There are five key components of financial literacy, according to the Financial Literacy and Education Commission: Earn, spend, save and invest, borrow, and protect.12
Three excellent resources for improving financial literacy are books, including the Dummies Guide to Financial Literacy; magazines such as Kiplinger; and podcasts like NPR's Planet Money.
Whatever you do, whether in word or deed, do it all in the name of the Lord Jesus, giving thanks to God the Father through Him.
Colossians 3:17
The October 1987 stock market crash, with its almost 25 percent drop in share prices in one day, brought starkly to the fore the risky nature of investing in "the market". With news of major losses screaming out from newspaper headlines, the stock market attracted the attention of even the least financially inclined. As Christians, committed to do everything in the name of the Lord Jesus, our first reaction is likely to be, "That just proves it; the stock market is just legalized gambling; keep away!" Such an automatic reaction would, however, be wrong.
To help decide whether or not a Christian is justified in participating in the stock market, this article addressed two questions. First, can we invest on a "limited liability" basis? Secondly, is the degree of risk involved in the stock market of such a nature that participants are in fact, gambling?
Whatever you do, whether in word or deed, do it all in the name of the Lord Jesus, giving thanks to God the Father through Him.
Colossians 3:17
As a financial advisor, you probably spend a great deal of your time studying businesses to determine how successful they are. In other words, whether they're worth your clients' money. But don't forget to keep an eye on the success of your own firm. Measure and evaluate it as you would any business. Track it over time. Know what's working and what needs adjusting. That's the point of measuring success.
When it comes to business management, there are various ways to measure success that can help ensure the business is on the right track. Take a look at some of the best metrics for measuring a financial advisory practice and some tips for interpreting the numbers.
Assets under management (AUM) is a long-time favorite metric for the financial industry since it’s directly tied to the firm’s overall revenue. Business owners look at the trend in AUM over time to get an idea of whether a firm is growing. Prospective clients look at it too. A healthy AUM indicates a trusted and experienced advisor.
This metric can also be used to set goals for the next month or next year. In addition, the revenue estimates derived from AUM will help when it comes time to create an annual budget.
The problem with traditional AUM metrics for a financial advisor is that the firm's rate of growth may well become a diminishing figure as the practice grows. A financial advisor may instead want to look at net new AUM (that is, new assets under management) for the period, minus any lost accounts.
Dictionaries list several different definitions for the word "ethics." The primary definition is a system of moral principles, and a secondary definition is that ethics are the rules of conduct as used by a specific group or culture. The final definition of ethics is a branch of philosophy dealing with values relating to human conduct, with respect to the right and wrong of certain actions and their respective motives and consequences.
The proper application of ethics to investments is a highly subjective topic that can raise some difficult questions for both investors and regulatory agencies. It does bring up the question of why business ethics are important.
Although the definition of ethical investing could be stated as simply purchasing investments from issuers who act ethically, investors who seek to achieve this must first establish a set of criteria that can be used to determine what actions and practices are considered ethical to them. For example, the Bible and other religious books provide rules and principles for people to live by, and those who believe what those books say use them as guides to evaluate things in the world around them. Religious texts and other moral teachings, however, do not always provide crystal-clear guidance for practical investment decisions.
Although creating or finding the ethical criteria to use as the basis for evaluating investments may often be relatively simple, effectively applying that criteria to actual investment choices can be more difficult. For instance, the Bible condemns drunkenness in several passages, but does this then make it unconditionally wrong to purchase securities issued by makers of alcoholic beverages? Since not all consumers of alcohol get drunk, then the investor will have to decide for him or herself whether this investment truly supports immoral behavior. Virtually all issuers of securities or investments most likely do something that at least a substantial percentage of their investors do not approve of (how many investors who buy Treasury securities approve of everything that is done by the government?). Of course, this begs the question of which practices and policies are tolerable for investors and which are not.
Although the values and beliefs that guide ethically minded investors differ somewhat for each person, there are several specific areas where ethics play a major role. Some of the more notable issues that investors examine from an ethical standpoint include:
Although there will inevitably be both winners and losers in a free-market economy, the issue of how a company wins is a concern to some. Companies that have monopolies in a market or industry can function very efficiently in many respects. Still, they also effectively prevent any form of healthy business competition, and some investors consider this to be unethical.
