Category: Economy

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Too Much Stuff – 6 Tips to a Happier, Sustainable Life

electronic-waste1Malcolm Forbes is credited with the phrase, “He who has the most toys wins the game.” According to a People magazine article written at the time of his death, his hobbies included the acquisition of wealth and “flaunting what it could buy.”
 
His memorial service featured displays of his vast collection of art, including antique model boats, toy soldiers, and manuscripts. Forbes owned eight homes around the world including a private island, 2,200 paintings, a 151-foot yacht, and a Boeing 727. He also owned more Russian Imperial Faberge eggs than the Russian government. Since his death, Mr. Forbes’ philosophy has been attacked by both preachers and pundits, some of whom cited the Bible’s question: “What good will it be for a man if he gains the whole world, yet forfeits his soul?”

The Impact of Accumulating Stuff

Ironically, studies suggest that the pursuit of material possession makes us happier than its actual acquisition. Dr. Marsha L. Richins, a professor of marketing at the University of Missouri, says that materialistic consumers derive more pleasure from desiring products than from actually owning them. In his book “Stumbling on Happiness,” psychologist Daniel Gilbert says that satisfaction and joy from owning an object quickly wanes, an effect psychologists call habituation and economists call “declining marginal utility.”

Materialism – Socially Destructive and Self-Destructive

A series of studies published in the journal Motivation and Emotion in July 2013 indicates that as people acquire more, their sense of well-being diminishes. As they acquire less, it rises. Another study published in the December 2013 issue of the Journal of Consumer Research states that materialism fosters social isolation, and vice versa. The relationship creates a vicious cycle – the more lonely you feel, the more likely you are to seek possessions, even as a greater amount of possessions crowds out your relationships.
 
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Does Gold Belong In Your Investment Portfolio?

GOLD – The MAGIC METAL
Humankind’s fascination with gold can be dated back as far as 4000 B.C., and for much of our collective history, possession of gold was a sign of wealth and status restricted solely to governments and nobility. Eventually, the first gold coins are believed to have initially financed long-distance trading around the world – around 500 B.C., Darius the Great of the Persian Empire is thought to have minted the first coin, the “daric,” to facilitate the expansion of his empire and the needs of his army as it moved into foreign territories.
 
Many countries came to use gold and silver coins as currencies for centuries. However, during the worldwide depression of the 1930s, every industrialized nation ceased using the gold standard, subsequently severing the close link between the value (and quantity) of gold and the value of money.
 
Despite this, gold continues to be a sought-after commodity due to its scarcity and reputation as a hedge against monetary or societal collapse. But does it deserve a place in your portfolio?

Gold in Modern Civilization

Today, gold is available in several forms, including the following:

Historic Collectors’ Coins

Minted as currency by many countries, these coins are now collected as much for their numismatic value as their gold content. Like other collector’s items, such as stamps and fine art, only experts, or those who have access to experts, should consider this investment.

Collector Gold Coins

Issued by countries and commercial businesses, these coins are priced according to their weight and purity. The more popular coins are the Canadian Maple Leaf, the South African Krugerrand, and the American Eagle.

Gold Bars

Available by weight of one gram, one ounce, ten ounces, and one kilo (32.15 ounces) generally with 99.99% purity, bars are also referred to as “gold bullion.” A standard gold ingot like that found in the U.S. Fort Knox Depository, and commonly depicted in movies, is seven inches long, three and five-eighths inches wide, and one and three-quarters inches high, and weighs 27.5 pounds. At current market prices, an ingot would have a value in excess of $500,000, much too expensive to support an active investor market.

Common Stock of a Gold Mining Company

Ownership in a company whose sole business is the search and discovery of gold, and the potential value of the element in the resources not yet produced is a common type of gold investment.

Gold Exchange Traded Fund (ETF)

A gold ETF does not typically hold gold as a commodity, but tracks its price with a combination of financial derivatives.

Gold Exchange Traded Notes (ETN)

A gold ETN is a debt security that’s value fluctuates based upon the price of the underlying index – in this case, the price of gold. While this investment includes credit risk, the benefit of being taxed as a long-term capital gain rather than paying ordinary interest exists with this vehicle.
 
Gold is not money or currency, but an investment which must be converted into money before it can be used to purchase other assets. Of course, individuals and businesses can agree to exchange an amount of gold for a service or product – as was done for centuries – but it would require negotiation about the relative value of each, a timely and potentially risky process for both parties.
 
