Personal Investing

My family asked me about my personal investing. I’ve done well in the market – I’ve averages over 8% returns per year for the past 11 years (2007-2017) which includes several down or flat years.

  1. It’s all in mutual funds in Vanguard
  2. I re-balance my funds about once a year unless there is a major world event in which case I’ll immediately re-configure my investments (think war, economic collapse of a country/region, etc.)
  3. I’m invested 80% in equities and 20% in bonds. The bonds are a hedge against the stocks. You can be more aggressive by having more equities or by having more aggressive equities (emerging/international markets and/or small cap).
  4. My specific investments and percentages
    1. VFIAX    Vanguard 500 Index Fund Admiral Shares – 40%
    2. VEMAX  Vanguard Emerging Markets Stock Index Fund Admiral Shares – 15%
    3. VWETX  Vanguard Long-Term Investment Grade Fund Admiral Shares – 20%
    4. VSGAX   Vanguard Small-Cap Growth Index Fund Admiral Shares – 25%
  5. This means that my portfolio is a good mix of aggressive and conservative, US and international. This is a secret to investing – diversification! That can’t be stressed enough – don’t put all your eggs in one stock or even one mutual fund. Here’s my mix:
    1. 40% invested in large US companies (stable growth)
    2. 15% invested in international companies (stable with some speculation)
    3. 20% invested in bond (conservative part of my portfolio)
    4. 25% invested in small cap or aggressive companies

A few rules for investing

  1. “A rising tide lifts all boats.” When the market is going up, you don’t have to be particularly smart or good to do well.
  2. “Be a pig, not a hog. Pigs get fat, hogs get slaughtered.” Go for gains of all kinds but don’t get greedy and chase after the high flyers each week or even each month.
  3. “Never fall in love with your investments.” They don’t love you back. Investments are tools, nothing more. Be willing to bail on them whenever necessary.

Lead On!

Steve

 

Good churches need good manuals – Finance Manual

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A finance manual is critical. Church finances require the utmost level of trust from the donors and members toward the pastors and finance staff. A finance manual establishes the policies by which the church’s money will be governed and used. Parts of this document are a legal requirement but most of it is designed to ensure confidence in the handling of funds.

 

If a church does not have a finance manual, it can create the appearance of lack of integrity and a haphazard attitude towards donated money. That is not the biblical standard. Paul tells the Corinthians to do all things in their church “decently and in order.”

 

A good finance manual will address accounting, banking, record-keeping, software and hardware, document retention, communication with donors, accounts payable, financial reporting, audits, gift acknowledgement, and too many other things to list here. These policies ensure that even though staff may come and go, the practices within the Finance Office remain constant and completely above-board.

 

A personnel manual is a living document – it must be reviewed every year and updated at least every other year. Not doing that minimal step is a failure by management. Most policies will remain the same such as contribution processing, payroll, or accounts payable. But as times change, new policies must be written and old policies changed to address changes in the law or accounting standards regarding overtime, designated funds, and PP&E (property, plant, & equipment).

 

The finance manual template at www.churchbestpractices.org has

  • A Gift Acceptance Policy to help the church know what gifts can be accepted without question versus those which require research
  • A policy for using church-issued credit cards and reporting the expenses charged on the card
  • Fundraising ethics standards to ensure the church abides by IRS rules

 

This manual is only $30. It is updated annually to ensure its compliance with the latest legal and tax changes.  This manual is a great starting point for churches needing to develop a manual scratch or to update their current one. It will save hours of research and writing. By using this manual, a church will need only to add sections that are specific to their situation and/or remove non-legal policies which don’t apply to them.

Good churches need good manuals – Personnel Manual

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Many churches don’t have a personnel manual or their manual is seriously outdated. And that is fine so long as it passes this test: will whatever you have stand up in court?

 

Personnel manuals are founded in personnel law which is written by Congress and the Department of Labor. If a church’s manual does not keep up with the current laws, then the church is open to a lawsuit. AND, if a church does not abide by its own manual, then every judge will rule harshly against the church.

 

A personnel manual is a living document – it must be reviewed every year and updated at least every other year. Not doing that minimal step is a failure by management. Most policies will remain the same such as employee benefits, grievance guidelines, etc. But as times change, new policies must be written and old policies changed.

 

For instance, most churches do not have a “social media policy” which instructs their staff on how to write about their church and/or boss on social media sites and blogs. Does your church have an updated weapons policy? What about political statements and statuses advocated publicly by lay leaders and staff?

