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                            TO:   All Interested Onliners                                                                        FROM: Jim Bramer. Retired CPA-Auditor
                                                                                                                                                        FILE:  0920-03/fwi

                            RE:  Prudent Money Investments                                                             Originated in July 2002                                                            

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    "Today's "Ax to Grind"   

        My topic today is "Prudent Money Investments".  First,  from the viewpoint of Christian Organizations that takes your investment and then from the viewpoint of individual Christian Onliners, or that of other Ministries,  who make investments.  As a retired CPA-Auditor it has been my privilege to have clients named within the categories below.  I have seen both "great" situations as well as those that have been most "distasteful."

 Places to invest your money

        Examples of places to invest your money are Credit Unions and Denominational Ministries, but no doubt there are other Christian Organizations where you can make prudent money investments. 
        The first thing that impresses me is that such entities are handling someone else's money. Their Management and Board MUST always bear this in mind.  Not only do they need to ask the question: "What would I do if this was my own money , but much more importantly: "Should I do such and such since this belongs to someone else."   The word Fiduciary applies here since such a definition includes: "Holding something in trust which belongs to another."  Obviously,  fraud and stealing is a concern, but my thrust here has to do with investment by such groups themselves.
         The purpose of Credit Unions (or a member owned Financial Co-operative) is to take  investments from members, turn around and loan such sums to other members and return the net savings to its investors.  Such financial institutions insure balances up to some $100,000.  One known Credit Union has a subsidiary that invests exclusively in Ministry facilities, etc. Other examples are Denominational Ministries where the money ends up being an investment, or an upgrade of,  Ministry facilities of their constituency. They also make other investments which are usually righteous, wise, and prudent. 
        My concern is when groups take such money and invest in speculative real estate or in the stock/bond markets.
        My view is that the Board should set forth a policy, following it's purpose and objectives, that sets forth percentages (remember, this is a sample only) like the following:    

					Percentage
Residence/Facility					30.%
With Insured Entities:
	Regular Banks				20.%
	Credit Unions				5.%
		Sub-total			55.%
With Uninsured Entities:
	Other Ministries				15.%
	Non-Ministry
		Government Bonds			5.%
		Stocks/Bonds Market			15.%
			Sub-total		20.%
	More speculative but with
		potential higher yield			10.%
		Sub-total			45.%
Total					100.%

The Investor Emphasis

    We Onliners, and many Ministries also,  find that most of our investments often end up in our residences, or facilities.  Investments of more liquid assets must be chosen carefully.  You might ask yourself questions like the following:

•      Did I evaluate my entire investment picture and set some Investment by type percentages  like above? 
•     To what extent do I invest in Ministry financial endeavors, where my balance is NOT insured?
•     Do I invest in the Corporate Stock or Bond market; either directly by ownership in specific Corporate Stocks or Bonds, or indirectly through Mutual funds. How do I monitor it so that corporations in which I invest comply with my morals?  Examples, Alcoholic Beverages or Pornography, etc.
•     Do I invest in Government Bonds --- again directly or indirectly?
•     Hopefully a Ministry's investments would NOT have a conflict of interest problem by making interest bearing loans to Staff  or to Board Members (or their controlled entities).  Do they invest in any business endeavors of some of their  Board Members? Likewise, do they invest in any business endeavors of a substantial donor?  Does the Ministry invest it's resources in something that requires their active participation ... on-going businesses or leased property, etc.   
•      Do I simply turn over investment money to my "stock/bond brokers'" with no criteria for them to follow; after all, they "are the experts, etc."? I think NOT!
•     How do you define 'going out on a limb'  or 'to speculate' in an imprudent manner?   Compile a list that I would NEVER  invest in.

    How to invest my money (including those of us who make investment decisions within various retirement mechanisms) is especially an issue for we older Onliners. We generally depend on the yield from said investments for our retirement income. All too often mis-handling of such investments affects my spiritual condition and relationship with others  All of this needs to fit into my overall Estate Planning effort.

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 Please see the following topical  links within  www.bcidot.org :

1 - 0051 -Trust and Fiduciary 
2 - 8518 - Unconventional Investments
3 - 3201 - Christian Foundation
4 - 6301 - Remarks by Investment Ministry Official
5 - 0044 - Double Duty
6 - 0043 - Cash Management
7 - 0006 - Float Mgt
8 - 0083- Replicate

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UPTD: January 04, 2010

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