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.]