 

The personnel manual template at www.churchbestpractices.org has

  • Typical employee classifications which meet legal standards
  • Common benefits for employees (while salaries get an employee inside the door, benefits KEEP employees inside)
  • Dozens of other policies which help churches, their staffs, and their members

 

This manual is only $30. It is updated annually to ensure its compliance with the latest legal and tax changes.  This manual is a great starting point for churches needing to develop a manual scratch or to update their current one. It will save hours of research and writing. By using this manual, a church will need only to add sections that are specific to their situation and/or remove non-legal policies which don’t apply to them.

Good churches need good manuals

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All churches need policies. Some churches make policies in reaction to an event. That is backwards thinking. Churches must be proactive in their policies so that staff and members know what is expected and what lines cannot be crossed.

 

Every church needs a personnel manual and a finance manual to establish the legal and ethical boundaries within which the staff and members will operate. Violation of these policies often violates legal, ethical, or moral boundaries. Breaking a policy will always result in a conversation and sometimes in the termination of a staff member.

 

Some churches need guide manuals (not policy manuals) to establish the parameters for their budget, endowment, or internal operations. These manuals determine the boundaries within which the staff and committees will function. Straying outside those limits may be permitted but only after a conversation about why and how.

 

This site provides churches with templates they can use to create their own manuals. There is no need to “re-invent the wheel.” These manuals were developed by an administrator with over 25 years of experience in half a dozen churches. These policies comply with all current laws and are the best practices of healthy churches.

 

The manuals available are:

  • Budget
  • Finance
  • Finance Office
  • Endowment
  • Personnel
  • Financial Statements
  • Financial Planning for Ministers
  • Generosity Strategy
  • Written Communications

 

Nehemiah Answers Simon Sinek (part 2 of 2)

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In part one, I recapped an excellent Ted Talk by Simon Sinek. (please stop now and watch it to more fully understand this post).

 

Nehemiah is a quintessential Old Testament leader. Upon hearing of the status of the protective walls and gates of Jerusalem, Nehemiah got his boss, the king of Persia, to let him go to his ancestral homeland and rebuild everything. His leadership skills are not questioned – he found solutions for every problem as they arose, he dealt with people justly, and he confronted his cynics directly. He accomplished what needed to be done and what others said couldn’t be done. He did it. And his work subsequently protected Jerusalem for several centuries.

 

This is what Nehemiah did:

  • In chapter one,
    • Nehemiah hears about a situation which breaks his heart
    • He prays fervently about what he should do and he listens to God
  • In chapter 2, Nehemiah answers Simon Sinek
    • Verse 2: the king asks, “Why does your face look so sad…?” Nehemiah’s reply is an emotional appeal: his homeland is in ruins.
    • Verse 4: the king asks “What is it you want?” Nehemiah has a short reply – let me go to my homeland and rebuild the city
    • Verse 6: the king asks, “How long will your journey take?” and Nehemiah responds with lots of specifics about his needs
  • In the rest of the book: Nehemiah gets the job done. He leads the people, fends off critics, and reports back to the king.

 

When the book begins, Nehemiah had no power and very little influence. But he did have a God-inspired vision and he was articulate. By the end of the book, Nehemiah is an inspirational leader. Even 2,500 years ago, Nehemiah was ready for Simon Sinek!

 

Nehemiah 2:1-9

In the month of Nisan in the twentieth year of King Artaxerxes, when wine was brought for him, I took the wine and gave it to the king. I had not been sad in his presence before, so the king asked me, “Why does your face look so sad when you are not ill? This can be nothing but sadness of heart.”

 

I was very much afraid, but I said to the king, “May the king live forever! Why should my face not look sad when the city where my ancestors are buried lies in ruins, and its gates have been destroyed by fire?”

 

The king said to me, “What is it you want?”

 

Then I prayed to the God of heaven, and I answered the king, “If it pleases the king and if your servant has found favor in his sight, let him send me to the city in Judah where my ancestors are buried so that I can rebuild it.”

 

Then the king, with the queen sitting beside him, asked me, “How long will your journey take, and when will you get back?” It pleased the king to send me; so I set a time.

