds, it is quite difficult to know what kind of financial impact this may have on your
assets.

-$<662/87,21 Mutual funds are good for those who have less than
$20,000 to invest. There are a few fund families that screen from a faith-based
perspective: Timothy Plan, Eventide Funds, Ave Maria Funds, MMA Praxis are a few fund
families that offer faith-based investments. Additionally, Exchange Traded
Funds (ETFs), whose costs are often as much as 90% less than traditional
mutual funds.
Culprit # 2: Variable Annuities
Variable annuities are complex investment products, often described as mutual funds wrapped in
an insurance policy. Under a variable annuity contract, an insurance company agrees to make
periodic payments to you, beginning either immediately or at some future date. You purchase a
variable annuity contract by making either a single purchase payment or a series of purchase
payments. Variable annuities are a favorite product of advisors seeking to maximize their
incomes as they oIten pay commission oI 3, 4, 5, or even 10 percent! Thats right, Ior every
$100,000 you invest, your broker may make $3,000 to $10,000. all Ior Iilling out a Iew Iorms!

Exhibit #1: Outrageous fees
In addition to high commissions, variable annuities have
high costs compared to many other investments. These
expenses essentially guarantee you wont achieve a
reasonable long-term rate oI return. Its like you have a ball
and chain!

+HUHVDW\SLFDO expense structure:

Mortality and Expense Charge 1.50%
Sub Account Management Fees 1.00%
Unreported trading costs 0.78%
Annual Administrative Expenses 0.15%
TOTAL EXPENSES 3.43%

Exhibit #2: Long surrender periods
And you wondered why
\RX ZHUHQW PDNLQJ any
PRQH\

Surrender
Schedule
Year 1: 8%
Year 2: 7%
This means your money is tied up! If you want to sell your annuity, you
Year 3: 6%
will pay dearly. For example look at a typical surrender schedule on a 7 Year 4: 5%
year annuity (far right): Year 5: 4%
Year 6: 3%
Year 7: 2%
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This means on a $100,000 investment you may have to pay $2,000 to $8,000 or more to sell your
annuity. Talk about inflexible! Yes, most annuities do allow you to withdraw up to 10% per year
without penalties, however, you can never completely cash out until the surrender period expires. In
the investment world seven years is a long time and things change rapidly. Being stuck in an
expensive annuity is not a place you want to remain in limbo.

Exhibit # 3: Complexity

For most investors, variable annuities are quite complex investments. Between knowing what a
subaccount is, how living and/or death benefits work, surrender schedules and fees, withdrawal
options, on and on. Variable annuities are so complex that many advisors who sell them truly dont
Iully understand what theyre selling.

-$<662/87,21 My advice would be to avoid annuities like the plague. There are
far better investment choices in this world that are cheaper, more flexible, and provide
more attractive returns.

Culprit # 3: 401(k) s

Your 401(k) oIIers you a retirement savings vehicle . with Iees attached. Some oI these Iees are hard
to detect unless you read the Iine, Iine print about whats going on with your investments. Over time,
those fees will actually cut into your retirement savings potential.

Exhibit #1: High fees
How high are these fees? Typically, 401(k) annual fees run from .25% to 1.5%. The fees are
subtracted right out of the savings in your account, and there is no requirement to notify you
about them: when you get your quarterly 401(k)
statement in the mail, you will find no line-item
expense labeled Iees. The bulk oI these Iees are Ior
investment services. Most people who invest in 401(k)
s invest in the major mutual funds and have to pay
these investment fees by law. (In response, some
corporations have created their own generic wholesale
funds to give employees lower-cost options.) Some
plans also charge fees for legal, administrative, record-
keeping and even advertising costs.

The cost to you: over a 20- or 30-year period, these
fees can really affect the compounding of your assets.
The Department of Labor offers an example: if you have $25,000 right now in your 401(k) and
just let it sit there, and your investment returns average 7% across the next 35 years with 0.5%
annual fees, you will end up with $227,000 in 2042. But if those annual fees are set at 1.5%, you

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will end up with only $163,000 in 2042. A 1% difference in fees and expenses would leave you with
28% less money for retirement. Wow!

Exhibit #2: Poor choices
With thousands of investment choices, why do so many 401(k) s have 20 or few investment
choices? Do you really think these are the best investment options in the world? Additionally few
401(k) s offer any investment options that are socially or morally responsible.

-$<662/87,ON: 401(k) s are not on my list of favorite investment vehicles.
You may want to consider an in-service withdrawal. If your 401(k) plan permits it, you can
take an in-service withdrawal and redirect some of your 401(k) funds into another
investment vehicle that offers you better investment choices (such as an IRA).
An in-service withdrawal can provide you with early access to a portion of your
retirement assets, freeing you to manage them as you wish. If the mix of funds in your
401(k) have taken a big hit lately, you might be wondering how some of those assets
would do in other kinds of investments, especially those with less risk exposure.

Also, don'i forgci any 401(l} s
from your former places of
employment can be rolled over
into an IRA without tax
consequences. This allows you
to take control of your money.
This may mean lower fees,
professional management,
more choices, and flexibility.

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CHAPTER TWO
The Blind leading the blind

Hc uso tod tIcn tIs uuIc. "Cun u Ind nun cud u Ind nun V they
not both fall into a pit? - Luke 6:39

Big Mistake #2: Getting financial advice from the
wrong places.

hy on earth do people take advice from other people who do not have the money
game Iigure out? Advice Irom the rich uncle, yes Ill take it. Advice Irom the
corporate CEO who just landed another blockbuster deal, yes please! Money
Magazine, CNBC, other financial media and friends and family who are broke too?

NO THANK YOU!!!!

Sorry Ior yelling! Its just I am passionate about helping people learn how to become Iinancially free.
When we take advice Irom those who have not Iigured out the money game, its like the
blind leading the blind. If you were addicted to drugs
would you take advice on how to get clean from someone
currently using? Would you take advice on how to lose weight
from someone twice as big as you? Not to be mean here, but
you get my point! Follow those who have been where you are
and found the way out! Now follow them! I say that loosely!
Obviously make sure the share the same values, morals, and
faith that you do.
Financial freedom takes hard work, a dedication to learning, and
wise counsel from those who have already succeeded. In this
chapter we will look at some of the top mistakes
people make when looking for advice. The source of the advice
is critical to your success!
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The Midas touch
Tom and his brother Greg had the Midas touch! No matter where they invested, success was soon
to follow. Their claim to fame started in the late 80s when they built a pharmaceutical
manuIacturing company. By manuIacturing other companys drugs they Iound a way to avoid
expensive research costs, yet reap huge profits. After a
merger in 1991, Tom and Greg took all their sweat equity
and walked away with nearly $100 million. I asked Tom
about his philosophies and keys to being a successful
investor. Here is what he shared with me:
Dont expect the market or an opportunity to give
you a second chance. You have to seize moment
and take risks. Not careless risks, but rather
calculated ones that have a high chance for a
payoff.
Take action on your gut or years of learned experience. Your gut will rarely lead you
wrong.
Understand the upside (best case scenario) and more importantly the downside (worst
case scenario) before investing a dime. Plan for the worst and hope for the best.
Disregard advice that violat
Read the annual and semiannual reports. Study beIore you invest. II anything doesnt
make sense, sell it or dont buy it.
Admit and correct mistakessooner rather than later.
Keep your own independent counsel of advisors.
Be skeptical, not cynical. Trust your own research.
Now coming Irom someone whos been there, done that, made a Iortune without sacriIicing his
principles, Ill listen. Here is one class act who claims Jesus as his Savior and lets his walk do the
talking. He is one of the most generous guys I know!
KEY INSIGHT
God calls us to a life of commitment to Him. Our finances reveal our commitments
in life. Where we spend, invest, and give our money reveals our priorities in life. As
we grow in our faith, we should long to have our finances line up with God's word.
This means that we need to make a commitment to Him to make changes in our
lives. Over the next year we will look at various ways to combine our faith and
finances. Your journey begins today. Make a commitment to God that you will seek
to learn His ways.
DcligIi yoursclf in iIc LOFD and Ic will givc you iIc dcsircs of your Icari. Connii
your way to the LORD; trust in him and he will do this: He will make your
righteousness shine like the dawn, the justice of your cause like the noonday sun.
(Psalm 37:4-6)
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Snake oil, anyone?
Mistake # 1: choosing a salesperson instead of an
independent professional with a fiduciary responsibility.
According to Registered Representative Magazine, salespeople in
the financial services industry earn on average $175,000 to $200,000
per year. Its not uncommon Ior Iinancial advisors to earn millions
annually.

Though many advisors may claim to have your best interest at
heart, you actually fall to the third slot on the totem pole of many
advisors:

1. Your advisors interests
2. His or her Iirms interests
3. Your interests
The Securities and Exchange Commission (SEC) and the
National Association of Securities Dealers (NASD) govern
brokers and investment advisors. However, the odds of an advisor facing daily conflicts of
interest are as common you spotting a Toyota while running an errand.
Conflicts are so widespread and entrenched on Wall Street that all
attempts at reform have failed. The backroom deals, commission
incentives, payments for shelf space, etc are happening as you read this.
Advisors are oIten gloriIied salespeople who have one goal: make as
much money as possible. Most have no fiduciary responsibility so the
prudent rule says they can invest in anything as long as it does not harm
you. So the advisor is free to sell you a variable annuity with a 10
percent commission. Your cost? Five percent annually in Iees and by the way you cant sell it for at
least ten years or youll pay huge penalties.
So in essence, they are not bound to act solely in your best interest. With commissions on the line,
many sales people will act in their own self-interest, justifying the product with the highest
commissions. With two identical product choices (one paying a 7% commission, the other 4%,
which do you think the advisor would choose?)
From a legal standpoint, an advisor is only required to avoid selling you an unsuitable
investment product. This meets a very minimum standard. There is no requirement to act in
your best interests or as a Iiduciary on your behalI. Additionally, they dont even have to disclose any
conflicts of interest that may exist. Talk about a bum deal for you!

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Mistake # 2: Listening to the media

Money magazine, Fortune, USA Today, CNBCs Jim Cramer, Forbes, you name it; they are all there
to entertain! Let me repeat this they are all there to entertain. This means sell you
something! II you dont tune in, buy Irom their advertisers, and continue to Irequent them
regularly, they go out of business. Bold headlines, irrational advice, entertaining news,
sensationalized stories.it must capture your attention.
How poor is the advice from the media? In 2000, Case
Western Reserve University conducted a study showing
that investors who follow media recommendations lose
3.8% of their money in the following six months after the
recommendation. So why do so many people blindly
Iollow the medias investment advice? Predictions made
about sports, weather, and Wall Street make good
conversation pieces, but poor investment strategies!
Mistake # 3: Listening to friends and family talk about ~what`s hot
Since 1990, weve seen investing Iads come and go. In the 1990s it was technology stocks,
followed by real estate, and then it became oil and gold, then emerging market countries like
Brazil, Russia, India, and China. Today many flock to any form of green or environmental
investing. Investment fads are only in vogue until everybody knows about them. Once they
become cocktail party conversation, financial magazine material, or an internet sensation, the fad is as
good as dead on arrival.

STOCK MARKET TIP:
,I HYHU\RQHV WDONLQJ
DERXWLW\RXUH
already too late!
I remember late in 1999 when I received a call from one of
my beloved clients Molly. Molly was in her mid-80s and a
very conservative investor. She was wondering if she should
sell many of her dividend stock investments and put them
into an Internet mutual fund. I asked Molly about her nearly
30% return from the prior year. Was she not happy? She said
she had a friend (and everyone has one of these friends) who
made over 100% the prior year in an Internet fund. After
explaining the risks, and discussing her personal situation, I talked Molly out of
investing in the Internet fund. Not that I had a crystal ball or anything, Molly had no place being in the
internet.
Normally a fixed income and dividend stock owner, this would have taken her risk level from a 4
all the way to a 10. Molly took my advice and we all know how the Internet story unfolded. I
dont always claim to get it right when it comes to trends or predicting short-term movements in
the stock market, but what I can spot are troubled signs that a strategy is headed for disaster.
Human nature drives people to invest in fads only after prices have already risen. This means
those late to the game are the most apt to get hurt. We only hear about a trend after people have
already been successful making it less and less likely that you can follow their success. Instead,
you need to Iigure out how to buy low and sell high. Heres a hint: investing in Iads is not the
way!
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Mistake # 4: Listening to your co-workers
Too many people put too much in their own companys
stock or take too much advice from co-workers. When it
comes to investing, many turn to the well known well
established companies. AIter all they cant Iail? Wait,
Enron, WorldCom, Lehman Brothers, and Ginnie Mae to
name a few, were giants who became extinct just like
enormous dinosaurs. Bigger is not always better! In fact,
much of the growth for many companies takes place within the
first few years of operation.
Bloomberg provided further proof that the largest
companies arent always the best. Their publications (as oI December 31, 2008) show that 49% of the
companies in the S&P 500 (largest, most widely known companies) had lower prices in 2008 than in
2000. In fact Merrill Lynch lost 78% in 2008, AIG lost 97%, Fannie Mae lost 98% Freddie Mac lost
98%, while Wachovia lost 85%. Still not convinced?
From 2000 to 2002 GE lost 53%, from 1999 to 2005 Coca-Cola lost 40% within seven years,
Irom 2000 to 2002 McDonalds lost 60 in three years, even trusty old Wal-Mart lost 37% from
2000 to 2007 (a 8 year span). These are some of the largest companies in the entire world. If they
can lose almost halI or more oI their value within a relatively short period oI time, biggest isnt
always best!
Dont get me wrong, large company stocks have their place in a portIolio. My point is just dont
assume that if you buy the biggest and best companies you will profit. As they say timing is
everything.
In order to truly understand an investment opportunity, much homework is needed. You should
evaluate a companys Iinancial potential by looking at a wide number oI Iinancial data available
at sites like www.Morningstar.com, www.valueline.com, www.zacks.com, and Yahoo Finance
to name a few.

Where do you turn for financial advice?

So where do you turn? Rather than running from advisor to
advisor, changing accounts from firm to firm, or seeking a savior,
other than The Savior Jesus Christ, it starts with your education.
You can't expect someone else to bail you out of trouble. It all
starts with you! You have the power to change your financial
future if you are willing to put in the time, energy, and effort.
There is no one-size-fits-all solution. Truth being, there is no
shortage of good ideas: Stocks, bonds, real estate, options trading,
commodities, exchange-traded funds -- there are dozens of ways to
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invest. Chances are you've probably tried some or many of these options. How successful have they
been? If those ideas made you rich, why are you reading this book?
Your education is the key to your future success. If you want to grow your wealth, you cannot
keep doing the same things you've done in the past and expect different results. You probably
tried a lot of ideas with little to no success. This is okay. In fact better than ok, it's perfect! This
is perfect because you've seen what hasn't worked and you now know there has to be a better
way.