Heavy industries such as energy and manufacturing have long been perceived as destroyers of nature and wildlife with their pollution and decimation of forests, oceans, lakes, and rivers. Ethical investors favor companies that replace what they take from the earth and adhere to governmental standards for emissions.
Companies that profit from certain medical procedures or types of research are often considered to be unethical or even criminal by those in the Judeo-Christian community.1
Although the concept of an industry being sinful is obviously somewhat subjective, a portion of the investing public still considers makers of alcoholic beverages, tobacco companies, casinos, and the pornography industry to be taboo. The tobacco industry, for instance, has long been accused of targeting teenagers as customers and making its products as addictive as possible to fuel sales. While sin industries have made efforts to raise public awareness of the dangers of misusing their products and services, some investors may choose to avoid companies that operate in these industries.
Many investors who seek to avoid what they consider to be unethical investments look to vehicles such as socially conscious mutual funds that screen companies according to specific ethically-based criteria. Many such funds are offered by religious denominations such as the Lutheran Brotherhood, which typically avoids investing in any of the "sin" industries listed above and can provide investors with a clear conscience in this area.2
Of course, the ability of investors to make informed ethical choices is dampened by the quality of information that they receive. For example, the accuracy of emissions and other environmental reports that are issued by major conglomerates such as Exxon may be suspect, and the data published by other companies such as Enron and WorldCom that were found guilty of major accounting fraud was false.34
The term billionaire refers to an individual with assets or a net worth of at least one billion currency units in their native currency such as dollars, euros, or pounds. Billionaires are extremely rich, with assets ranging from cash and cash equivalents, real estate, as well as business and personal property.
These individuals are ranked each year by Forbes, an American business magazine, which first started compiling lists of the world's richest in 1987.
A billionaire is a person with a net wealth of a billion dollars—$1,000,000,000, or a number followed by nine zeroes. This is one thousand times greater than a millionaire ($1,000,000). Billionaires in other countries are defined by monetary units in other currencies such as euros, pounds, and others. So someone who is a billionaire in the eurozone is defined with a net worth of €1 billion or more, while someone in the United Kingdom has £1 billion or more.
Subtracting liabilities from assets results in an individual's net worth. A billionaire's assets generally include things like cash and liquid investments, personal property such as real estate, jewelry, cars and other vehicles, and furniture. Business interests such as equipment and commercial properties are also included if the individual has a personal stake in a corporation.
Billionaires make up a small and very elite club of powerful individuals—both men and women—in the world. These people control enormous sums of money and the power and influence that comes with it.
A deca-billionaire is someone who has more than $10 billion while a centi-billionaire has more than $100 billion in net wealth.
As noted above, Forbes magazine publishes a list of the world's billionaires every year. When Forbes produced the first list in 1987, there were 140 names on the list.1 In 2021, Forbes listed a record 2,755 billionaires around the globe from 70 countries.2 Their combined net worth totals $13.1 trillion.3
According to Forbes' 2021 report, the United States has the most billionaires in the world with a total of 724. China follows with 626 billionaires, India with 140 billionaires, Germany with 136 billionaires, and Russia with a total of 117 billionaires.2
Jeff Bezos, founder and former chief executive officer (CEO) of Amazon, ranked the highest on the magazine's list with a total net worth of $177 billion.3Forbes' real-time billionaires list lists his fortune at upwards of $210 billion as of July 14, 2021.4 Amazon (AMZN) raked in $386 billion in revenues and $21.3 billion in net profit for the 2020 fiscal year.5
Elon Musk, CEO of Tesla, came in second with $151 billion when the list was compiled in March 2021. Two other Americans made the top five list—Microsoft's Bill Gates with $124 billion and founder of Facebook, Mark Zuckerberg, at $97 billion.3
Readers can isolate names on the list by country, industry, as well as age group. For instance, Lukas Walton was one of the youngest billionaires, ranking in 127th with a net worth of $15.6 billion. He is the grandson of Sam Walton, founder of Walmart (WMT). His father, John, died in a plane crash, leaving the then-19-year-old much of his fortune. George Joseph, who founded an insurance company, was the oldest on the list at 99 with a net worth of $2 billion.3
The richest billionaire woman, according to the report, was French Françoise Bettencourt Meyers, granddaughter of the founder of L'Oréal and heiress of his fortune. Her wealth was listed at $73.6 billion, putting her in twelfth place overall.
