Financial commandments

Last updated on May 13th, 2019 at 02:21 pm

Some healthful planning advice from business peers down under

Harry S. Dennis III
For SBT

Hey readers, have you seen the financial bloodshed with the markets? Have you asked your trusted financial advisors what went wrong, only to be told, "Don’t worry, be happy. It’ll all come back, if you just wait long enough!"?
Oops … shucks. Forgot. One year does not a portfolio asset evaluation fairly make. If you’re 45, for goodness sakes, you have lots of years to recoup it all – and more. If you are 75, however, it gets a little dicey. Oh well. And if you need liquidity with a healthy gain, oh well, again.
An alternative thought pattern? This month I’m going down under (no pun intended with respect to the Dow, the NASDAQ, and S&P 500). Our fellow TEC colleagues in Australia have adopted some interesting financial commandments that I would like to share with you.
They make a lot of sense to me. See what you think. In many respects, these 16 dictums could almost sub for a credible list of New Year’s resolutions. They’re also some stiff insulation against the volatility of the markets and the obvious economic slowdown that, if we aren’t experiencing it, we are reminded daily by the media that we should be.
1. Thou shalt avoid conspicuous consumption. Remember what grandma said. "A penny saved is a penny earned."

2. Thou shalt avoid putting assets in your name. To do so makes the IRS salivate.

3. Thou shalt never co-sign a loan for anyone. Well, my daughter proved it’s OK, and I’m proud of her for it.

4. Thou shalt carry adequate liability insurance. Not that expensive if purchased with care, and it can save your bacon in a litigation scare.

5. Thou shalt not serve on a board of directors. A board of advisors, like TEC, is much safer from a liability standpoint.

6. Thou shalt avoid all personal guarantees. Don’t give away the marbles when you don’t have to.

7. Thou shalt operate thy business from a corporate entity. C", "S", "LLC", – you bet.

8. Thou shalt not go into business without a detailed business plan. Without it, absolutely any road will probably get you there.
9. Thou shalt never enter a partnership without a simple fool-proof plan for getting out. Fact: most partnerships don’t make it.

10. Thou shalt never put all of thy financial eggs into one basket. Variety has always been the spice of life, right?

11. Thou shalt always assume the worst; thou will probably be optimistic. Remember, these are financial commandments, not psychological ones. In that vein, "remain happy, wealthy and reasonably intelligent," especially when it comes to your financial decisions.

12. Thou shalt accumulate cash in the following order: tax-deferred, long-term capital gain, ordinary income. Enough said.

13. Thou shalt commit to a review of your estate plan, ensuring that the bulk of your assets are irrevocable trusts. Uncle Sam will accept your deposit anytime, especially at death. Keep him at bay.

14. Thou shalt diversify internationally. We are a global community, to be sure. So let’s take advantage of it. Get into the global community – if nothing else than through a mutual fund of choice.

15. Thou shalt take the time to have investment discussions with thy children. Use your wisdom to better help them manage money and future inheritances.

16. Though shalt accept the fact that only one in 10 readers will implement three of these "down under" recommendations.

Will you be the "one in 10"? Or perhaps you will be among the world of procrastinators who say, "Harry, next year." Don’t get me wrong. I might very well be with you. Until next month, let’s keep it our secret!
Best of the New Year to you, your family and fellow employees.

Harry S. Dennis III is the
president of TEC (The Executive Committee) in Wisconsin and Michigan. TEC is a professional development group for CEOs, presidents and business owners. He can be reached at 262-821-3340.

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Karen Vernal is executive vice president and chief dreamer for Vernal, LLC (www.ccvernal.com), a Milwaukee based leadership and human resource firm, dedicated to “igniting the spirit and skills of leaders.” As an executive coach/consultant, she was recognized by the Green Bay Packers for her guidance in their organizational planning process. She was also the recipient of the 2011 Marquette University Leadership Excellence Award.

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