I found a better way!
Throughout the past 15 years, I have been managing
millions of dollars for people just like you. I've spent
years studying for the CFP designation, years getting
my masters degree in financial planning, and working for
some of the largest firms on Wall Street. Then finally I
had enough! I was tired of working for firms that claim to
have the best interest of their clients at heart but their
decisions clearly indicated otherwise.
The chain of command often does not work in your favor.
If your firm is publicly traded, shareholders come before
you. If you invest in mutual funds, your manager gets
paid whether he makes you a dime or not. Mutual funds spend billions each year selling you
product yet very few outpace their benchmark. If you invest at a bank or credit union it's often
about fee revenue more so than making you money. If you invest with an insurance company
often it's about making a commission and there is little incentive for servicing your account.
Now don't jump to conclusions. I'm not here to bash every financial advisor, broker, planner, or a
Wall Street firm, I am here to say I have found a better way. That's exactly why I helped start
www.faithbasedinvestor.com, an independent portfolio management tool dedicated helping you
find morally and financially sound investment opportunities. We charge a flat annual fee for our
services regardless oI your portIolio size. Its about having someone working in your best
interests. If we can help you in any way, please let us know.

Do you invest according to your beliefs? Many well-educated, morally conscious,
investors wind up buying shares of companies whose beliefs and business practices
are far remtD
about merging their personal beliefs with their investment strategies. Some may
not even be aware of where and how their money is invested. For a FREE portfolio
analysis go to www.faithbasedinvestor.com

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JA<6 62/87,21 As a financial advisor with 15 years of experience,
knowing what I know, here are my top 5 criteria for selecting a financial
advisor:
1. Look for a Certified Financial Professional (CFP). CFP's arc
certified by the Certified Financial Planner Board of Standards Inc. (CFP
Board), which can help you identify financial planners who are committed
to competent and ethical behavior when providing financial planning. To
find a CFP in your area go here:
http://www.cfp.net/search/
2. Look for an independent financial advisor, one who is free from
conflicts of interest. Well, when you search for an independent advisor,
you have a better chance of finding someone who gets paid for their
advice and/or their fee-based asset management, instead of deriving
the bulk of their income from trades or product sales. Many of these
independent advisors set flat or hourly fees for specific services. Some
earn a fee that corresponds to a small percentage of the invested
assets they manage for you. If your portfolio does well, they do well. 3.
Make sure your advisor is on the up and up. If you want to check
out an investment advisory firm, visit
www.adviserinfo.sec.gov/IAPD/Content/IapdMain/iapd_SiteMap.aspx
That is the website at which the Securities and Exchange Commission
keeps Form ADVs - the forms which reveal disciplinary actions taken
against that advisory firm and/or its key employees. You can also
make sure a firm is properly registered there. If you want to check up
on a specific investment advisor, go to the FINRA BrokerCheck website
tool
(www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm).
Here you can learn about the professional backgrounds of advisors
and firms through the Financial Industry Regulatory Authority.
4. Make sure your advisor shares your faith, values, and morals. Two
Christian organizations are www.kingdomadvisors.org (you can search
for Qualified Kingdom Advisors) and www.nacfc.com. If you desire to
invest in moral responsible investments make sure your advisor
specializes in this type of investing.
5. Get a referral from someone you trust. The best advisors tend to get
referred from professionals, business owners, golf partners, people at
your church, or relatives. It signifies real trust in that advisor.

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CHAPTER THREE
Right road, wrong vehicle

A ong IuIt o not tInIng u tIng uong, gucs t u succu
appearance of being right. - Thomas Paine

Big Mistake #3: Choosing the wrong places to
store wealth
The eighth wonder

he purpose of a magic trick is to amuse and create a
feeling of wonder; the audience is generally
aware that the magic is performed using trickery,
and derives enjoyment Irom the magicians skill and
cunning. Traditionally, magicians refuse to reveal the
secrets to the audience. They even take an oath to never
reveal these secrets.

The Magicians Oath: As a magician I promise never to
reveal the secret of any illusion to a non-magician, unless
that one swears to uphold the Magicians Oath in turn. I
promise never to perform any illusion for any non-
magician without first practicing the effect until I can
perform it well enough to maintain the illusion of magic.

Unlike the magician who relies on an illusion, many investors rely on true magic. They rely on what
Albert Einstein described as the eighth wonder oI the world- compound interest!
Compounding, an investors best Iriend, can certainly make you rich!

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It never ceases to amaze me when I look at the balances of some of my clients over the past
fifteen years. What started with a few thousand dollars have become six figure accounts. Do you
realize that some families thrive for generation after generation because of compound interest?
Trust funds, even invested conservatively, keep growing because with compounding, the trust
earns interest on its principal, as well as on the other interest that has been accumulating.
Getting started with investing as early as possible can
make a big difference in how much wealth you amass.
The benefits of saving early in life are greatly magnified
by compounding. The power of compounding can make
assets grow much faster. Where most investors make
their biggest mistakes are using the wrong vehicles:
taking too much or too little risk and paying too much in
fees and taxes.
Being too conservative when you invest is detrimental to
your wealth. I see many people become so fearful that
they invest only in safe, guaranteed vehicles such as CDs,
Treasury bonds, and money market funds. As life expectancies continue to rise, so do the
probabilities that too-conservative investors may outlive their assets.
Being too aggressive is just as dangerous as being too conservative. Taking unnecessary risks
and jumping into investments that are not understood are critical mistakes I see being made on a
regular basis.
Too many people jump in and out of the stock markets at the absolute worst times. I see people
Iinally get out at the bottom oI the market only to get back in aIter a major recovery. I had a client
that was notorious Ior his. I would spend hours with Phil. Hed want to get out as the market was
tanking and buy back in after the market had a sharp rise. I had to remind him that the object is to
buy low and sell high. Phil still calls me, but he has Iinally understood the concept the Warren
BuIIett describes best, We simply attempt to be fearful when others are greedy and to be greedy only
when others are fearful.`
Some of my favorite Warren Buffett quotes:
1. I ust Isto uus u tIcc uus to tIc gunc, tIc cIcst coc uoud Ic
librarians.
2. It tuIcs 2U cus to Iud u cututon und uc nnutes to ruin it. If you
think about that, you'll do things differently.
3. It's u Icttc to Iu u uondcu conun ut u u cc tIun u u
company at a wonderful price.
4. On uIcn tIc tdc gocs out do ou dscouc uIo's Iccn sunnng
naked.
5. Price is what you pay. Value is what you get.
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Faith in the wrong place
With God as your pilot, you can take control of your financial destination. You cannot control
what the stock markets do, but you can control how much you allocate toward your goals. Leave
nothing to chance. Stop relying on the government, stop counting
on your company, and take responsibility for your future. There are
three plans you can primarily focus on as an investor:

1. The Government Plan
This is, in two words, Social Security. Nearly two-thirds of
todays elderly count on Social Security as their primary source
of income. Can you imagine that? Each year gas, groceries,
health care, and other goods go up in value and their paychecks
buy less and less. This is a plan for disaster. I have seen many
elderly lose their homes and independence because they relied on
the government to take care of them. Over time, this plan will not
lead to financial independence.

2. The Company Plan
For some this may be a pension. This may have been the case for
many in the private sector years ago. However, according to the
Employee Benefit Research Institute, less than 18 percent of those in the private sector today will be able
to rely on any form of pension. Companies left and right are abandoning, freezing, and altering pension
benefits mainly because people are living longer, thus severely increasing the costs to corporations.
Even cash-rich private companies like
Fidelity Investments are choosing to get out of the pension
business for their employees. You may be saying, Well, I have a
401(k) or 403(b) or another self-funding retirement option at work so I
will be in good shape. Maybe yes, maybe no!
There are five major problems with tax-deferred plans at work:
1
st
Problem: Limited Choices
For most, this provides two challenges: the limited ability to screen your investments for moral or
social issues important to you and the limited ability to find the best investment vehicles (place to
get the highest potential return).
2
nd
Problem: No personal relevance
When you simply select funds from a plan at work, there is no personal meaning or connection to
your life. You are handing your money over to someone else who does not know you or
anything about your situation. Your faith is in the hands of a money manager or team of
managers and fully out of your control. Why do you think so many people stop contributing to a
401(k) when the markets are going down? If instead your investments had relevance to your life
and were in full alignment with your faith, values, belieI, and mission in liIe dont you think you
would continue investing?
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3
rd
Problem: High Fees
Most retirement plan fees are hidden beneath layers and layers of costs assumed by mutual
funds. There are the widely publicized expenses reflected in the prospectus of the mutual fund
listed under the expense ratio. But there are also trading costs, commissions, and other fees that
you can find only in what is called the Statement of Additional Information (SAI). These
additional expenses are difficult to determine, but a 2007 analysis by Virginia Tech, the
University of Virginia, and Boston College revealed that the average SAI charge is 1.44 percent
per year. This is in addition to the 1.56 percent charged by the average Annual Expense Ratio. In
other words, the total charge of the average mutual fund is 3.00 percent per year.

4th Problem: Tax Time Bomb
Make no mistake about it. The government knows how to generate
future tax revenue at your expense. They do this by allowing you to
take tax breaks today in exchange for much larger tax bills in the
future. Many people just look at the tax benefits of tax deferral and
neglect to factor in that what used to be a $5,000 tax write-off is
now a tax bill for tens or even hundreds of thousands of dollars.
Uncle Sam is no Iool. Hes Iigured out how to entice you into
funding his future spending.

5
th
Problem: Lack of Liquidity and Accessibility
If you need access to your funds prior to age 59 1/2, your retirement plan generally will have a
10% penalty and you may also owe federal and state taxes. Often a withdrawal from a retirement
account can cost you 40% of more. That means every $10,000 would lose $4,000 in taxes and
penalties.thats not what you can easily accessible. OI course there are exceptions to the rule,
but in most cases, your retirement plan at work is very inflexible and costly if you need to access
the funds.
3. The Faith-Based Investment Plan
This plan allows you to better control your tax bill,
your investment choices, and fees. Dr. Stanley
Thomas, who wrote The Millionaire Next Door,
simplified the basic guidelines that most millionaires
followed. They maximized income, gave generously,
minimized expense, and invested regularly. It seems
so simple, yet most struggle to do all four. Living
below your means is the key!
Are you willing to sacrifice short-term temporary
pleasure to have greater freedom in the future?
Knowing what God truly desires for your life is
essential. Once you are in Gods will, He will IulIill
the desires of your heart. You may be in preparation
mode or already there. Know what you want and
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make choices that will lead you where you need to go.

Five choices for your money

When you look at investing, there are really only Iive choices. Heres a look at the classes oI
assets youll generally be considering when you invest:

1. Start or Operate a Company: Selling a product or service that meets the needs of the
marketplace can be the fastest path to financial freedom. However, this can also be the
riskiest and least likely to succeed when you evaluate your choices.
2. Stocks: Although past performance is no guarantee of future results, stocks have
historically provided a higher average annual rate of return than other investments,
including bonds and cash equivalents. However, stocks are generally more volatile than
bonds or cash equivalents. Investing in stocks may be appropriate if your investment
goals are long-term.
3. Bonds: Historically less volatile than stocks, bonds do not provide as much opportunity
for growth as stocks do. When interest rates rise,
bond values tend to fall, and when interest rates fall,
bond values tend to rise. Because bonds offer fixed
interest payments at regular intervals, they may be
appropriate if you want regular income from your
investments.
4. Cash Equivalents: Cash equivalents (or short-term
instruments) such as money market funds offer a
lower potential for growth than other types of assets but
are the least volatile. They are subject to
inIlation risk, the chance that returns wont outpace rising prices. They provide easier
access to funds than longer-term investments and may be appropriate if your investment
goals are short-term.
5. Alternative Assets: The term alternative assets is highly Ilexible and is used to
describe specific physical assets (gold and silver), natural resources and real estate, as well
as methods of investing, such as hedge funds and private equity. In some cases, even
geographic regions, such as emerging global markets, are considered alternative assets.
These are often investments that are unrelated to other asset types.
-$<662/87,21 Building a diversified portfolio and multiple streams of
income are keys to success! I recommend owning a business, investing in
oiIcr colc's lusincsscs, and ursuing iIc cnircrcncurial gifis you osscss.
Very few people get rich investing in mutual funds. Instead look for real ways
to build wealth! Everyone should own some gold and silver coins and/or bars.

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Choosing the right investment vehicle

Just like buying a car, selecting the right mix of investments
involves evaluating your liquidity needs, time horizon, risk
tolerance, and asset allocation. Tax deferred compound
Interest Is NOT the Miracle Some Say It Is. Contrary to
what is popularly taught; accumulating and compounding
interest is usually a massive mistake. Why? Well..Ior
several reasons. First, it is an accumulation-based theory that
takes years and years to develop; secondly, it can create a tax
each time interest is earned; and is especially susceptible to
inflation and leaves one exposed to unnecessary risk.
Because youll be paying tax every time it compounds, when
you take the tax and add something called opportunity cost
plus inIlation into account, a 10 compounded return isnt a
miracle. In Iact, in many cases youll barely end up breaking
even.
Some of the isolated numbers on paper might look good, but
they dont tell the whole story. Someone might tell you that
iI youll invest $100,000, at 10 then it will grow to be $1,744,940 in 30 years. That probably
sounds pretty good to you. The problem is that theyre usually not including taxes, administrative fees
and other hidden factors in that equation that will end up making the real numbers
substantially smaller.

They dont mention things like the Iact that even iI you are
in a 25 marginal tax bracket, youll end up having to pay
$ 411,235 out-of pocket just in the form of taxes. In the
thirtieth year alone, youd be paying out close to $40,000
just in taxes. On the other hand, iI you didnt pay the taxes
out of your own pocket, then the account would only grow
to $875,496 and not the $1,744,940. You will notice this
difference is larger than the $411,235 dollars that would
have been paid in tax if out of your own pocket, but this
also represents the opportunity cost to losing those dollars,
that would have otherwise grown in the account, to taxes.
Opportunity cost is taking the $411,235 paid to tax and also
considering what it would have grown to iI it wasnt lost to
tax. In other words, if you pay a dollar to tax, it is no longer
available to earn interest. The lost interest is an opportunity
cost.
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Another opportunity cost to consider is the fees known as expense ratios and 12b-1 fees (for
marketing). After these expenses, it could leave you only earning 8 percent instead of 10. The
account ends up being $1,006,266 before tax or $574,349 after tax with this 2 percent expense (far
short of the $1,744,940 you were promised).
The difference between what you were told that you were going to earn (based on all too
common creative advice) and what you really end up earning is what we call the unseen
reality. As a Iinancial advisor, I am careIul to make sure my clients understand the real bottom line, and
as an expert I show them how to recover and utilize money that is rightfully theirs, money they never
realized they were losing! I want you to have a financial plan based on reality, so you can plan
realistically for the future.
How to unlock wealth by placing principles before profits

YOU are the only one who can decide what YOU want to get out of
your financial life. You are in control of the decisions you make that
can increase, or decrease, your satisfaction in other areas of
your life. This concept applies in literally countless ways. Investing
decisions do overlap into other aspects of your life and values.

