A few years ago, during some kind of school vacation, I was sitting in front of the TV and started channel surfing. To my surprise, the classic movie The Ten Commandments was on. I was so excited and told the kids to come over and watch with me. After all, I said, this is a classic movie; Charlton Heston is Moses.
It took them all of maybe 30 seconds to start laughing. I asked what was so funny, and they said the graphics were a joke. “We could make better graphics in five minutes,” one of them said. “How can you take this movie seriously?” They all went back to their cellphones, and I felt old.
In a few days, we will read the 10 Commandments as we celebrate Shavuot. Rabbi Asher Meir asks why doesn’t it say anywhere in the Torah that Shavuot commemorates the receiving of the Torah?
He answers: “It seems that the Torah intentionally de-emphasized the historical dimension of Shavuot. One profound explanation is that giving this day too much of a historical aspect would relegate the giving of the Torah to a distant, isolated event: One day, long ago, HaShem appeared to the Jewish people and transmitted the Torah. This happened in a specific time (Shavuot), at a specific place (Mount Sinai), and through a specific individual (Moshe Rabbeinu). Yet we are obligated to experience the giving of the Torah as an eternal, ongoing process. Every morning we say a blessing acknowledging that HaShem “gives the Torah” – in an ongoing way.”
Building wealth
Building wealth is a similar ongoing process. It doesn’t happen with one action; rather, it takes daily discipline and fortitude to stay the course over the long term. In honor of Shavuot, I decided to aggregate tips I give regularly into my 10 commandments of wealth building.
No. 1) Budget: Take control over your spending. Track income and expenses, and then you can start a realistic savings plan and build wealth.
No. 2) Get out of debt: Credit-card debt or overdraft is the No. 1 obstacle to making it financially. It’s a lot better to take those interest payments and plow them into savings than to keep paying the credit-card company.
No. 3) Emergency Fund: You may be fired, or your food processor may die. By creating an emergency fund, you will be able to handle surprise expenses. Keep three to four months of income in a short-term deposit or something similar to have it liquid and available at a moment’s notice in case you need to draw upon it.
No. 4) Save: There is no shortcut to building wealth. You need to start investing, and with discipline, the wonders of compound interest and the growth of the stock and/or real-estate market over time will create a comfortable nest egg.
No. 5) Know your limitations: It’s well know that Warren Buffett often tells investors that the best advice he can give them is to know their limitations. He means that investors should be aware that their chances of performing better than the major averages are statistically small if they pick individual stocks. As such, most investors should stick to index and exchange traded funds (ETFs).
No. 6) Tax-loss harvesting: A portfolio that is tax efficient can literally save you thousands of dollars a year. Multiply that by 20 to 30 years of investing, and you can keep tens, if not hundreds, of thousands of dollars in your account instead of giving it to the government. You want to offset capital gains with losses. Speak with your accountant before moving ahead with the selling so that you understand all the rules and restrictions that apply to tax-loss sales.
No. 7) Earn money: While this may seem obvious, you need to earn money. You can’t save or invest if you have no income. If you are out of work, don’t wait for the “perfect” job. Work in a store, deliver pizza, or do whatever it takes to pay your expenses.
No. 8) Maximize your retirement account contributions: There is no better investment than a tax-deferred investment. If living in Israel, make sure you are maximizing contributions to your Keren Hishtalmut and Kupot Gemmel funds. Keep the money invested, and you will be surprised at the long-term growth of those accounts.
No. 9) Target date: As a guide for how much money you will need in the future, I like to tell clients they need about 20 years’ worth of this year’s expenses to make it. For example, if you spend $30,000 a year, you will need $600,000.
Keep in mind that any pension, National Insurance Institute (Bituach Leumi) payments, or Social Security income that you receive will lower the overall amount you need. For example, if you receive $20,000 a year in retirement income, then you will need another $10,000 as supplemental income.
No. 10) Use a professional: Unless you are well-versed in the fields of financial planning and investment management, using an experienced and qualified financial adviser will be necessary. Choosing the right one will be one of the most important decisions you make.
Chag Sameach!
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group or its affiliates.