 

I also said to him, “If it pleases the king, may I have letters to the governors of Trans-Euphrates, so that they will provide me safe-conduct until I arrive in Judah? And may I have a letter to Asaph, keeper of the royal park, so he will give me timber to make beams for the gates of the citadel by the temple and for the city wall and for the residence I will occupy?” And because the gracious hand of my God was on me, the king granted my requests. So I went to the governors of Trans-Euphrates and gave them the king’s letters. The king had also sent army officers and cavalry with me.

 

Nehemiah was an inspirational leader. In only 52 days he did what others said couldn’t be done. He had a clear “Why” and could get people to believe what he believed. Even the king, who paid for everything, was able to buy into what Nehemiah wanted to do. Nehemiah’s “Why” was compelling to the soul of his listeners.

 

Lead On

Steve

www.churchbestpractices.org has a complete set of very affordable church manuals as templates in Word plus lots of free Word and Excel docs to help church administration.

Nehemiah Answers Simon Sinek (part 1 of 2)

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In September 2009, Simon Sinek recorded the third most watched Ted Talk (you should have Ted Talks in your podcast list). It is only 18 minutes long. It is impactful. It points to a different kind of leader, an inspirational leader.

 

The first few minutes are spent explaining The Golden Circle. Sinek draws three circles and writes “Why” in the centermost circle, “How” in the middle circle, and “What” in the outermost circle. He provides the advertising example of Apple who tells you why you should buy from them, not how they make computers or even what they manufacture. “Why” is an emotional connection.

 

Sinek continues by explaining what we know about the development of the human brain. The centermost part of the brain, the limbic system, focuses on our feelings, behavior, and decision-making. This part of the brain is the oldest to develop. It does not have the capacity for language. That is for the outer parts of the brain developed more recently and it determines the “what” of how we use our brain.

 

For leaders to reach the core of a person, inspirational leaders must focus on connecting with the “Why” of the listeners – that innermost core of a person’s brain. Sinek states that you must find “people who believe what you believe.” Another memorable quote is, “People don’t buy what you do, they buy why you do it.” Leaders speak initially to a person’s soul, not to their practical side. The “how” and “what” will come soon enough but if you don’t hook someone with “why” then you’ll have a much harder time getting that person to join your mission.

 

Sinek ends with the example of Martin Luther King, Jr. When he spoke at the National Mall in August 1963, a quarter million people showed up because they wanted to be there. The “I have a dream” speech they heard is deemed the most memorable US speech given in the 20th Century. Inspirational leaders must speak to the emotional core of their followers so they will absorb “why” they should follow.

 

Lead On

Steve Law

www.churchbestpractices.org has a complete set of very affordable church manuals as templates in Word plus lots of free Word and Excel docs to help church administration.

 

Employees Should Pay for Benefits with Non-Taxable Dollars

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The rule of thumb is that you always want to pay for benefits with non-taxable dollars. If you pay for them with taxable dollars, then when you get the benefit, you have to pay taxes on that benefit. Taxes on premiums are always cheaper than taxes on benefits. The best example is life insurance: the premium on a life insurance policy is a few dollars a year (depending on what the premium is and your tax bracket) but that is certainly cheaper than paying taxes on a life insurance benefit of $50,000 or $250,000! Other examples include disability policies and benefits and long-term care.

Health insurance and its related health savings accounts are not, by law, taxable (as of when this post is written). In fact, employee payments for both health insurance and HSAs are tax-deductible and employees should be encouraged to max out their HSA amounts if financially possible (same goes for retirement).

 

Lead On!

Steve

Admins as Notaries Public

 

Periodically church members will need documents to be notarized. This notarization may be for a document required to participate in a church event or even for a private need. FYI, all banks have notary public and people can get a doc notarized at their local bank. But it is often more convenient for the church to provide this service.

 

Becoming a notary public is pretty easy. Most of the work can be done online through the state agency. Do not use private companies that do the paperwork for you – they overcharge and you end up doing most of the work anyway.  The notary public fees are about $100 and the certification lasts for five years in many states.

 

I required all church administrative assistants to become notaries public so they could notarize docs as needed. Frequently the youth or children’s ministries had documents related to retreats or trips which needed to be notarized. It was easy to tell people to come to the church and ask for an admin who would then notarize the doc.

 

I told the admins who were notaries that they could notarize other people’s documents and even charge the legally permitted fee. They were forbidden from charging members a fee since the church paid for the notary public license.

 

This system has worked well and I encourage churches to take this step.

 

Lead On!

Steve