Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

5 Iyar 5762 - April 17, 2002 | Mordecai Plaut, director Published Weekly









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Shema Yisrael Torah Network
Shema Yisrael Torah Network











Home and Family
Investing Wisely
by Rosally Saltsman

Douglas Goldstein is the director and owner of Profile Investment Services and is connected to a brokerage firm in the U.S. which also deals with the Union Bank of Switzerland. Goldstein does work for people who live in Israel and have their investments in America. Most of his clients are religious and he will soon be giving a seminar on halachic issues involving investment. His book, to be published this summer, Managing Your U.S. Investments from Israel, can be pre-ordered at a discount.

Since Goldstein has done consulting for fundraisers and yeshivos, as well as wealthy investors and entrepreneurs, I asked him to give us some advice for large religious families who would like to make the most of their money.

"If you don't have money, there is no solution. I see a lot of people who have tremendous financial commitments and have no income to back it up. The wrong thing to do is to put a lot of money in investments that on the surface appear to have tremendous potential." He quotes his mother who was a vice president at Morgan Stanley Dean Whitter for 18 years: "If it sounds too good to be true, it probably is."

"Another way to avoid trouble is to be very realistic with your expectations." When it comes to investments, he says, "Don't try to manage the money yourself unless you're going to spend full time doing it. One couple got a million dollar inheritance and decided to manage it themselves. With no experience and no access to information on the market, they lost hundreds of thousands of dollars because they were outside of their field." Most of us don't have that kind of money available to us, which makes it all the more important to know what we are doing with it.

"The most important thing people must do is to consider their personal finances the way they would if they were runnning a business. Companies usually hire a CFO -- chief financial officer, whose job it is to understand the future of the company. He plots out a business plan to enable it to reach its goals in a reasonable and responsible fashion. If a person is bringing home 6,000 shekel a month and has 6 or 7 children, it is unreasonable to assume that he'll be able to pay for weddings and apartments to the tune of more than a few thousand dollars per child when they reach that age. It is crucial to save early when the children are young." Goldsten says that even putting away a little bit each month, say from the National Insurance child allowance, can yield large returns with compounded interest.

"Start yesterday. You missed yesterday? Better start today. The longer time that you have the money in savings, the better."

Insurance policies are a kind of forced savings and some gedolim endorsed a combination of savings and term life insurance for heads of families. They did not endorse so- called "whole life" insurance which is part savings, part investment and part commissions for those selling it to you.

However, if you are driving yourself into overdraft, you are spending more on interest, so that it's not worth it. "Try to maximize the savings without going into overdraft," he says. A nest egg grows at 4%; overdraft grows at 20%.

"When we have a client who comes in to do comprehensive financial planning, we try to understand everything going on in the person's financial life. I had one client with eleven kids. He had no life insurance, no savings. He said, `Der Eibishter vet helfen.' I pointed out to him that Hashem has set up life insurance companies to take care of guys like him but he wouldn't hear of the concept of life insurance and there was no other source of money.

"While life insurance is not necessarily the world's best investment, it is a crucial aspect of financial planning. If anything happens to this guy, G-d forbid, his family will be ruined, even if the community steps in to bail them out." Unfortunately, we see so many appeals for money for families who have met such a fate..."

Top Down and Bottom Up

What about people with some money to invest?

"There are two approaches to investments: Top Down and Bottom Up. Bottom Up people look around, see ads, hear about investments their friends have made and they think, `Oh, there's a great bond.'

"Nine years ago, there was a gold company in Australia run by a chareidi philanthropist. He got a brocha from a Rebbe to be successful. Everyone heard about it and bought the stock because of this brocha. Many mortgaged their homes and took out loans. They guy got richer but everyone else lost money. The brocha had been for him and not for everyone else. That's an example of Bottom Up investing."

Top Down is what Goldstein's firm does. "We understand that there are literally dozens of thousands of investments. We match investments to each person, depending on their present and future needs. We look at the whole financial situation: are they better off with stocks, bonds or cash?"

If you want to invest, it is probably a good idea to find someone who is licensed in the country for which he is advising: Israel and/or the U.S. The licensing process should guarantee a minimum expertise.

The Aibishter DID help the guy with the eleven kids finance the first wedding. But what about the next ten children? Goldstein doesn't deny that money comes from Above, he only points out that one has to make a studied effort. A person must take the necessary steps to protect himself. And certainly, if he does have some money to invest, he should do his utmost to preserve and increase this gift from Heaven and accord it its due attention and appreciation.

Whether you have a million dollars or a thousand shekels [and child allowances for several children bring in several thousand monthly], saving and investing can help you make the most of your money and provide for all of your simchas, may they increase, and help protect you from unforeseen events, may they be only theoretical.

[Goldstein is available for hourly consultation at 03- 5240942 or 02-6242788. You can order his book from him, too.

Yated is not endorsing his services in any way, just passing on the info.]


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