For example, if you were morally opposed to child sweat shops that
paid meager wages and kept young children out of school, would you
want to invest in a company that had hundreds of them around the
globe? After all, a monetary investment is one form of support you give
a company. By giving your money to a company that
LASTING
WORDS
An nucstncnt n
knowledge always
pays the best
interest
- Benjamin Franklin
supports child labor, in essence you are also supporting child labor. What about other issues like
abortion, pornography, or embryonic stem- cell research? There are many hot button issues that you
may be passionate about, yet neglect to incorporate this passion into your finances.

Likewise, if you are an avid environmentalist, you might want to put your money where your mouth is
by investing in solar technology, for example, rather than in an oil company. On a
different note, if one of your major aims in life is to have less stress and more peace, then it
would be a bad move to invest in a volatile stockno matter how sure your investment advisor is that
it could make you a millionaire. After all, your peace of mind is a valuable asset in its own rightone
that shouldnt be easily sold in an attempt to make a quick buck.
Investing in the most valuable asset: You

The secret to investing that most people miss is they overlook one of
the most valuable assets, which is their own self! So how do you
invest in yourself? The first step is taking the time to figure out what
your ideal life looks like: spiritually, financially, occupationally, and
otherwise. This will then allow you to create an investment, and
financial plan to complement both your long-term and short-term
objectives. Once you know what you really want, you are now in a
much better position to create a financial blueprint by design rather
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than one by deIault. In other words, youll know what youre doing and why. That can make all the
difference in the world!

There are many different ways to invest in one's self. A lot of people get stuck in investing ruts.
They think that investing means mutual Iunds, or purchasing hot stocks. But there are many
legitimate traditional and nontraditional ways to invest. Different investment vehicles can be
smart ways to invest, depending on where youre at in liIe, and what objectives you have. Every
investment vehicle has its positives and negatives, but the point is that there is more than one
way to invest, and many overlook one of the most obvious investment opportunities: Developing
your own capacity to create real value in the world, in turn leads to financial prosperity. It is not
so much that investment products are good or bad, it is whether they meet the objective or not.
What you want is a plan that is not based on limits, but on the limitless possibilities of your own
unique potential.
Invest in your own life, first!
There is more to wealth than just money. Real prosperity involves your health, your spirituality, your
relationships and your overall emotional/mental wellbeing. People dont live
compartmentalized lives.

Every aspect of life will naturally affect each other, including financially. If you want more money,
realize that investing in yourself is likely to increase your wealth and happiness more than investing
in someone else, or in some other company. Think about it. Youre smart.
You have passions and ideas. Why cant you make a lot oI money doing what you want to do?
Many people do, and there's no reason why you can't too.
So how do you invest in yourself? One way is to identify your own natural passions, abilities, and
talents, and then bringing them to the marketplace. That doesnt mean that you have to own your
own business or be a good salesperson. Anyone can find enjoyable ways to bring value to the
marketplace, which in turn naturally creates wealth.
Investing in yourself allows you to identify and obtain a view of the possibilities. People who
invest in their own ideas and talents, are inevitably richer, happier and more satisfied than people who
only dare invest in others talents and capacity for productivity.
KEY INSIGHT
How often do we seem to be between a rock and a hard place? We seem to be
pinned against the wall. All hope is lost. You are overdrawn on the checking
account, the credit cards are maxed. It is a struggle to make ends meet. Or you
are about to retire and the stock market collapsed, delaying your plans for years.
Any number of financial circumstances can appear to be a disaster. However,
there is always light at the end of the tunnel. There is always hope in Christ. He
can help you no matter where you are. You just need to let go and place your trust
in Him.
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CHAPTER FOUR
Someplace else

I ou don't Inou uIcc you are going, you might wind up someplace
else. - Yogi Berra

Big Mistake #4: Failing to plan ahead
Are you on track?

here is an old cliche, iI you Iail to plan, you plan to Iail. Seems like common sense! Yet the
majority of Americans fail to plan ahead. Why? Do we really think that flying by the
seats of our pants will get us where we
want to go? How can God bless the steps we
never take? He is waiting on you to develop a
plan of attack!

As a result of not planning, here are some of the
repercussions:

Common financial mistakes due to a
lack of a plan:

1. Procrastination: This does not help you
save for retirement, and it will not help you
reduce your taxes or transfer money to
your heirs. Delaying necessary financial planning can be perilous. Some avoid planning out
of fear - they simply dont know where to begin. Dont let this stop you. Decide today to do
something about your financial future.
2. Putting all your eggs in one basket. Too many people invest everything in just one
place. Try spreading your assets across multiple investments, and youll help to insulate
them against the effects of economic ups and downs.
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3. Buying more home than you can afford. Interest-only loans, option adjustable-rate
mortgages (option ARMs) and lease purchases still tantalize couples and families with small
nest eggs, modest salaries and credit blemishes into taking on much more liability than they
can bear. The result is often foreclosure. 2008 and 2009 proved costly to
millions of Americans. By speaking to a qualified professional they can make sure the
amount of home you purchase makes sense for you.

4. Making impulsive or emotional money decisions.
A decision that feels good (or exciting) may not be
appropriate for you financially. Avoid spur-of-the-
moment financial choices, and the influences that
may trigger them. The next time youre about to
make a snap decision, stop and think. Will you lose
the opportunity if you take a while to consider your
next move? Consider and compare whenever
possible. Also make sure your spouse is on the same page as you. Money problems are still
one of the top reasons for divorce!

5. Living above your means. In the acclaimed book The Millionaire Next Door, authors
Thomas Stanley and William Danko found that most millionaires drive used American cars
and shun a champagne-and-caviar lifestyle. It is the middle class that is generally seduced
by big-debt, big-ticket luxury items . sometimes all the way into bankruptcy. Make wise
decisions about money, take the time to consider big purchases, and be mindful of what
eIIect theyll have on Iinances down the road.

6. Avoiding all risk. Caution is good, but being extremely risk-averse (for example,
refraining from investment and just putting your money in an FDIC-insured bank
account) may cost you in terms of the growth of your retirement savings and assets. If
youre holding back because youre unsure, speak with a Iinancial advisor.

JAY`S SO!!TIO Sit down with a financial professional to see if you
are heading in the right direction.

Give our offices a call at 866-594-9919 for a FREE 30 minute review.

Is money good or evil?
So much of our time is occupied by earning a living. It is difficult to keep our priorities straight.
Someone expressed the dilemma in these terms: You cant win. If vou run after monev, voure
materialistic. If vou dont get it, voure a loser. If vou get it and keep it, voure a miser. If vou

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dont trv to get it, vou lack ambition. If vou get it and spend it, voure a spendthrift. If vou still have
it after a lifetime of work, voure a fool who never got anv fun out of life.`

Money itself is morally neutralit can be used for good or evil. The problem is caused by the love
of money, not the amount of money you have (see 1 Timothy 6:10). We can be just as covetous and
materialistic over a little as over a lot.
People like Abraham, Joseph, and David showed us
wealth does not always jeopardize a persons walk with
God. The real issue is attitude, not affluence. We may not
consider ourselves rich, but compared to all the
people who have lived on this earth in the past and in the
present, we are clearly at the wealthy end of the
spectrum. If you go to www.globalrichlist.com and plug in
your salary, you will probably find yourself to be
among the wealthiest people in the world.
What does money mean to you?
LASTING WORDS
"He who represents himself has
a fool for a client and an idiot for
a lawyer."
- Old Legal Saying

A man prays to God. God, what is a million years to you? God
replies and says To me, its like a second Well, How much is a
million dollars to you? to which God replies it is like a penny.
Thinking he has outsmarted God, the Man prays for a penny. God says
Sure, just wait a second.
Our perspective of money determines what it means to us. In a day
and age where divorce is as trendy as the iPhone, it isnt exactly earth
shattering when we learn that most marriages are a result of financial
problems. Money can be a blessing or a curse depending on where you are in your relationship with
money. Money is a necessary for day to day living, but when the relationship is abused, it can become
a great source of evil. When I speak about marital problems, it does not mean that money is always the
root problem. It is often merely a symptom of deeper underlying issues that may be unconscious and
unspoken.
If you are prepared to handle money, more of it will lead to more money. Why do you think that most
lottery winners end up broker or back where they started before the won the lottery no
matter how much they won? They were not prepared for the responsibility and made the same
mistakes they were currently making only multiplied the mistakes because they had more money.
When you look at a persons views on money, it impacts many other areas oI their life: how they view
God, their spouse, their children, their other relationships, and even their career. The
motives behind why someone wants money become a root question.

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People generally feel money is important to them for seven main reasons:

1. for securitynow
2. for securityin the future
3. as a reward for a job well done
4. for freedom
5. to give away
6. to buy the necessities of life
7. to buy things to make my life more comfortable or convenient
It is when greed and the pursuit of money consume you that problems arise. It all depends on
your priorities in liIe. The top indicators I have Iound that reveal a persons priorities are the
spending of two God-given resources: time and money. You can get a fairly accurate picture of
what a person deems as important in life by looking at his or her planning calendar and check
book.

Your priorities are
self-centered!

Money can be used Ior good purposes such as providing Ior ones Iamily, preventing poverty, and
relief help following disasters such as the Haitian earthquake. On the other hand, however, money
can provide no satisfaction for our spiritual needs; it cannot purchase peace, love, or righteousness.
It does not last, but slips through our fingers. When you set your eyes solely on wealth, you are more
likely to lose it. Money can be dangerous when you become materialistic, greedy, and self-sufficient
to the point where God has no place in your world.
Serve God, not money
If we allow anything that we desire or possess to rival our love for God, it will turn our hearts
away Irom Him. Jesus contrast between earthly and heavenly treasures and masters is too sharp
to allow compromise: No servant can serve two masters. Either he will hate the one and love

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the other, or he will be devoted to the one and despise the other. You cannot serve both God and
Money. (Luke 16:13 niv).

Haddon Robinson puts the issue in these terms: Either we serve God and use money or we serve
money and use God. Yet, few Christians deliberately dedicate their lives to materialism. Wealth
is deceitIul, Jesus told us, and its bondage is subtle. We should seek to be Iree Irom the love oI
money and not Iond oI sordid gain (1 Timothy 3:3, 8 nasb). God wants us to love people and
use things. Too often we use people and love things. We do not own the things we cannot give
awaythey own us. To minimize the chances of falling in love with money, a faith-based
financial plan is critical.
Just start somewhere!

64% of Americans have no financial strategy at all.
Thats right - no plan whatsoever to build wealth or
keep it. That finding comes from the 2009 National
Consumer Survey on Personal Finance conducted by the
Certified Financial Planner Board of Standards, Inc.
(The survey collected data from 1,700+ U.S. residents.)
Only 17% of us have a written financial plan that is
updated regularly. So congratulate yourself if you are in
that group. The CFP Board found that just 17% of the
36% polled who did have a written financial plan had
reviewed it in light of changing times. Notably, 48%
said they had benefited from having a written plan.
BEGIN TODAY!
Just 38% of the 36% having written financial plans retain a financial advisor. The really
troubling part: 37% of those with written plans are doing their financial planning on their own.
Another 12% of respondents with written plans have consulted a friend or family member who isnt
a financial services professional for advice.
Why dont more people have a Iinancial plan? After all, Americans of all incomes and savings levels
certainly are free to set financial goals. In the survey, the reasons varied. Some cited the expense of
engaging a financial advisor; some said they get along just fine without a financial plan, and others felt
their Iinances werent complicated enough to warrant one. Others were hazy about financial services
industry qualifications - 40% of respondents had no idea that there were professional credentials or
designations for financial advisors.

Defined goals lead to definite plans. If you set financial objectives and plan for them, you vault
ahead of most Americans - at least according to the CFP Boards Iindings. A written Iinancial
plan does not imply or guarantee wealth, of course; nor does it ensure that you will reach your
goals. Yet that financial plan does give you an understanding of the distance between your
current financial situations (where you are) and where you want to be. Too many Americans, it
seems, have little comprehension of their financial situation or their financial potential.

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How much planning have you done? Retiring without a financial plan is an enormous risk;
retiring with a Iinancial plan that hasnt been reviewed in several years is also chancy. A
relationship with a financial advisor can help to bring you up to date about what you need to do, and
provide you with more clarity and confidence when it comes to the financial future.

Your financial road map
The best way to reach your financial goals is to have
a clear Iinancial road map that corresponds with
what you want to get out of your life. Finding your
purpose and passion will lead to performance.

Do you know what your personal definition of
wealth is (beyond a dollar amount)? If your only
objective in investing is to have MORE money, then
not only will you likely never reach your objective
(because there is always more), but youre
unlikely to find lasting security and satisfaction in
your investments.

Understand that money is just a tool to enhance your life, and
KEY INSIGHT
God uses money:

To meet our basic
needs
To strengthen our
faith
To prove His
power
To direct our lives
To teach us
financial freedom
To help us face
ourselves
not the meaning of life! If you dont know where to invest,
then invest in yourself first and always. Warren Buffett has
said that although he has made his fortune in investing, he
detests risk. "Risk comes from not knowing what you're
doing," he says. The better you understand what youre doing,
and why youre doing it, both Irom a Iinancial and personal
perspective, the better investment decision you will make.

II you dont have a plan, then someone else will have a plan Ior
you. By understanding your big picture and the legacy you are
creating, you will be less likely to get derailed or talked into
things. Knowing what you want gives you purpose and clarity
behind your investing. It helps you recognize
opportunities that you didnt beIore, and at the same time
avoid the things that you dont want in your liIe.
Some people think theyre saIe because they get beneIits Irom their work, Ior example, but their
pension likely has a lot of restrictions and can be lost all together. With group disability benefits, for
example, they find out too late that you practically have to be immobile to get paid.

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A lot oI people also dont know that theres a cap on payouts Ior group health or liIe insurance. One
sad example of this happened on September 11, 2001. There was a group that had a
significant number of employees die in the World Trade Center tragedy so the aggregate death
benefit was capped and each family was surprised to find out they were paid much less than the
benefit they expected.

Group coverage also gets people stuck doing what theyre doing
today, because they cant aIIord to lose the benefits if there are any
health changes. With some personal responsibility and
education, you can find ways to do it more economically and in
such a way that gives you greater freedom.

Chances are youve been reading this E-book and thinking I agree
with all of these ideas in principle, but how do I apply them
Iinancially? Thats a great question and its one that deserves an
answer. If there was a one-size-fits-all approach that actually
LASTING
WORDS
It tuIcs us nucI
time and energy to
wish as it does to
plan
- Eleanor
Roosevelt
worked then I would give it to you right now. But since there isnt, I suggest that you schedule a
complimentary Discovery Session with me. This way you can get a better idea of how to
construct your financial road map and afterwards do a moral audit to see how you might be able to
optimize your finances and avoid common mistakes.