A trillionaire is an individual with a net worth equal to at least one trillion in U.S. dollars or a similarly valued currency, such as the euro or the British pound. Currently, no one has yet claimed trillionaire status, although some of the world’s richest individuals may only be a few years away from this milestone.
Extremely affluent individuals often derive their wealth from a variety of sources: business interests, investments, real estate holdings, cash, and personal property. To tabulate your net worth, start by totaling up all of those assets. You then deduct liabilities—everything from personal loans to mortgages. Someone with at least $1 trillion (or one trillion euros) of net assets would qualify as a trillionaire.
For those in the highest strata of wealth, arriving at an accurate net worth figure tends to be a complex undertaking. While some assets are relatively stable, the value of business interests, in particular, can fluctuate wildly from one day to the next.
In fact, Forbes, which publishes the preeminent list of the world’s wealthiest people, operates a “Real-Time Billionaires List” that is updated by the minute, based on stock valuations. Sitting atop it in the first three slots, as of April 15, 2022, are Elon Musk ($264 billion), Jeff Bezos ($177 billion), and Bernard Arnault & family ($167 billion), who are separated by $97 billion. Trailing them by about $35 billion in slots four and five are Bill Gates and Warren Buffett.2
Let’s look at French fashion magnate Arnault. Most of his and his family's roughly $167 billion wealth isn’t simply sitting in a bank account. It’s tied to the value of his holding company, LVMH, which owns famed brands such as Louis Vuitton, Christian Dior, and Hennessy.3 A quick rise in the value of LVMH stock, relative to the holdings of Musk and Bezos, could vault him back to the first slot, which he held in May 2021. And, indeed, the three men often change positions with each other.4
As the value of Arnault’s brands surged during the COVID-19 pandemic, so did his net worth. Back in March 2020, Forbes estimated it at $76 billion. In nearly two years as of February 2022, that figure had grown nearly 2½ times.4
First on the current Forbes list is Musk, who has a current net worth of approximately $264 billion.2 As of February 2022, he owns roughly 23% of electric car manufacturer Tesla and about 50% of the aerospace company SpaceX.56 Bezos, founder of Amazon, is second and worth $177 billion, with a 14% ownership of shares in the online retailer’s stock (AMZN on Nasdaq).7
As an example of how volatile those personal wealth estimates can be, Musk lost a reported $8.9 billion in one day back in December 2020, when a J.P. Morgan analyst concluded that Tesla shares were significantly overvalued.8
Even the likes of Arnault and Bezos—with $167 billion and $177 billion, respectively—might seem a long way off from reaching the trillionaire designation. However, the pace at which some of the world’s richest people have been able to accumulate wealth suggests that it may only be a few short years before someone garners that designation.
Arnault, for instance, was able to increase his net worth by about six-fold in eight years—from $29 billion in 2013 to $185 billion in 2021. Were he to repeat that accomplishment, he would be a trillionaire before the decade is over.9
Bezos, who owns The Washington Post and aerospace firm Blue Origin in addition to his stake in Amazon, has similarly experienced a rapid buildup of wealth. Since 2017, the Forbes estimate of Bezos’ net worth soared from nearly $67 billion to $177 billion, a more than 2 1/2 times gain.10
Musk, who has built his wealth on game-changing companies—Tesla in the realm of electric cars and SpaceX for commercially developed rockets—may stand as good a chance as any. Just five years ago in 2017, the enigmatic entrepreneur had a net worth estimated at $13.9 billion. As of April 15, 2022, his wealth is in the ballpark of $264 billion.6 If those ventures continue on anything like their current valuation trajectory, then he could get to trillionaire status before long.
A fortune of $1 trillion is, to put it mildly, an enormous amount of money—so much that it’s hard to conceptualize how much wealth that actually is.
Here’s some context: According to the Federal Reserve’s latest Survey of Consumer Finances, taken in 2019, the median net worth of U.S. households was $121,700.11 Thus, a trillionaire would have wealth equal to 8.2 milliontimes that of the typical American family.
Here is another way to put that amount of personal treasure in perspective: It took the U.S. Senate months of arduous negotiations to agree on a $1.2 trillion infrastructure bill which was passed in November 2021. In large part, that was because many Republicans balked at that much additional federal spending (though, technically, the bill has only $550 billion of new expenditures).1213
Net assets of $1 trillion represents a greater sum than the gross domestic product (GDP) of countries such as Switzerland, Sweden, and Austria. In fact, $1 trillion is more than the current GDP of all but 16 countries.1
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