Midday Money: Disability

Happy St. Patrick's Day!  Nancy was on the "Midday Money" segment of WLBT's Midday Mississippi.   Watch it online here:  MIDDAY MONEY: DISABILITY.

Using Your Money For Good

"Money is the root of all evil" is the first suggestion Google makes when searching about money. This is reflected in a lot of people's attitudes about money. While money is indispensable in the modern economy, we often feel a bit of disgust or shame about accumulating it and spending it on ourselves. It does not have to be this way! Beyond just living off of the profits from your hard work, there are plenty of ways to use your money as a force for good in this world. Here, we will briefly look at three ways, and hopefully I will expand those into longer posts later.

You can just give it away:

• If your money really disgusts you, or if you just know of someone who needs the money more than you, you can always just give it away. Each U.S. taxpayer can give $14,000 to each other without running into any gift tax issues. (If you're interested in going overboard, the giver has to pay the taxes.) There are a lot of uses in estate planning here. If you are thinking of giving to your children or grandchildren, just giving cash is the most advantageous way to do it with no strings attached.

You can give it away and collect some great benefits for yourself:

• If you don't just want to give unrestricted cash to a child or grandchild, consider a college savings account. Each state runs a 529 plan with possible tax benefits within that state.

• Give to charity - with more control. A Donor Advised Fund is an account you can set up which acts like your own personal charitable foundation. You can donate cash, appreciated stock or other assets for an immediate tax deduction. From there, you can grant money to a regular charity at any time. This is useful for taking advantage of the tax break before actually planning who and when to donate it. If you have a stock with a large capital gain, you can transfer it to the account, get the full amount as a tax deduction and not have to recognize the gain either. This could be a huge tax benefit!

You can invest it in responsible companies or projects who will provide you with a return while they make a positive impact in the world:

• Sustainable and Responsible Investing is attracting a lot more attention and money these days. Sustainability and Responsibility may form part of the core thesis of your investments, and you can generally expect similar returns investing this way as you can expect conventionally. You can either pick stocks and bonds yourself or you can invest through a fund. My main caution with investing through a fund is making sure that your actual beliefs and desires are accurately reflected in the fund management and portfolio. With a lot of investors and views to please, not everyone will be perfectly satisfied. That being said, there are now some really good options out there from both an investment standpoint and a sustainability standpoint.

• Some bonds are designed to finance noble causes. There are bonds that directly finance solar panel installation, microfinance, women and minority business support and many other socially responsible projects. These often have fixed terms and lower risk than an equity investment. You get to support the project and still earn a return on your money!

• Some credit unions also focus on financial education and anti-poverty practices that you can support just by opening a savings account!

• Some municipal bonds may be funding projects or government entities in your community you want to support. The interest payments are often tax exempt as well. Participating in a new offering directly lowers the cost of borrowing for the issuer. Be very careful here as these bonds can fund anything from bridges and schools to prisons and factories. Any broker or investment advisor should be able to tell you not only the terms and risk of the investment but the issuer and use of the proceeds to help you make a decision.

Keep in mind with each of these options there are a LOT of considerations to make. Consult your financial advisor as to what the implications here are. There are a variety of ways you can use your money for good and it may be refreshing to learn that you can do good with your money AND earn a decent return as well!

Not all of the investments are appropriate for all investors. This is only meant to give you some insight into the different ways you can use your money for good. As always, consult a trusted financial advisor before making any decisions on gifting, taxes or investing.

The Debt Hangover - Midday Money on WLBT

This afternoon, Nancy was on WLBT's Midday segment, and she discussed debt.  Watch the video here:  The Debt Hangover!

blue chips

"Is there still such a thing as a Blue Chip stock anymore?"

It used to be considered a fairly sound investment strategy to just put your money in a couple of "Blue Chip" stocks and call it a day. Stocks have always been rightly viewed as risky, but the term Blue Chip lent comfort to investors. The designation differentiated large, well known, stable companies from smaller, risky companies that had not established themselves in the market. These were large companies with wide moats that could fend off competition and continue profitable growth into the foreseeable future. The term Blue Chip conveyed a sense of safety, a protection against permanent loss.

Picking a few Blue Chip companies is not a strategy that makes sense anymore. Blue Chips do not exist anymore, not because competition is too fierce and risk is too high, but because they are simply not needed.

The arc of human history is towards a growing population with growing wealth. Businesses are levered to this growth. Economic growth is ultimately growth in sales, masking the tumultuous fight for profits at the companies that make up the economy. No matter how steady a company appears, or now large their moat is, with individual companies there is always the risk of permanent loss. If you selected a small list of individual companies right now, you may find that they do not all exist in a one, ten, or forty years. If you happened to have selected the wrong ones, your investment might be worthless. If instead, you just bought everything, there would be some losers, but you would expect the winners to make up for that and still provide growth on your investment. Individual companies may fail, but it is exceedingly unlikely that the entire market fails.

The equivalent today of investing in Blue Chip stocks is being a passive index.

Now you can capture the market return effectively with index funds. There is less need for the stalwart individual stocks when you can capture a similar expected return with lower expected volatility in an index fund. Company management in a reasonably free economy have demonstrated time and time again a fantastic propensity for making money. Ride the wave of human history and just buy everything out there.

Blue Chip companies may be dead, but investing in stocks is still the best way to grow your investments over the long term.

Christmas Cookies!

A friend who is currently in Germany recently asked for christmas cookie recipes. This one is full of memories for me, so I shared it with him, and decided to share it with everyone!

First, story time: When Geraldine Ferraro was the Democratic VP candidate in 1984, she stopped at a blueberry farm in Mississippi on the campaign trail. She asked the farmer if he had any good blueberry muffin recipes. He looked her in the eye and said "ma'am, down here, men don't cook". This inspired my mom and dad to solicit recipes from Mississippi men and make a cookbook, titled "Down Here Men Don't Cook" of course. This recipe for "Southern Sand Tarts" comes from Charles Balch and Gus Liveakos in Tupelo. Dad made these every year around christmas time and my joy was getting to put them in a big bag with powdered sugar and shake them until coated. I probably got clouds of powdered sugar on everything, but I can still smell the sweet buttery cookies now...

Now, recipe:

Southern Sand Tarts. From Down Here Men Don't Cook. Recipe by Charles Balch and Gus Liveakos of Tupelo.

2 c (250g) plain flour

1 lb (450g) confectioners sugar

1.5 c (180g) pecans, chopped

1 TBSP (15mL) vanilla extract

2 sticks (220g) butter

Lay out butter to reach room tempo. Sift 2 cups flour with 7 tablespoons powdered sugar. Blend flour mixture with butter. Add vanilla, mix well. Add chopped pecans. Mix well. Place in covered bowl and refrigerate OVERNIGHT or longer.

Roll chilled dough into neat balls. Place on lightly greased cookie sheet and bake at 325F (162C) for 20-35 minutes until slightly brown (DO NOT OVERCOOK)

Remove from oven. Leave to cook 7-10 minutes. Gently roll all cookies at once into remainder of powdered sugar which has been sifted into a heavy paper bag. Cookies will absorb most all of the surge. Store in a sealed container once completely cool.

Yields 110-118 cookies.