What is your ~big picture plan?

Just like a dream house, a financial blueprint
that is thoughtfully planned out is going to be
a lot more attractive and stable than one just
thrown together as you go based on
momentary whims or fast-talking marketers.

Before you even begin to consider investing,
or doing anything major with your finances,
its a good idea to careIully map out what
your real overarching desires and objectives
are- not just Iinancially, but with your liIe in general. Why? Because like it or not, in todays world
money aIIects every single aspect oI our lives. Dont think some generic, standard plan that some
financial advisor outlined for you based on statistics is going to be your ticket to
financial success.
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II you beat numbers hard enough theyll conIess to anything.
Your life, however, is not a statistic. How about a plan that
actually improves the quality of your life in the ways that
personally matter to you? For example, if you dream of buying an RV
in a few years and will be taking time off of work to tour the country,
do you want to be able to do this only if the market
cooperates, or under the worst-case scenario as well?

Your plans should not be dependent upon the market, unless you
want to have to wait and see if your dreams will come true or not.
A personal plan, customized to the preferences of the individual
can be designed that ensures the outcomes that really matter to
you will come to pass regardless of whether or not the market
cooperates.

How do I know if I`m on track?

I have created a Iree process to see iI youre on track.

1. Simply go to www.faithbasedinvestor.com
2. Register via email
3. Let us know youd like a FREE review
4. Send us your data
5. Well email you a personalized roadmap
LASTING WORDS
:LWKRXW D ULFK KHDUW
wealth is an ugly
EHJJDU

~ Ralph Waldo
Emerson

It only takes about five to ten minutes to see if you`re heading in the right direction!

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CHAPTER FIVE
MEET THREE VILLIANS

TIc Icst uu to dcsto un cncn s to nuIc In u cnd.
- Abraham Lincoln
Big Mistake #5: Failing to properly account for
inflation, taxes, and long-term health care
Beat the index or reach your goals?

e are happy when the markets are up and sad when they are down. We Ieel rich when its
up and poor when its down. Our bi-polar mood is often dictated by the markets. Many
people place too much importance on trying to beat the stock market. How
much of our society compares everything about investing to the Standard & Poor's 500 index? When
you beat the market you're happy and sad when you underperform. Why is this? Are your goals really
tied to the stock market?

This perspective is flawed from the beginning. For example, would you have been happy at the
end of 2008 if your investment accounts were
down 35%? The market, as indicated by the
S&P 500, was down 38.5%. You beat the market
by 3 1/2! Somehow, I dont think you or your
spouse would think this was great news. That is
why beating the market" should not be your
goal.

The true purpose of investing is to help you
accomplish your goals. The rate of return you
need to achieve should be independent of stock
market returns. The market returns only enable
you to see if your goals are realistic. For
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example the need to send children off to college, or purchase a home, or obtain financial
freedom, using the S&P 500 as a benchmark has no importance to your personal goals. When you
focus solely on the returns of the market you miss the true purpose of investing -- reaching your
personal goals.
Most people want financial security. They want the freedom that comes along with having
money. It can buy you a different lifestyle. It can buy you more time to volunteer or help others. It can
allow you more resources to send to ministries, charities, and organizations important to
you. It can buy you more, and more... But what good is financial security without significant
meaning in your life? People NEED other people to share life and money with. Our goals should also
reflect ways to help the less fortunate and finding places to spend meaningful time. If life on earth is
just about your personal pleasure you'll never have enough. Shouldn't our lives focus
more on making the world better?
Detours - financial obstacles to keep you from your goals
Growing up, I watched the hardest working man I knew, my
grandfather, lose his entire life savings. Here he was working
three jobs to put food on the table for his wife and seven
children. He would work any job that he could find just to help
this family out. He did this for over 30 years before he retired
with significant health problems. Despite his lack of investment
knowledge, he was a diligent saver and managed to scrape
together over $500,000 at retirement. What seemed to be more
than enough money to last throughout retirement turned out to
be far less than he truly needed.
What happens if you run out of money? Most of us will face a major health problem at some
point in our lives - perhaps even multiple or chronic health problems. We dont want to think
about that reality. But iI youre a new retiree, think Ior a moment about the costs oI prescription
medicines, and recurring treatment for chronic ailments. These minor and major costs can really take a
bite out of retirement income, even with a great health care plan. While generics have
slowed the advance of prescription drug costs to about 1-2% a year recently,1 one estimate found that
a 65-year-old who retired in 2007 would need $215,000 to pay for overall retirement health care costs
- up about 7.5% from 2006.2

Mistake # 1: Not planning to live so long
If you come from a family where people frequently live into their 80s and 90s, you
may live as long or longer. Imagine retiring at 55 and living to 95 or 100. You
would need 40-45 years of steady retirement income.

Mistake # 2: Portfolio errors
Many people retire with investment portIolios they havent reviewed in years,
with asset allocations that may no longer be appropriate. New retirees
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sometimes carry too much risk in their portfolios, with the result being that the retirement
income from their investments fluctuates wildly with the vagaries of the market. Other retirees
are super-conservative investors: their portfolios are so risk-averse that they cant earn enough to
keep up with even moderate inflation, and over time, they find they have less and less purchasing
power.
Mistake # 3: Poor spending habits

Do you only spend 70 oI your salary? Probably not. II youre
like many Americans, you probably spend 90% or 95% of it.
Will your spending habits change drastically once you retire?
Again, probably not. Most people only change spending habits
in response to economic necessity or in pursuit of new
Iinancial goals. People dont want to live on less once they
have had more.
Mistake # 4: Too dependent on Social Security

In 2005, SSI represented 39% of a typical 65-year-old retirees income. But by 2030, Social
Security may only replace 29% of that income, after deductions for Medicare premiums and
income taxes. Since 1983, retirees earning more than $25,000 in SSI have had to pay income tax on a
portion of their benefits. This is all presuming Social Security is still around in 2030.

The first villain: Mr. Taxes
My grandIathers first obstacle was taxes. Much of his money was in IRAs which he had to pay taxes
anytime he withdrew money. He also had some CDs which were taxed every single year.
When he invested money he paid income taxes
TAX RATES

As of January 2009 tax rates in America stand as
high as:

35% for federal income taxes (when
you earn income)
15% for capital gains taxes (when you
sell assets at a profit)
45% for estate taxes (when you die)
45% for gift taxes (when you give
property away)
7.25% for state sales taxes
2.8% for local property taxes

Source: Internal Revenue Source & U.S. Census

on the interest he earned. He also paid income
taxes and capital gains on a few shares of stock he
owned on the dividends and profits he
earned. Taxes ate away at his returns.
By having his money in taxable accounts, his
low return on his investments was further
eroded by taxation. Think about this is you
earn 5% interest on a CD and pay 20% in
taxes; your after-tax rate of return is only 4%.
You lose 1% to taxes. If you pay state taxes that
gets further eroded. Too many fail to
properly account for taxes. They assume they
will be in a lower tax bracket when they retire.
This is rarely a correct assumption. Many
retirees are at the same or higher tax bracket
when they retire.
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SIX WAYS MR. TAXES TRAPS YOU
Meet Mr. Taxes
1. You work, you pay income taxes.
2. You buy, you pay sales taxes.
3. You invest you pay ordinary and
dividend income taxes.
4. You buy real estate and pay
property taxes.
5. You give away too much to family
or friends and pay gift taxes.
6. You die with too much money
and pay estate taxes.

I love to meet
folks who fail to
properly plan for
my raid. I come
when you earn,
sell property,
even when you
die!
$.$WKH&DSLWDO/RRWHU

-$<662/87,21 Tax minimization strategies are a must! Your after-tax return
really matters most. If your portfolio earns you double-digit returns,
iIosc rciurns rcally arcn'i so grcai if you cnd u losing 20% or 30% of iIcn io iacs.
One possible method for realizing greater tax efficiency is simply to
minimize buying and selling to reduce capital gains taxes. Tax-loss harvesting is
another strategy. This means selling certain securities at a loss to
counterbalance capital gains. Asset location is important too! Tax-efficient
investments should be placed in taxable accounts, and less tax-efficient
investments should be held in tax-advantaged accounts.

The second villain: Mr. Inflation
My grandfather watched as his purchasing power slowly eroded. As his nest egg grew he found
his dollars bought less and less. Inflation which is measured by the consumer price index (CPI)
has been remarkably consistent at 3.2% since 1926 (Source Bureau of Labor Statistics). This
means each year, goods and services generally increase by 3.2% in price. So every dollar is
worth 96.8 cents at the end oI each year. Some years inIlation is higher and some years lower
but averages 3.2% per year. Now consider the price of health care. In recent years, health care
costs have increased at a much greater rate than inflation. The same goes for nursing home care.

So how do you prepare? If your after-tax rate of return for an investment earning 5% is only 4%
(after paying 20% in taxes) and now you lose another 3.2% to inflation, what are you to do?
The key is to get ahead of both inflation and taxes. This means any investment you choose, other
than emergency funds, and money invested in instruments that can earn at least 5% or better! If
an investment is earning less you are losing money on that investment. Playing the money game
to not lose is not the way to win! Play the game to win and you will come out on top!
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So when my grandfather thought he was investing in a risk-free investment through his
certificate of deposit (CD), he assumed he was making a wise decision. After all why expose his life
savings to risk? What he failed to calculate is that CDs historically pay 3.1% interest
annually (source: Bankrate.com). So for every hundred thousand dollars he put in a CD, he earned
$3,100 in interest. Yet aIter paying Ior taxes (lets assume 30), he was leIt with $2,170 or a 2.17%
rate of return. However after inflation of 3.2%, he is
left with an annual return of -1.03%. Typically the only true
guarantee of a CD is that it will not outpace inflation and taxes.
Unfortunately my grandfather learned the hard way!

You may say losing 1% per year is better than losing 38% in one-
year investing in the stock market. You're right: that one-year you
would have been better off in a CD versus the stock market.
However, if you lose 1% per year for 25 years ,you lost
more than one quarter of your nest egg before you even
spent a dime.

David came to see me in 2002. He had been burned by the
stock market. He had retired in 1999 with over $1 million
and placed the majority of his investments in technology
stocks. He figured he could withdraw $50,000 a year for
the rest of his life. At 5% withdrawal rate how could he go
wrong? David invested too aggressively and his million
Dollar portfolio soon became a $500,000 portfolio during
the technology collapse from 2000-2003. Still, he kept
taking his $50,000 per year withdrawal (now a 10%
withdrawal rate). It didn't take long to spot David's problem
but how could you fix it? The solution was an easy. He had
Do you stick
your head in the
sand and
pretend your
finances are in
good order?
to either decrease his withdrawal rate, reallocate his assets, or a combination of the two.

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Sometimes there are no easy solutions. Yet being too conservative can be just as dangerous as being
too aggressive. My grandfather saw the dangers of being too conservative. David saw the dangers of
being too aggressive. Finding the appropriate middle road is often the key solution. For most people
gone are the days of pensions, possibly Social Security, and many corporate benefit packages. There
is a greater need today to rely on self directed investment strategies to balance risk and achieve your
goals.

I admit I am deeply saddened by the number of people putting their life savings into bank CDs
thinking it's the saIe thing to do. They avoid the stock market like the plague because they Iear
losing money. Yet the sad reality is the only guarantee they're getting with that CD is a guarantee
that they lose more and more purchasing power the longer they own the CD. What looks like a
safe, predictable, stable rate of return is disguised as a means to outlive their savings and go
broke!

Meet Mr. Inflation

AKA WKH6WHDOWK%RPEHU
I sneak in silently
and before you know
ii you'rc ialling
aloui Iow you can'i
believe how much
milk and bread
costs and you
remember when it
used to be so much
cheaper!
How to lose 20% on an
investment paying 3.1%
interest per year

Annual CD Rate 3.10%
30% Tax rate -0.93%
Average inflation -3.20%
Annual rate of return -1.03%
X 20 years
20 year result -20.60%

-$<662/87,21I advocate using three pools of money. One pool is for
short-term needs and your emergency fund (think 3 years or less). The
second pool of money is for intermediate needs (think 3 to 7 years); the third
pool is for long-term needs (think 7+ years). This long-term pool is where all
your longer term investments go - stocks, real estate, etc. These are the
investments that will hedge inflation and provide the greatest return over
the long haul. The younger you are the more you should allocate to the longterm
pool of money. This concept has been the cornerstone of my investing over the
past 15 years.

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The third villain: Long-term care
What was the final straw for my grandfather was the nursing home. After developing dementia, he
spent the final few years of his life in a nursing home. At nearly $100,000 per year, his life
savings were completely wiped out.
Sometimes we get caught up in a battle between using faith
and depending on our own abilities. Had my
grandfather purchased long-term care insurance he
would have preserved his life savings. I believe God has
enabled man to create strategies and tools to preserve and
grow the blessings He has provided.

As long as we do not succumb to selfishness, pride, and
greed, insurance can be a wise investment. When we are
motivated by fear and do not allow God to work in our
lives, over-insuring can be dangerous to our faith.
Faith and fear are direct opposites. They cannot co-exist.
Do you find a stronger presence of faith or fear in your
life? How about in your finances? It says In God We
Trust on our money but do we truly have that attitude?
So many trust God in almost every area of their lives yet
treat money separately. Why is this so? Its a total
disconnect.
Many people choose self-insurance or go without insurance while others take on too much
insurance. During downtimes, insurance can be a financial lifesaver. But is it wise and godly to
protect against illness, death, accident, or theft? Many refuse insurance simply because they
Meet Mr. Long-term Care

AKA WKH'LJQLW\5REEHU
argue that it takes God out of the picture.

I rob sweet old ladies and men from dignity
and force them to submit to care. Their
family members and friends can only take
care of them for so long then they need
assisted living, visiting nurses, and
eventually my favorite money maker - the
nursing home!
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Does insurance show a lack of faith?

Gods Word instructs us to prepare Ior good and bad times. When insurance is used properly it can
help a family during a major illness or disability, it
can provide replacement income for the loss of a spouse, it
can rebuild a damaged home, and it can pay medical bills
during an extended stay in a nursing home. Insurance will
never cover every catastrophe, but it can be a wise way to
protect the assets and income God blesses you with. You
should also be careful not to allow insurance to be a
replacement for God. Balancing wise planning and faith in
God should be the goal of every protection planenough
to protect your family, but not so much as to limit your dependence on God.
In his book Money, Possessions, and Eternity, Randy Alcorn asks, But where does God Iit into
all this? The greatest danger in insurance is that it so easily undermines our sense of dependency
on God. Is insurance a God-given means of provision, or is it in reality a theological end-run that
makes trust obsolete and God unnecessary? The act oI buying insurance in itselI doesnt show a
lack of trust in God; instead it demonstrates proper planning. God clearly wants us to provide for
our families as demonstrated in 1Timothy 5:8: II anyone does not provide Ior his own, and
especially for those of his household, he has denied the
Iaith and is worse than an unbeliever (nasb).