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5 Reasons Now Is The Best Time to Start a New Business

start-business1The combination of inexpensive technology, accessible virtual markets, and easy funding through crowdsourcing is changing the face of entrepreneurship. Today’s new business starters are socially sophisticated, willing to bear more risk than previous generations, and more likely to work out of a home or small office and rely on others for business processes. Some are small guerrilla outfits surfing from one hot concept to the next, and some are venture capital-funded geniuses with disruptor ideas.
It is a great time to start a new business – the best time in history.
 

The Keys to Success

America has always been the land of opportunity, the Mecca for entrepreneurship. While great fortunes have been made by immigrants and first-generation Americans such as Andrew Carnegie in steel, John D. Rockefeller in oil, and William A. Clark in copper, thousands of others formed successful small companies that provided financial security and employment for hundreds of thousands of their fellow citizens.
 
The possibility of being responsible for one’s own fate has never been greater in the history of the country. Latent opportunities for new ideas and businesses have exploded exponentially, each new concept and novel interpretation of old methods pregnant with possibility, just waiting to be birthed. There are several key reasons why this is so.

1. Cultural Accommodation

For much of history, capitalism was restricted to the beneficiaries of high birth, ancestral wealth, and exclusive education. The wide-open spaces and untapped resources of the new continent in the 19th century shattered cultural norms that had existed for hundreds of years. Entrepreneurs flooded the country, exploiting new resources, new markets, and new technology to create the greatest industrial nation in the history of the world.
 
Despite the success, access to these new possibilities was unfortunately generally limited to white males. Minorities (except in their limited communities) and women were excluded, restricted by racial prejudice, cultural stereotypes, and inefficient educations.
America in the 21st century is a more open society and access continues to broaden regardless of sex or ethnicity – anyone smart enough and brave enough to create a new business can try. According to a 2013 American Express report, there are 8.6 million women-owned businesses in the country, generating more than $1.3 trillion in revenues and providing jobs for 7.8 million employees. The rate of growth between 1997 and 2013 in new women-owned businesses has been one and a half times the national average. In a U.S. Census News release in 2011, Tom Mesenbourg, deputy director of the U.S. Census Bureau, proclaimed, “The growth in the number of minority-owned firms – both employers and non-employers – has far outpaced that of businesses overall.”
 
Led by federal and state governments, programs to assist potential new business owners are readily accessible and generally free. An entrepreneur can access classes ranging from basic accounting, to sophisticated product and service contracting. Face-to-face onsite mentoring is available from organizations such as S.C.O.R.E., while municipalities, colleges and universities, and private businesses offer incubator facilities with administrative and accounting assistance at low cost. Federal laws require that a percentage of federal contracts be subcontracted to small businesses and provide detailed contracting assistance for those individuals and companies who seek such work.
 
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Importance of Community Banks and How They’re Threatened by Dodd-Frank

local bank buildingMalcolm Holland, president of $650 million Veritex Community Bank in Dallas, Texas, worries about the future of community banks as a result of increasing federal regulations and growing compliance costs. His concern is based upon the increasing expansion of federal rules that limit the flexibility of community bankers to meet the needs of their customers: “Community banks need to be creative because small business is creative. If we can’t meet the needs of small business – the core of our business – the economy as we’ve known it will cease to exist.”

In Mr. Holland’s opinion, legislators and regulators have failed to distinguish traditional community banks from the large multinational finance corporations commonly called “banks,” but for whom the standard functions of banking – taking deposits and making loans – are a minuscule part of their activities. It was the activities of the too-big-to-fail entities that caused the recent worldwide financial crisis, not the community banks. Unfortunately, in response to the mortgage securities debacle and in their efforts to prevent similar abuses in the future, the heavy hands of the regulators and uninformed legislators have unnecessarily and unfairly burdened community banks.

History of Community Banks

Banking is among the oldest industries in the world, tracing its roots back to ancient times where lenders, representing temples of worship or ancient rulers, provided loans to farmers to raise crops or traders to finance purchases in a distant region. As government-issued currencies became more acceptable and common, commerce expanded across continents and oceans, and a greater proportion of the population began to rise above subsistence, the beginning of our modern banking system appeared.

The first regulated savings bank in America (and the world) was the Provident Institution for Savings of Boston, Massachusetts in 1816. Just as the ballot box provided the opportunity for a man to assert himself in the politics of the nation, the savings banks allowed him to share in its prosperity, according to John Townsend, writing in his 1896 “The History of Savings-Banks in The United States.” It is from these roots that community-based financing developed.

Definition of Community-Based Financing

Simply stated, community-based financing is the utilization of locally based and supported financial institutions and organizations to fund local businesses and individuals within the same community or geographic area. The concept implies a continuous cycle where residents of the community, employed by and trading with local businesses, deposit their savings in locally owned institutions, which subsequently (and repeatedly) lend to or invest in local businesses and individuals.

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