But we cannot be too greedy and slothful with our
insurance policies either. Life insurance is a financial tool
just like a mutual fund, a stock, or a CD. These tools are
morally neutral. The attitude in using the tools determines
whether insurance is being used properly in Gods eyes.
Insurance should not be bought because of fear but rather
with faith.

The saving grace
Jeff worked at a telephone company for nearly twenty years after graduating from high school.
At thirty-seven, he was the sole breadwinner for his family. He always thought that his company
would take care of him in the event of an untimely death. He was confident that his family was
secure. He was a family man and loved spending time with his wife, Julie, and their two young
children. They were Iortunate that JeIIs income allowed Julie to stay home with the children.
When he came in for an appointment, Jeff was shocked that he was underinsured. If he passed
away, his group term insurance would have covered only two times his yearly salary. This would
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last only Iour to six years with his Iamilys current expenses.
His wife would have to go back to work and put the kids in day care.
Jeff opted to buy additional life insurance to cover his income until
the kids were through college. Sadly, this was the wisest investment
that Jeff ever made.

Less than a year after being accepted for insurance, he was
diagnosed with brain cancer. Jeff never reached his thirty-ninth
birthday. The silver lining in the story was the policy that Jeff
bought for his family. He prepared and planned and left his family
in a sound financial position.

Julie says, Had JeII not met with you, a tragedy would have been made worse. Yes, God could have
performed a miracle. He could have used the church family to bail us out, but through this policy, He
was able to carry us through the toughest loss we ever Iaced. Julie has since gone to nursing school at
night and has become an RN. The insurance proceeds allowed her to pursue a passion rather than
forcing her to take a job.

Why insure?

Insurance provides protection for
unanticipated expenses you couldnt
otherwise pay. For example, in the case of
Jeff and Julie, insurance was used to
produce needed income aIter JeIIs
death. Buying insurance is like looking
ahead. If you knew you would face a
financial problem down the road and
could afford to protect your family and
your assets at a fraction of the
replacement cost, why would you not at
least consider it?

Insurance also frees up surplus funds. In

-$<6 62/87,21 In order to grow
wealth, we must also protect it. Sound
financial strategies involve prudent
insurance planning. Long-term care,
disability, life, auto, home, and liability
insurances are a few I highly recommend
considering. However, when meeting with
an insurance professional, be very cautious
with who is recommending advice. Seek an
independent insurance broker who can
compare and contrast policies and shop
around for the best carriers and rates.
JeII and Julies case, JeII made $85,000 a year. When he died, the Iamily still needed at least
$75,000 in yearly income. Social Security provided around $12,000 a year for dependent care.
The family still needed $63,000 a year to cover the gap. Where would these funds come from?
Jeff and his family could have saved over time, but in this case he had less than a year to live.
The other alternative was to buy insurance, which he did, and that turned out to be the wise
choice. No one knows what the future holds, but planning ahead is prudent and resourceful.
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CHAPTER SIX
FATTEN YOUR WALLET

Contcntncnt nuIcs oo ncn cI; dscontcntncnt nuIcs cI ncn oo.
- Benjamin Franklin

Big Mistake #6: Spending more than you make

Time to Fatten Your Wallet!

hy do so many people struggle with money? Why is it so difficult to get ahead in a
time of such prosperity? Why do the rich keep getting richer while the poor and
middle class seem to continually struggle? The answers to these questions are
contained within these pages. My objective is to not only answer your questions but rather
change the rest of your life.
You see every day you make money choices that affect all areas of your life. Try going a full 24 hours
without doing something that involves spending, receiving, giving, or investing money. The truth
remains so many people today, even with the 2008-9 economic collapse spend more than they make.
They live paycheck to paycheck and could be one missed payment from
financial disaster. This could be you. What made you want to read this book?

Whether your finances are in dire straight or
you just want a little fine tune up, I want to
fatten your wallet so you can improve the
quality of your life and have the time and
money to help others. In order to do this, you
need to win the battle. What do I mean by
battle? This is the battle for your money.
Retail stores, mortgage companies, credit card
companies, auto loan companies, insurance
companies, and investment firms (to name a
few) are in the battle for every single one of
your dollars. Overspend and they will take every dollar you earn and more.
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You`ve sunk my battleship

In the game of Battleship, the object of the game is to sink your opponent's entire fleet without
him sinking your fleet first. It is the same with the money game. You either sink or swim. With
there being no shortage of companies fighting to win your money, only the warrior prepared for
battle can win at the money game. The credit card companies, banks, mortgage companies,
insurance companies, and others all have one
task at hand to win as much of your money as
possible for as long as possible. Read that
line again to win as much oI your money as
possible Ior as long as possible. They oIIer
0% financing, buy now pay later, extended
payment terms, basically anything possible to
get you to spend as much as you can and pay
it back as slow as possible. My task is to give
you the weapons and game strategies you
need so the opponent doesnt sink your
battleship.

Let us not forget either, the other enemy: advertisers. They want to create dissatisfaction in your
life. They solely aim to get you to upgrade, switch, and change, try their product, and capture
your business for as long as humanly possible. The average American is bombarded with
thousands of advertisements every single day. From billboards, Newspaper, magazine, TV and
radio advertisements, online banners, email solicitations, the list goes on. They all have one
focus: capture your attention, create or solidify your perceived needs, and get you to pony up
your hard-earned money.
Never show up to a gunfight with a knife
Theres an old saying, Never show up to a gunIight with a kniIe. Your Iinancial goals will
require time and discipline. There is no shortcut to success. Getting in financial shape is a fight.
Gaining financial freedom is a battle. While a fight may only be 12-15 rounds, it will be based on your
desire to win. You can get in better financial standing in as little as 12-15 months, but you should focus
more on the long-term battle
at hand: obtaining financial freedom. This battle
is a must win that will last years. OI course
your financial goal and current
financial position will determine whether you are
facing a fight or a battle.

Take a look at your current financial situation.
Is your outflow exceeding your inflow? Do
you have more assets (things you own) or
more liabilities (things you owe)? How large
the gap is between the two? This will give
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you some indication as to whether you need boxing gloves or a machine gun.

If you are going to battle, would you march off without a battle plan? How many wars have been won
without a plan? Unfortunately, many fly by the seat of their pants when it comes to financial planning.
They are more reactive than proactive. Its hard to gain position when you are constantly Iighting an
uphill battle. The most important thing is to have a plan. You must be prepared. Part of that planning
is recognizing or predicting in advance the obstacles and
challenges you are very likely to face along the way. Then create a strategy to offset the
potential obstacles. Though you will never alleviate or predict every challenge, you will
however, be better prepared for unexpected bumps along the way.
Choose your own bailout
Now that the US Government has bailed out the same
companies who have been maneuvering to take your
money, isnt it time Ior your own bailout? II the
Government can take $700 billion and reward the
banks, insurance companies, mortgage companies, and
auto makers who have long taken advantage of Your
consumers, isnt it time you Iought and won?
Bailout
It is an extremely daunting task trying to borrow your
way to prosperity. As the government digs itself
further into debt, you do not have to follow suit. The
one silver lining from the 2008-9 financial crises is
consumers will have to rely less on debt to finance
their lifestyles. As credit becomes more difficult to obtain, consumers dare I say have to pay
cash for certain items, can no longer use the home equity as an ATM, and have to find more
creative ways such as saving to buy larger items. I half joke about these points but the good
news in this downturn is more and more people will have to go back to the basics: spend less
than you earn, save money for a rainy day, try to avoid credit, and invest more for financial
freedom to name a few.
As credit has become tighter, financial companies are
scrambling for new ways to take money out of your
pocket and line their profits. Can you say hidden
fees, increased charges, misleading offers, and more
fine print? The war has been declared are you
prepared to battle?

Win the battle, win the war
So how do you win the battle for your wealth? It
starts with education! As English philosopher Sir
Francis Bacon declared, Knowledge is power,
these pages will give you the knowledge to not only turn your financial life around but build a new
mentality to change your future. Fix your money problems and you will achieve more purpose, a
stronger passion, and improved satisfaction in all areas of your life.
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KEY INSIGHT
Spending Does Not Equal Happiness

Many spend more than they make going
deeper and deeper into debt. Before you
consider debt, ask yourself:
Is this adding to my wealth or
subtracting from it?
Do I really need this now?
Do I have enough in savings to pay
for this?
If I borrow, how much interest will I
pay?
Does this make financial sense?

Chances are you are losing at this
sophisticated money game. Dont Ieel bad;
the odds are stacked against you. Many
people often pay 10-20% more than they
should for goods and services simply because
they are unaware or ignore hidden fees, extra
costs, finance charges, and wasteful add-ons to
name a few.
Here are a few examples:

Credit card finance charges, late fees,
over the limit fees, and rate hikes
Extended warranties that will never
likely pay for themselves
Extra, fine print, fees on your
telephone or cable bills
Paying too much for a product or
service
Service Iees Irom you bank
These extra costs add up and can often mean the difference between financial freedom and
financial bondage. The banks want you to use overdraft, the credit cards want you to send
payments late, and the airlines now charge to send your luggage. The oil companies, health care,
banking, and insurance companies are all
picking your pocket and chances are you
probably dont even know it.
Five ways to get back on track

1. Have a budget. Many people live
without one - and that includes many
affluent people. This exercise is starkly
simple, but might be illuminating: make a two-column chart, with the left column listing your
monthly income and the right column detailing your expenses. Detail them as best as you can,
type and monthly amount. Include your credit card expenses. This little
exercise shows you how much you are spending on essentials and how much of your income
you are assigning to comparative frivolities. Perhaps you will find some dollars you could
reassign to planning for your financial future.
2. Distinguish needs from desires. Do you need that material item or merely want it? Slick
marketing and advertising leaves many consumers unable to tell the difference. They run
up debts to buy what they want, rather than what they need. How many of them
understand that by borrowing, they are actually spending away future earnings?

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3. Discern the difference between good & bad debt. Do you know the difference? A bad
debt is a debt you incur on a disposable item or a durable good that will depreciate. It is a
debt on something that has no potential to gain
value. You want to avoid as many bad debts as you
can. Of course, there is also good debt - for
example, a mortgage, a business loan or a student
loan. These are so-called investment debts that
can potentially create value down the road.

4. Educate yourself. Some people are very cavalier
when it comes to spending and saving money.
Others are convinced that they will never be able to build wealth, so they spend their days
addressing short-term financial needs and give no thought to the wealth and income they
will need in maturity. In both cases, the root problem is a lack of education. Those who
spend money like water dont understand its value; those who shun Iinancial planning
and investing dont understand its potential. People with greater degrees oI Iinancial
education tend to be more rational when it comes to financial decisions. (Not always, but
often.)

5. Set financial goals and take them seriously. When people educate themselves about
money - the ways to potentially make it, the ways to plan to protect it - they start to see
how the financial world works and they tend to explore their own Iinancial potential.
This exploration may lead them to meet with a financial advisor. That conversation can
inspire them to set and plan for specific objectives, and get a relationship going - a shared
commitment to wealth building. II you havent had such a conversation, today is as good as any
day for that to happen.

KEY INSIGHT

Gaining wealth has very little do with your education, socio-economic
status, amount of talent, or the environment you grew up or currently
are in. It also has very little to do with your IQ, physical gifts, or where
you live. These factors combined can add or subtract to your potential.
However the biggest obstacle is you. Yes you. You, whether you know
it or not, have an internal thermometer that is set at 98 degrees. You
can go no higher, no lower. You have a self-imposed glass ceiling.
Only you don'i lnow Iow io lrcal iIc glass. If you lool closcly iIc
glass is paper thin and could be blown over if you tried. Most of us set
goals and have expectations that are reasonable, even achievable. It is
when we dare to dream big, to think big, and to think the
unimaginable, that anything is possible.

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How do I get the odds back in my favor?
It all starts with a new attitude, a new sense of direction - part detective, part prudent shopper,
part diligent saver, part shrewd investor, and a whole lot of prayer! To change it will take time,
commitment, focus, and the desire to turn things around. The basis of what we will call common
S-E-N-S-E.
We look at:

Sound too good to be true oIIers: Theres no FREE lunch! Everything comes
with some sort of string attached.
Evaluating package deals: are you buying more than you really need?

Needing everything in writing: verbal deals often result in one party
misunderstanding pertinent facts. If the deal is legit, a company should back their deal
in writing.

Signing contracts only aIter reading: read the Iine print, understand what youre
signing and make sure youre getting what youre paying Ior.
Evaluating the total cost: often there will be add-on costs, taxes, and fees not
mentioned in advertisements. Make sure you factor in the total cost not just the
monthly payment.

This S-E-N-S-E approach will help you evaluate each financial decision through a whole new
lens. We will look at how this approach applies to your spending, saving, investing, and even
your income choices. Be prepared for change and you can swing the odds back in your favor.
Unlike the casino where the house always wins, with a little education and work on your part you
too can always win!

-$<662/87,21Building wealth, not reducing debt, should be your
ultimate objective. Some debt reduction and debt consolidation planners obsess
on getting you out of debt, but that is only half the story. Minimizing debt is
great, but maximizing wealth is even better.

You can plan to build wealth and reduce debt at the same time. If you have a
relationship with a financial advisor, you might be able to do it in the
same unified process. Why just keep debt at bay when you can leave it
behind? Do yourself a favor and talk with a good financial advisor who can
show you ways toward financial freedom.
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CHAPTER SEVEN
RISKY BUSINESS

Dudc ou oton to scucn, o cucn to cgIt, o ou do not Inou uIut
misfortune may occur on the earth - Ecclesiastes 11:2 (nasb)
Big Mistake #7: Failing to properly understand
risk

hen an investor or financial advisor thinks about diversification, it is generally with
market risk in mind. Its worth remembering that there are other potential risks to
your money - and diversification can be valuable in helping you cope with them.
When you meet with a Iinancial advisor, at some point the talk will turn to your risk tolerance or
risk proIile . and you may receive a questionnaire intended to gauge it. Well, it seems simple
enough: the financial advisor is learning how conservatively or aggressively you would like to invest.
But actually, a risk profile signifies more than that.

Financial advisors often use a few
model portfolios which they adapt
for the unique needs of each
client. Your risk profile indicates
which of these model portfolios
might become a good basis for
your own, custom portfolio.
Investors are usually categorized
as conservative, moderate or
aggressive, with in-between
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categories oI moderately aggressive and moderately conservative also applicable based on
questionnaire responses.

Portfolios shouldn`t be one size fits all

How conservative are you? If you absolutely do
not want to risk losing money, and if your first
priority is consistent income to live on, you are
a conservative investor. If these are your
concerns and you are retired or about to retire,
you should not be offered high-risk investments.
If you retire with an aggressive portfolio and
your investments tank, it could take (many)
years to rebuild your savings, years you might
not have. However, many pre-retirees and new
retirees are moderately conservative: they are
cautious with money in their lives and dont
want to take on a risky portfolio, but they still
have a need to accumulate assets because they have either started saving for the future too late or lost
assets as a result of market downturns or poor or unfortunate financial decisions.
How aggressive are you? Aggressive and moderately aggressive investors commonly want to
match or beat the stock markets, or save for retirement at a highly accelerated rate. Some are
market junkies who watch Wall Street on a daily basis. Most oI them expect to build
substantial wealth someday; most of them are young or in the middle stage of life; most of them
have NOT been hit hard financially as a result of investing, and many of them have substantial
income or savings. The moderately aggressive investor is willing to wait a bit longer to reach his
or her goals, while the aggressive investor tends to be in a hurry by comparison.
KEY VERSE
When you are in tribulation and
all these things come upon you, in
the latter days you will turn to the
Lord your God and be obedient to
His voice.
- Deuteronomy 4:30

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Who is the moderate investor? Typically, the
moderate investor starts investing roughly about
the time of major life events - that first stable job
with a corresponding 401(k), a marriage, the start of
a family. Often, the moderate investor is a
younger investor saving or investing for long-term
goals (usually their childs college education and
retirement). These midlife investors frequently
have a balanced portIolio, with a mix oI
conservative and riskier investments across varied
investment classes. The portfolios of moderate
investors are often fine-tuned or revised to
become more conservative as they age. These
investors are willing to accept some losses and
risks and are pragmatic and usually educated
about the realities of investing and their
investment options. Some moderate investors are
retired or nearly retired, having either retained
their investment stance out of necessity (they need
to continue accumulating assets in retirement) or
out of preference (they do not want to miss out
when the bulls run on Wall Street).
Why risk tolerance is so important. Decades ago,
you used to hear horror stories about seniors
losing their life savings as a result of inappropriate
investments. Things have changed for the better:

KEY INSIGHT
I remember when I was 8 years old
and looked at this enormous roller
coaster at the local amusement park.
It seemed like it was way too scary for
me. After all, people were screaming
lilc crazy iIc wIolc ridc. I couldn'i do
it. Just then an older friend
grabbed me by the arm and dragged me
into the line. I tried my hardest to get
away, but there was no stopping him.
You will lovc ii! he
demanded. Finally came our turn to
ride to the death. We got on and my
heart was beating in my throat. Tcll
Mom I love her, I thought. The ride
took off like a bolt of lightning and the
next two and a half minutes turned
fron fcar io cciicncni. TIis wasn'i so
bad after all. Sometimes we are
fearful of the things that appear
difficult at first, but when we truly
experience them, we learn more about
ourselves and where God is leading us.
Nowhere worth going is risk free.
we now have questionnaires and in-depth discussions about risk tolerance. It is a very important
factor not only in terms of investing, but in terms of the client-advisor relationship. II youd like to
learn more about different investment styles or you feel you might be taking on too much risk as you
invest, I would urge you to speak with a qualified financial advisor.
Here are several risks you may not be aware of. Often investors fail to truly understand how
much risk they are taking on.

Business risk

Even today, there are people who have worked for one company for many years and who own
great amounts of corporate stock, perhaps as a significant portion of their 401(k) investments or

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overall portIolio. Are you one oI them? Heres a word Ior you: Enron. It is risky to link your
financial future to the health and viability of one company.

Investment advisor risk

Bernie 0DGH 2II
with Millions!

We can be thankful, as investors and as a society, that Bernie
Madoff represents an unfortunate aberration in the financial
services industry. Financial advisors, investment advisors, money
managers - hundreds of thousands of them work by strict legal,
ethical, and moral standards. II they dont, they risk losing their
livelihoods, or worse. But, very rarely, you do read stories of
financial services professionals who have proved charlatans. One
way to combat this risk is to check out the advisor. You can do it
through the free Broker Check record search offered by the
Financial Industry Regulatory Authority
(www/finra.org/brokercheck), and through your state securities
administrator. This risk, although thankfully rare, does give one
pause to think about the value of having a strong cash position and diversification beyond the
standard investment vehicles.

Brokerage risk

At mid-decade, if you had walked around Manhattan saying Lehman Brothers would go
bankrupt, few would have paid you any mind. But it happened - not just because of the financial
climate, but because of decisions management made. Of course, brokerages only handle your
investments; they are prohibited from tapping into your assets or
lending them out when they get in a jam. The Securities Investor
Protection Corporation protects up to $500,000 of your assets at
a brokerage - including stocks, bonds, money market funds, and
cash up to $100,000.

In the 39-year history of the SIPC, just 349
brokerage account holders have failed to get their entire
portfolios back.

But SIPC coverage doesnt cover everything - fixed annuity contracts,
commodity futures contracts, and certain investment contracts such as limited partnerships arent
protected.

Additionally, there have been a few brokerages that have lost their SIPC membership, for a
variety of reasons. Again, it pays to be vigilant, and to diversify.

Political risk

Americans dont always link politics and Iinancial pressures, except when it comes to oil and gas
prices. Yet earlier this decade - I dont have to tell you the date - the financial markets were

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rocked by an unimaginable human tragedy and a new kind of global threat. The plunge was
temporary, and it was a bear market at the time. But the DJIA fell 685 points in a day and
14.26% across the succeeding week.

These risks, too, make you think about the value of
diversification.

Currency risk

Many investors dont incorporate this Iactor into risk assumptions. But Iluctuating exchange
rates do present a risk element. If you have stocks in Canada that gain 6% but the Canadian dollar
loses 6% of its value relative to the U.S. dollar, so much for that return.

Inflation risk

Inflation - even moderate inflation - effectively reduces your purchasing power over time. This is why
growth investing is a priority in retirement.

Be diversified!

There may be many more ways to invest your
assets than you realize. The stock market is
unsettled . and perhaps its Iluctuations are
unsettling you. Its a stressIul time Ior the
economy and Wall Street, and you may be
concerned about your portIolio given whats going
on with oil prices, the real estate market, and rising
unemployment figures. It may be a good time to
review how your assets are invested. Is your
portfolio balanced? A balanced portfolio may help
you ride out stock market turbulence.

Are you retired, or retiring? If you are, this is all the more reason to review and possibly even

-$<662/87,21In any stock market climate, proper asset allocation
matters. In a down market, you could argue that it matters more than
anything else. Hands on, active asset allocation strategies are critical. Buy-
and-hold strategies are only suitable when you find good, quality
investments. Your time horizon, preferred investment style, accumulated
assets, life goals and financial objectives - these all have to be taken into
consideration.
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revise your portIolio. Frequently, people approach or enter retirement with portIolios that havent
been reviewed in years. The asset allocation that seemed wise ten years ago may seem foolhardy
today.

Often, people in their fifties and sixties feel they need to accumulate more money for retirement,
and that feeling leads them to accept more risk in their portfolio than they should. In the absence
of a salary, however, youll likely want consistent income and growth, and therein lies the appeal
of a balanced investment approach designed to manage risk while encouraging an adequate
return.
Why not take a look into your portfolio? Ask your financial advisor to assist you. You may find that
you have a mix of investments that matches your risk tolerance. Or, your portfolio may need minor or
major adjustments. The right balance may help you insulate your assets to a greater degree against
financial ups and downs.

Asset Allocation

Figure 1-1: asset allocation for the All Weather Portfolio as of 12-31-09
In 2009, while everyone else was losing money in January and February, our asset allocation at
www.faithbasedinvestor.com saved us. We use a combination of stocks, bonds, cash,
commodities like gold, and a host of other hedging instruments. Using a disciplined strategy paid
off as the market recovered as well. All in all, our All-Weather Strategy was up slightly over
50% in 2009. This will not always be the case, but shows that asset allocation can be one of your
best friends.

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CHAPTER EIGHT
SKINNY PIG

Monc s u gcut cnd, oncc ou scnd t o to uoI.
Peter Lynch

Big Mistake #8: Failing to save regularly

hats the problem? In general, when it comes to a lack of savings, it is often not a
question of low income, but a matter of high spending. While its very true that oIten
were put into situations where we must spend money (due to loss oI employment,
health care bills, home repairs, etc.), for many of us our excessive spending is merely a habit we must
learn to break . or at least control.
Many confuse the act of saving with hoarding. There are both
proper and appropriate ways to save and invest portions of
your money. However, there is a danger of investing to create
financial freedom apart from God. Where is the line? It will
come down to your heart and where your motives lie. The
motives must still involve God and His direction for your life.
Taking matters into your own hands and relying on wealth
alone will open the door to a materialistic lifestyle.

God calls us to use money for two main purposes: to take care
oI our Iamilies and to bless others. But these purposes dont
tell us how to balance faith and common sense. How do we
completely trust Him yet still use the intellect and common
sense He provides us? Many wait for a holy sign from above
when clearly God has moved and created golden
opportunities. Yet many fail to see them as that and continue
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playing the wait Ior God to move card. He already moved.silly!

I have met many strong followers of Christ who believe investing and saving show a lack of faith in God.
It reminds me of a story:

A man died and went to heaven, and when he got to heaven he
questioned why God allowed him to die. Earlier in the day the man
had turned on the weather report and saw that heavy rains and
flooding were coming and everyone should evacuate. The man,
lcing faiiIful, said, Cod will Icl nc iIrougI, so he did nothing.
The waters came in like a fury. The floodwaters began to rise and
he was forced to the second floor of the house. He saw a boat go by
and the two men inside the boat asked if he needed help. He
refused, saying that the Lord would help him. So they went on
their way. The waters continued to rise until he was forced onto
the roof of the house. Suddenly a helicopter came by and asked if
he wanted a lift. Again, he refused, saying, TIc Lord will Icl nc,
and off the helicopter went. The man died in the flood and
questioned why God would allow a man with such strong faith to
die. But who do you think sent the message, the boat, and the
helicopter?

The balancing act
There is a strong need for faith, but there also needs to
be a balance of God-given common sense. It is your
responsibility to provide Ior your Iamilys Iuture. First
Timothy 5:8 always comes to my mind: II anyone does
not provide for his relatives, and especially for his im-
mediate family, he has denied the faith and is worse than
an unbeliever (niv). Pretty strong words! You should
have faith but also the desire to find ways to provide for
your family.
By learning about the various options that are available
to you, you can make the best decisions possible to
maximize your financial future. Careful study, prayer,
and education are necessary. If you were buying a car,
would you buy the first one available? You would likely
do some research, comparing features, options, and
prices. Its the same with investing. There are several steps youll need to take to educate

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yourself in all the possibilities so you can focus on the type of investing that is most beneficial to you.
God expects His followers to be wise in the area of finances. If you do not desire to do this, you are
expected and commanded to seek wise counsel.
So how do you find more money?
Many people would like to reduce their spending
and increase their savings, but it seems like such
a monumental task that they simply dont take
any steps in the right direction. Sound familiar?
II so, dont shrug it oII any longer. Saving
money can begin right now, and you can start in
small ways. Here are several easy

Secret #1: ~Put it on the mantle

My grandmother used to use that phrase when I was making a major decision, generally related
to a purchase. She would say put it on the mantle, meaning that I should set it aside and think
on it. Thats great advice, Gram! When youre considering a large purchase (like a car) or even
small (like a pair of designer shoes), try putting it aside, even for just a week or two. Allow
yourselI time to think it through. II, aIter that time, you still Ieel its a good idea, proceed .
knowing its not just an impulse buy. II not, dont. Most oI us have made at least one (and
probably more) purchases of this nature that we have later regretted. What if you had the money
back for every such purchase? What if that money was collecting interest in your savings
account? It could really add up.

Secret #2: Pay yourself first

When you get a paycheck, you
likely pay your rent first, your car
payment second, your insurance
third, and so on and so on.
Somewhere at the very bottom of your list is you. Why are you at the bottom? Probably because
you know you wont penalize yourselI iI you dont make a payment to yourselI. My point is this:
hold yourself accountable. Start by putting money into your savings account first. Take care of
yourself before anyone else (except God), so there are no excuses at the end of the month. Unless
your monthly bills are higher than your monthly income, you should be able to determine a set,
comIortable amount that goes into savings every month . no iIs, ands, or buts. Stick to it!

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Secret #3: Shop smarter

Were all in a hurry, so its easy to grab items like snacks or coIIee when convenient. But think about it
. iI you stop at a convenience store Ior a 12 oz. coIIee every morning, thats probably
about $1.75 youre spending every day . that adds up to over $600 every year! What iI, instead, you
bought a $10 coffee maker for your office and bought your coffee grounds in bulk? How
much money could you save? And how could interest aIIect what youre saving? II you saved
just $600 per year in a basic savings account with a 5% rate of return, after 30 years you could
potentially have more than $30,000 . and thats after taxes! Start paying more attention to those little
expenditures. They can really add up!

Secret #4: See your destination
They say that hindsight is 20/20. Think about this: if 10 years ago you began saving just $200 per
month in a shoe box under your bed, then
today that shoe box would have $24,000 in it!
UnIortunately, you cant go back in time. But
you CAN look ahead. Use a financial
calculator (there are free calculators available
online) and start plugging in numbers .
calculate where you could be in 20-30 years
depending on how much youre willing to save
today. Once you know what you COULD
achieve, saving money could become your
favorite pastime. A competition (with yourself) to
see how much you can increase your future net
worth. Have fun with it!

Secret #5: Ditch the shoebox

Speaking of that hypothetical shoebox under
your bed . the money in that box might
collect dust, but it wont collect interest. And
while I seriously doubt that you keep money in a
shoebox, take a moment to consider WHERE and
HOW you save your money. While a
traditional savings account can earn you
interest, there are other options available to

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'217 %( /,.( %,*
GOVERNMENT

Wasteful spending
Huge deficits
No plan to pay back
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you that could potentially earn you more. Perhaps youve heard people speak about money
market accounts or CDs, but youre not sure what they are or iI theyre right Ior you. Its a good idea to
learn all you can and make informed decisions about your money.

IF YOU SAVE.

If you save $0 annually and spend
more than you make, you will most
likely end up fully dependent on
others (government, friends, and
family) and living in poverty.

If you save less than 5 percent of
your income annually and never
set up a plan, you will most likely
end up partially dependent (some
income, but still relying heavily on
others), one major crisis away from
poverty.

If you save 5 to 10 percent of your
income annually, you will most
likely end up not dependent on
others, but living paycheck to
paycheck.

If you save 10 to 20 percent of your
income annually, you will most
likely end up partially financially
free (can survive on your income,
but theres not a lot extra to help
others).

If you save greater than 20 percent of
your income annually, you will
most likely end up completely
financially free (can take care of
your major financial needs and
also lend a major hand to others).

The best advice I can give you is this - speak
with a financial professional. While saving
money is important, where and how you choose
retain and grow that money can have a
significant impact on your net worth in the
years to come.

Systematize your savings
Systematic saving is the process of saving a
portion of your income on a regular basis. It is
important because establishing or increasing an
emergency fund should be your first savings
priority in a financial plan. Unfortunately, most
people do not save on a regular basis. I have
found a key to long-term success is to save
automatically by setting up systematic, regular
savings. This helps you develop excellent
habits.

After giving, you should always pay yourself
first and create an excellent habit that will
reward you for a lifetime. For those who do not yet
have financial security and independence,
systematic saving and building a cash reserve are
the first steps (managing debt is a close sec-
ond, except in dire situations). You should look at
systematic saving as paying yourself before
passing what is left on to others. Money spent is
money that usually must be replaced by
working for it.

With an automatic savings plan, you formally
arrange with an employer or financial
institution to periodically set aside a specified
amount of money from your income or an
existing account. A planned approach differs
from this in that savings are not set aside automatically, but require that you deliberately set the
specified amount aside every period. Automatic plans are preferable because the transactions are
made by others, thereby avoiding the temptation to divert funds (out of sight, out of mind). Yet,
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planning for periodic savings, which is often part of a
budgeting process, is an excellent alternative,
especially if the routine savings amount is viewed as a
mandatory bill payment.

Place your own oxygen mask on first!
You are no good to anyone passed out on the
floor. If your finances are a mess, how can you
go and do all God is asking of you? How can you
fully help others when you need help also?

Having a savings plan will enable you to help
more people in the long run. I knew a friend who desperately wanted go on various mission trips but
debts and a lack of savings kept him from that calling. Too many people are missing out on
opportunities because oI a lack oI Iinancial stability. Dont make the same mistakes. Start
saving today for your future.

God expects us to save for both feast and famine - the best and worst of times. Start by having an
emergency fund, then move on to intermediate, and then long-term goals. The more you save today, the
better financially prepared you will be in the future.

-$<662/87,21
1. Develop an emergency fund; decide on your cushion. Start with 3-6 months
of emergency reserves, then move on to a full 12 months worth.
2. Research the best place to park your emergency funds. Yields are low
today, but the more you have saved the greater the opportunity to find
higher rates.
3. Commit to using your emergency fund for emergencies, not spending. This
should go without saying but the reality is many pay too much attention to
getting out of debt. They pay off the credit cards and then rack them back
up after the first emergency.
4. Put your savings programs on autopilot (save automatically). Auto debit,
pre-drafts and regular saving will increase your odds of success.
5. Save to help your family. The more you save today for your children or
grandcIildrcn's college education and your future financial freedom the
better off you will be.
6. Save to help others: Improve your community, improve your state, improve
your country, and improve the world!
7. Use the Three-Ten Rule. Donate at least 10 percent, save at least 10 for
short-term needs, save at least 10 percent for your future, and live off the
rest! This formula has made many millionaires!

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CHAPTER NINE
LOST CAUSES

In c, us n cIcss, octIougIt uns. - Charles Buxton
Big Mistake #9: Using debt to consume rather than
to conserve.

Good, bad, and ugly debt

ebt is often viewed in the wrong light. People tend to either abuse it like a drug or run
from it like a sin. Debt is certainly not a sin, but should be used with extreme caution.
UnIortunately, most people dont know the proper use oI debt: to conserve assets rather
than for personal consumption and/or depreciating assets. In order to pursue true wealth, you
need to understand the difference between good and bad debt. So how can you tell the
difference?

Here are the working definitions of what I am talking about:
Good debt: Good debt involves purchasing something that will
gain, retain, or create value. A home mortgage is a prime
example of good debt.

Bad debt: To put it simply, bad debt is any debt you incur
when buying something that will lose value.

Ugly debt: Ugly debt is debt incurred when purchasing something
consumable (meaning it will have no further value). This seems
logical, right?

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CREDIT JUNKIE!
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A driving factor
Many people assume bad debts because thats just how it is. But thats not necessarily how it has to
be. For example, look at vehicles. Many Americans buy cars via automobile loans. But a
new or late-model car loses value the moment you drive it off the
lot, and it continues to lose value with every mile it travels. So
why incur bad debt for this? Well, for many a vehicle is simply a
necessity and a loan is the only means they have available to
obtain it. But a large percentage of Americans purchase more car
than they really need or can aIIord. Its important when Iacing
bad debt to keep that debt in check. Purchase only what you
need, and with a plan to pay it off as quickly as you can.

Can bad debt turn into good debt? Yes! Lets say you purchase a
vehicle by taking out a loan for a portion of the costthats bad debt.
But if the vehicle is a hybrid or electric vehicle that
typically has a high resale value and saves you a substantial amount of money on gasoline, your
bad debt could turn into good debt.
What about student loans? Your education is
used only by you and cannot be resold. So is
that bad debt? As I mentioned before, if a debt
creates value, then it can be
considered good debt. A student loan
definitely falls into this category, as higher
education creates increased earning
potential. Most people want to be debt-free.
That takes time. Until that time, try to get a
handle on which kind of debt you are
incurring.

Get a handle on debt

Money does not make up for the things you
lack in your life. It may temporarily solve
problems but is never a solution to a
problem. It is kind of like using a
screwdriver to drive in a nail. While it
probably can be done, it is not the most
effective way to complete the task. Just like
the expectations that once you have more
KEY INSIGHT

Is money burning a hole in your pocket?
How are your spending habits? Are you
feeding the habit or is the habit feeding
you? Are you using your resources wisely
or do you spend like there is no tomorrow?
For many, money burns a hole in their
pockets. The number one remorse these
days sccns io lc luycr's rcnorsc. How
often do we go out and spend money on an
impulse? It happens all the time.
Sonciincs, ii's an iicn or iwo ai iIc
grocery store. I remember this one time I
went shopping on an empty stomach, I
came home with bags full of junk food. It
was completely ridiculous. How many
things are in your garage or basement that
you just had to have and sit around
collecting dust? Instead of buying dust
collectors, what if we used our money
wisely? I know there will be times where
spending gets off track, but with a plan
and some focus you can minimize the
damage.
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money, your problems will go away.
This is a fantasy. Without changing your
habits, you will continue to make the same
mistakes.

II you dont keep a handle on debt,
things get out of control. You need to
avoid impulse spending and
overextending yourself. You really have
four choices of what to do with your
income: spend, save, lend, or invest.
Freedom and power are better than
momentary pleasures.
This chapter on debt could be a whole book. I will provide you with some sound wisdom relating to
debt management, but if debt is your number one concern, seek wise counsel. Of all the books that I
have read on debt management, Dave Ramseys Total Money Makeover is one of the
finest. Winning at money is 80 percent behavior and 20 percent head knowledge, according to Dave.
In his book, he provides a practical, how-to blueprint to get your financial house in order. Swim against
the tide like salmon. There are no shortcuts to wealth.

Warning, warning

I think it goes without saying that there are many dangers
of debt. When used properly, debt can help you reach
short-term and long-term goals. Debt should be used with
extreme caution due to its potential for enslaving people in
financial bondage. Debt presumes on your future, and
most people do not know what the future holds. You may
be out of assets, out of a job, or have new developments in
your financial life. If you commit to a loan, you impose on
your future by committing money you may or may not
have in the future. When you commit yourself to
payments over time, you are presuming: no pay
reductions, no loss of job, and no unexpected expenses. That is a dangerous and improbable
assumption.

Debt can also lower your standard oI living in the Iuture. II you borrow today, youll have the
principal and interest to pay back over time. This will reduce your future income because you are
financially committed to keep making monthly payments. This leaves you less to give away or to
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invest for your future. Compound interest, which is interest on interest, works against you when you
borrow. If you borrow $1,000 on a credit card and make only the minimum payments, it will take you
years to pay off and you will end up paying significantly more for the item you
borrowed money for. It can often cost you seven to eight times the purchase price!

There are other factors that should go into a purchasing decision: the purchase price, ongoing
expenses, finance charges, and late payment fees. Credit can be dangerous as it is so easy to say yes to
payments without realizing you are saying no to your financial future. The right question is not, Can
I aIIord it? But rather, Do I need it?

Destroy the shovel

Millions of people have dug themselves into a hole with credit card
debt. If you are in a hole, stop digging. Destroy the shovel. Get rid of
your cards so that you do not incur any new debts. In order to solve
the current problems, you have to reduce your
Iuture problems. This has to be a choice you make. Dont buy things
you cannot afford.

When Elizabeth came to see me she was up to her eyeballs in debt. She was robbing Peter to pay
Paul. She had seven credit cards and because of late payments, her interest rates had soared to 30
percent or more on each of her cards. She had accumulated more than $20,000 in debt and
couldnt even aIIord to pay the interest on the cards. She was then using cash advances to make
her monthly credit card minimum payments. My first bit of advice was to cut up all her
remaining cards. She had to stop increasing her balances in order to chip away at the current
balances.

Plastic surgery

Credit card debt is one of the biggest obstacles to financial
freedom. Credit cards eat up valuable dollars you could be
giving away to churches, ministries, and charities. They also
prevent you from saving more. If credit cards are a thorn in your
side, here are some rules to live by:

Rule 1: Pay off your balance each month.
Rule 2: If you violate rule 1, even once, cut up the card.
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This may sound harsh, but believe me, it is the best way to prevent getting into more trouble. The best
credit card is one that is being paid oII each month. Dont let the credit card companies take your
wealth away.
Dan went to his boss and said, I need a raise! And it may be helpIul Ior you to know that there
are three other companies aIter me. Is that so? asked his boss. What other companies are
aIter you? AIter a little more prodding Dan replied, Those would be Visa, MasterCard, and
Discover.

Killing me softly with interest

Have you ever heard the saying Im so poor, I cant even pay attention? It is so true with
credit cards. Most people do not pay attention to the fine print. The biggest financial mistakes
that I see on a day-to-day basis mainly deal with credit card issues. It is not so much the balance that is
the problem, it is the interest. This is the biggest wealth-killer. If you have even a $10,000 balance at
19.99 percent, this is almost $2,000 a year in interest. That is $2,000 that could have
been donated or invested. This adds up over time, especially when you are making only the
minimum required payments.

You will make very little progress if you are just sending that minimum payment each month.
This is where the credit card companies make most of their profit. If you owe $10,000 and make

KEY INSIGHT: As you begin to develop goals and create new ones, here are
some helpful guidelines to keep you on track:

1. Ensure your goals are working toward something that is important to you,
sonciIing iIai Ias ncaning and urosc. Don'i jusi nalc a goal for iIc salc of
making one or write something that just sounds good.

2. New goal can not contradict your other goals unless there has been some sort of
change in your vision or philosophy or previous goals sent you don a wrong track.
Your goals should have harmony with one another and no pull you in
various oosing dircciions. Do your goals coniradici Cod's Word?
3. Look to develop goals in at least six areas of your life:
Financial and Career
Family and home
Spiritual and Ethical
Physical and Health
Social and Cultural
Mental and Educational
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the minimum payments, you will often pay two to three or more times the principal amount in
interest. Thats right, over the liIe oI that debt; youll pay $10,000 or $20,000 or more to service that
debt. So a $10,000 purchase may in reality end up costing you $20,000 or $30,000. Credit
card companies make money by killing you with late fees, high interest payments, and confusing
small print. Dont become victims oI their game; get out oI debt. You cant achieve true wealth
carrying credit card debt.

Get the credit card monkey off your back

In order to make headway in paying off your credit
card debt, you need an aggressive course of action.
This requires lowering your interest payments,
paying off the smallest balances first, and paying
more than the required monthly payments. In order
to get the monkey off your back, you have to first be
prepared to fight back. In this war for your wealth,
pacifism leads to poverty.

You can lower your interest by following a simple method:

1. Find out your current interest rates on your cards.

2. Shop around and find what competing cards are charging for interest.

3. Call your card companies and ask to speak to a supervisor or manager. Use competitor
rates to negotiate your rate down. Keep escalating your request up to the next manager if you do
not get the answer you are looking for from the first manager you talk to. Be persistent. Dont back
down.
4. While you are at it, negotiate to have your late fees reversed. This is also negotiable. Be
prepared to fight back.
5. Set up your future payments to that company to be made automatically. Either use a bill
payment company or have your monthly payments scheduled to automatically hit before their
respective due dates.
6. Continue making the largest monthly payment you can makeabove the minimum
payment.
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Jane came to see me a Iew years ago. She didnt think she could ever get out oI debt. She and I
sat down and figured out that at her current pace, it would take her twenty-eight and a half years
to pay off her debt. Her interest rates were between 19 percent and 27 percent. She followed the
action plan listed above and negotiated her rates down to 7-12 percent. She paid off the smallest
balances first and kept allocating money toward debt repayment. Within three years, Jane had
paid off all her balances. She saved more than twenty-five years of payments and nearly
$100,000 in interest charges. She is now able to take the money she was paying the credit card
companies and give more to her church and save more for her future. Jane got the credit card
monkey off her back.

Should you pay off your mortgage early?

Many people believe the best way to
pay off a home mortgage is to do so
as quickly as possible. Such tactics
include taking out the shortest note
possible, accelerating payments
through bi-weekly programs, or
sending the bank extra money each
month to go toward principal. This
may make sense for some people,
but more often than not, this way
may not be the wisest choice. What
starts out as great intentions can
actually put the homeowner at
greater risk of foreclosure. On top of
that, these early pay-off strategies may realistically take longer to eliminate the mortgage
payment than a non-shortened strategy.
Imagine this: you and your neighbor have identical houses - same square footage and nearly identical
features. You have diligently been paying down your mortgage and have 50% equity. You neighbor
on the other hand took out 100% financing and is only making interest payments. If you and your
neighbor hit hard times, which home do you think the bank will seize first?
Your house will be seized first because you have equity and your neighbor does not. This isnt the
least bit fair, but neither is life in many cases. You would think you would receive credit for your
diligence but instead you will be the one foreclosed on the fastest.
Many do not realize the homeowner who has the most equity has the greater risk of losing their
home. UnIoreseen things happen all the time, especially in todays economy. People lose jobs,

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illness strikes, companies close. Many think that extra money being poured into the house is a wise
investment, but it really is a lot riskier than most people comprehend.

Additionally, people who want to hurry and pay off their homes are also potentially lowering
their tax advantages in addition to losing control of their money by putting it into something that is not
liquid. Theyre also losing the opportunity to earn interest on those dollars. For many
people, its a smarter idea to keep the extra money (that they might have put towards paying oII
the mortgage quicker) in their control where they have access to it. Handing the extra payment to the
bank rather than banking it yourself (keeping it earning for you), increases the rate at which
the bank gets its money (something the bank isnt going to complain about), but it might not be a good
idea for you financially.

Another Iallacy that people dont consider is that they probably arent really going to stay in the
home for the rest of their lives, so giving the bank that extra money in attempt to pay it off
quickly makes even less sense. Very few people are in a house for 30 years these days and there
is specific marketing the banks employ to entice one to refinance or upgrade if the loan nears a
payoff. The bottom line is that it is important to understand how the economics and risks of
sending the bank extra money, or locking into a higher monthly payment, really impact you.
Determine the proper objective first then determine the method, which will help you make a
proper decision.
-$<662/87,21
6 Steps to Get Out of Debt

1) Make a budget. Set a budget, and you can stop frivolous expenses and
redirect the money you save to pay down debt.
2) Get another job. I lnow, iIis docsn'i sound lilc fun. Dui Iaving norc
money will aid you to reduce debt more quickly.
3) Sell stuff. The Internet has proven that everything is worth something.
4) Ditch the big car payment and drive a cheaper car. Get a car that
makes sense instead of a statement. Your wallet will thank you.
5) Pay off all debts smallest to largest. Knock off even a small debt, and
you have an accomplishment to build on - encouragement to erase bigger
debts.
6) Once smallest debts are paid off, next pay off the debts with the
highest rate of interest. This will lower the interest expenses you are
paying.
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CHAPTER TEN
Come on lucky # 10

I u cson gcts Is utttudc touud nonc stugIt, t u Ic stugItcn
out almost every other area of his life. - Billy Graham
Big Mistake #10: Gambling with your assets instead
of investing
Roll the dice?

re you investing or gambling? Your
thoughts and attitude reveal the answer to
this question. Many people are willing to

Gamble
take risks when they are fairly confident they will
win, but iI they lose, then high risk wasnt what
they wanted. Many place too much value in risk
tolerance questionnaires. They place too much
weight on answering questions about risk then
choosing investments based on a questionnaire.

This is a dangerous way to
invest. This doesnt mean
considering you shouldnt
consider your risk tolerance.
However, too many people
rely on their tolerance when
choosing their investments

78
VERB: gambled , gambling ,
gambles
1. To bet on an uncertain
outcome, as of a
contest.
2. To play a game of
chance for stakes.
3. To take a risk in the
hope of gaining an
advantage or a benefit.

Source: American Heritage
Dictionary
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and do not know or understand what they are
investing in. This is form of investing is
gambling.

The key to avoid gambling is to fully understand
any investment you make. If you have important
financial decisions to make, it is prudent to seek
sound financial advice from someone who can
provide independent counsel and look at your
interests first. Finding such persons is not
always easy given the self-interests of many
financial institutions.

Gambling in disguise

A lot of people think they are investing when in
reality they are gambling. Many hand their
money over to an advisor, money manager, or
Invest
VERB: invested , investing ,
invests

1. To commit (money or capital)
in order to gain a financial
return.
2. To spend or devote for future
advantage or benefit.
3. To devote morally or
psychologically, as to a
purpose; commit.

Source: American Heritage
Dictionary
mutual fund company and have no idea where they are investing, yet hope for the best. Then if
they lose a large portion of their investment they are surprised or disappointed. If you went to a
casino and expect luck at the roulette table, you would also have to expect to lose money.
When many invest, they turn to mutual Iunds and stocks hoping that the same type oI luck will
make them a fortune. Yet they are surprised when they lose. Though I agree the odds are more
in your favor in the stock market than at the casino, but this mentality is similar to that of
gambling.

How to avoid gambling
Do you realize when you invest, you are investing in people? Even you think you are investing
in a service, a particular stock, or mutual Iund, you are actually investing in a companys
integrity, its ability to create value, and the ability to bring their services/products successfully to
the marketplace.

The product or service may be fabulous, but its success
relies on its people. How many times have you seen
companies lose money even though they have a fabulous
product or service? This often happens because of poor
management decisions, greed, or other inefficiencies.
Though it is easier to make money with a great product
or service, do not underestimate the importance behind
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the people managing as this will ultimately determine how successful your investment will be.

One oI the best ways to ensure that youre not gambling is to invest in your education. Every
person has at least one idea, skill, or talent within them that they could potentially capitalize on
in the marketplace. Too few people have enough faith in their own abilities to create value for
others. They think that investing in stocks will make them rich, but the truth is that most people
who are rich got there by investing in their own business, dreams and ideasthings they have
more ability to manage.

You hold the keys in your hands

Do you watch others and say hey I can do that too?
Maybe you have a friend who has made a lot of money in
one business venture or another and you want to follow.
Before investing in anything, the question should always
be is it right for me? Yes, someone else has succeed at it
- whether it be real estate, stock market investing, or
running a business, but is it right for you?

How will you know what types of investments are right
for you? Do you have passion, skills, and knowledge in regard to any particular type of
investing? When you have knowledge and attitude for certain types of investments, the more you
know the less it becomes gambling.
The line between investing and gambling is often blurred, but a surefire away to minimize it is to fully
understand what youre investing in and why you are
investing in it! Why do people spend more time researching
a vacation than researching an investment? Many blindly
Iollow the advice oI another proIessional without
researching what all of their financial options are. If you are
going to invest, it is critical to take enough time to
completely understand what you are investing in and why.
The path to riches
You dont have to run a business, or buy a business, or
invest in real estate or in the stock market in order to get
rich. One or all of those things might be perfect for someone
else, but horrible ideas Ior you. Were all made diIIerently.
Each oI us has unique giIts and abilities. Theres not one
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perfect way to richesit all depends on who you are
individually.
However, contrary to popular belief, there are safe ways to
invest that produce high yields, while at the same time
exposing you to very little risk. But first you have to know
what youre really aIter, and why.

Most people believe that high yield only exists in a
world of high risk, and low yield always equates to low
risk. In many situations, looking merely at product, that
is true. Banking products such as CDs and money
market accounts seem to be low yield and low risk. True
risks are often not accounted for however, especially when it
comes to inflation and opportunity risk.
The ideal, however, would be to find a way to invest where high
yields would be possible with a low risk. While specific strategies
are beyond the scope of this guide (simply because strategies and
techniques will be diIIerent Ior every individuals situation), there
are some basic things you can do to create a favorable scenario
for yourself, but the key is to ask the right questions.

Questions to ask before making ANY investment?
Why exactly am I choosing this particular investment?
How confident am I this investment will offer a good return?
What is the worst-case scenario with this investment? Am I comfortable
with this possibility?
Does this investment potentially compromise my moral, religious or social
beliefs?
Does this investment line up with my financial plan?
Am I making this investment based on emotion (i.e. greed or fear)?
How passionate am I about this investment?
Every investor should have an investment policy statement
An investment policy statement, or IPS, is the foundation of a good investment strategy. It gives
you an overview of the whole investment plan: the asset allocation, the objectives, the asset
management approach and the ground rules for communication between you and your advisor.

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A good IPS defines your time horizon, your risk tolerance, your liquidity requirements and
income needs, your return requirements, and your tax concerns. It also notes any special needs and
circumstances. But most oI all .

Your IPS states the parameters by which you invest. You might consider yourself a value
investor, a growth investor, or a conservative investor. With that preference established, your IPS
defines a long-term asset allocation for you: a way to assign your invested assets to diverse asset
classes in a way that suits your preferred investment style.

The GPS for your portfolio

Think of your IPS as long-term GPS for your portfolio. The goal
is to set the asset allocation in a way that can potentially give you
the highest possible rate of return corresponding to an acceptable
level of risk.

Your IPS keeps you Irom getting oII track when it comes to investing. Over time, your
financial advisor keeps an eye on your portfolio, to see that the assets inside it stay within the
allocation boundaries set by your IPS. (This is why quarterly reviews are so essential.)

Periodically, your portIolio may need to be rebalanced. Heres why. As months go by, the ups
and downs of the investment markets will throw your asset allocation slightly or dramatically out
oI whack. As an extremely simple example, lets say
you start out with 25% of your assets in U.S. large
caps, 15% in U.S. mid caps, 15% in U.S. small caps,
IS YOUR FINANCIAL
HOUSE IN ORDER?
20% in foreign shares and 25% in bonds. Suddenly,
small cap stocks have a great quarter, and thanks to the
great returns, you wind up with 21% of your
assets invested in small caps and only 19% in bonds.
Great, right?
No. Whats actually happened is that your risk has
increased along with your return. A greater
percentage of your assets are now held in the
comparatively risky stock market, removed from the
bond market. So while the short-term gains have been
great, its time to rebalance according to the parameters
set by your IPS so that you can help
reduce your risk exposure.
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For tax-deferred investment accounts, this is easily done: you simply transfer assets among
accounts to restore the target allocations. Future contributions occur according the IPS
parameters. When it comes to taxable investment accounts, it is usually best to ramp up future
contributions to the underweighted funds rather than sell portions of a fund and trigger taxes.

Remember that you are a balanced investor. Your IPS is designed to help you invest in a
consistent, appropriate way, a way that matches your preferred investment style. Without an IPS, you
invite impulse, emotion and a short-term focus into the picture.

-$<6SOLUTION: Though there are many choices for your investment
dollars, only one typically leads to wealth: owning a business. If you look at
the wealthiest people in the world, they share one thing in commonthey
own businesses. You can either start your own business or invest in someone
clsc's lusincss.

:K\,QYHVWLQ2WKHU3HRSOHV%XVLQHVVHV"
TIcrc arc nany ways io invcsi in oiIcr colc's lusincsscs. TIc iwo nain
ways are privately and publicly traded companies. While private equity can be
rewarding, I recommend focusing on purchasing publicly traded companies
otherwise known as stocks.

Why Start Your Own Business?
Many 9-to-5 workers have dreams of starting their own business one day. Do
you dream of someday owning a business? Starting your own business allows
you to be your own boss and choose your own hours. However, the best part
is knowing what you are capable of and knowing you gave it a shot, even if
you fail. There is nothing worse than looking back on your life and thinking,
What if I had succeeded back then? I could be in a better place now.

When you were young you were advised to go to school, get good grades, get into
a good college, and get a good job. If you followed this formula you were
supposed to land a high-paying job, become wealthy, and ride off into the
sunset. Two words for that plan: Yeah, right!

WIai, you didn'i gci iIai si-figure-a-year job right out of school, or not at
all? If you work for someone else, imagine how much money your employer is
making to be able io afford you and your coworlcrs' wagcs and siill rcnain
profitable. While you are working for someone else you are helping them
luild iIcir own drcan. TIc cnloycr docsn'i siari a lusincss so iIcy can
employ you, they do so to fulfill their own dreams and you are a part of their
vision.

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CONCLUSION
SO WHATCHA GONNA DO?

TIc sccct to c s to Icconc u go gucnot u go
getter - Sir John Templeton

hank you for making it this far! Congratulations. You have learned ten mistakes that
could jeopardize your financial future. Sadly, I have seen many fall victims to at least one
of the ten mistakes. The keys are to be aware, make mental notes of which are
affecting your personal situation, and commit to taking action.

Being aware is halI the battle, taking action is the other.
Now, you have three options for which to do with the
information you have read thus far:

Option 1: Do nothing! You finished this book, but nothing I said
will convinced you to take action. You will continue
doing the same things in the same way, and you will continue to get
the same results.

Option 2: Incorporate a portion of what I recommended into your
life. You may accommodate some of the new
information in your view of the world. Your brain gets it, but it
wont quite travel to your heart.

Option 3: You will make changes in your life. The principles
alone in this book will not change your life, but taking action to
implement these principles in your life can!

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I shared this in The Faith-Based Millionaire, but thought it may inspire you to get started:

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.

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Additional resources:
1. www.jayperoni.com: books, eBooks, blogs, access to The Jay Peroni Show, and much
more.
JAYPERONI.COM

2. www.faithbasedinvestor.com: access to faith-based investing ideas and recommendations

FaithBasedInvestor.com can help you find your way using a GPS
System based on biblical principles:
Grow your weaIth: We'II show you how to IInd Investments that reIIect your ChrIstIan vaIues,
morals and beliefs. Each month you will receive specific investment recommendations and
advIce. We'II teII you what to buy, when to buy, and when to seII. t onIy takes a few minutes
each month.
Protect your wealth: Our recommendations are designed to help you weather the storm,
gaIn peace oI mInd, and have conIIdence that you're headIng In the rIght dIrectIon. WIth two
faith-based modeI portIoIIos, you'II know exactly what to do.
Share your weaIth: 8y havIng more you can gIve more and heIp advance Cod's kIngdom.
Financial freedom allows you to help more of His people. We provide timely financial articles
to help you better manage your finances.

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3. www.faithbasedinvestor.com: Access to professional money management tools and
financial planning from a biblical perspective.
Faith-Based Portfolio is a premiere portfolio service that allows individual investors to
take control of their investments.
The Faith-Based Portfolio Service provides a diversified asset allocation model portfolio
with specific buy and sell instructions for investors who manage their own money. We help
investors place their faith and values first in the investment process. If you are an investor who
lacks the time, resources, or knowledge to research individual investments and place them in a
properly diversified portfolio than the Faith-Based Portfolio Service is right for you! We
provide you with everything you need to manage your own investments: all the research,
analysis, and asset allocation tools designed specifically for you.

4. Thrive Class & Coaching: Want to take a four week intensive wealth building course
and learn the keys to get out and stay out of debt, invest more with a biblically based
plan, and understand the ins and outs of growing, protecting, and sharing the wealth God
entrusts to you?
For One on One Coaching: www.jayperoni.com/coaching

Also by Jay:
The Faith-Based Millionaire:
Jays Iirst book on how to put
together a faith-based financial
plan. Jay shows you how to
unlock wealth by placing
principles before profits.
The Faith-Based Investor:
Jays second book on Iaith-based
investing. Jay shows you to
grow, protect, and share wealth
during uncertain economic
times.

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Biblical Principle References: The challenge for you!
Spend the next twelve months following these biblical financial principles and see if your
finances have improved:

The Keys

Ownership

Integrity

Generousity

Planning

Budgeting

Borrowing & Lending

Savings & Investing

Legacy Planning

Key
Principles

God owns 100% of
everything

Deal fairly with others

Give generously

Plan ahead

Spend less than you earn

Borrow cautiously and
repay, lend freely

Establish a savings plan

Make provisions, don't
hoard

Key
Scriptures

Hag 2:8, Ps 24:1, & 1Chr
29:11-12

Col 3:22-24, 1Tim 6:20,
Pro 13:6, Jam 4:13, & Pro
28:19

Lev 27:30, 2Cor 9:7, &
1Tim 6:19

Pro 6:6-8, Pro 21:20, &
Luk 14:28-30

Pro 25;28, Gal 5:22-24,
1Tim 6:6-8, Pro 14:24,
Ecc 5:10

Pro 22:7, Rom 13:8, mat
6:24, & Ps 112:5

Pro 13:11, Ecc 11:2, Pro
28:19, & Luk 12:13

1 tim 5:8, Ecc 5:13, Mat
6:28, Mat 28:20

Key
Questions

How do I best look after
God's money? How do
I completely trust Him?

How will I define
success? How do I find
moral responsible
investments?

What should I give and
to whom? How do I give
and when?

How will I set financial
goals? Who will help me
plan?

How do I increase
income and/or reduce
expenses?

How much should I
borrow and for how
long?

How do I save without
hoarding? How do I
multiply my blessings?

How much insurance is
wise? How do I create a
lasting legacy?

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10 MISTAKES that Could

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