Are You Rich?
Are you rich? It depends, of course, on where you live. In Malawi, the per capita income is $357, Uganda $631, Haiti $766, United States $59,939, and Luxembourg $105,280.
According to the Pew Research Center, 70% of the world's population, about 5 billion people, live on less than $10 per day. What can you buy for $10? A few low-budget items on Amazon are Super Glue, Uno, Frisbee, and a jumbo muffin pan. If you lived on $10 per day, would you buy a jumbo muffin pan?
How can you help the less fortunate? How can you assist the 70%? Here are a few ideas on how to give.
- Develop a philanthropic plan. It will focus your charitable efforts on causes and groups you support. It will assist you in determining the most efficient way to distribute your assets. To maximize your giving strategy, incorporate it inside your financial plan.
- Open a Donor Advised Fund (DAF). A DAF allows you to contribute significant dollars today and distribute the funds to your charities over time. In addition, you can manage the assets inside your DAF to grow the assets and potentially give more money away.
- Use the Qualified Charitable Deduction (QCD). If you're 70 or older, the IRS allows you to send up to $100,000 to charities you support from your IRA. The QCD satisfies your required minimum distribution, but you don't have to report it as income.
- Donate appreciated assets. If you own taxable assets with unrealized gains, consider donating them to nonprofit organizations. The organization receives your gift, and they can sell it without any tax consequences while you receive the deduction and avoid a capital gains tax.
- Cash is earning nothing, so you might as well donate it to others. It will benefit your charities, and you will receive a tax deduction.
- Give as a family. If you have children, involve them in the giving process. Give your children a seat at the table so they can experience the joy of helping others.
I must warn you, however, once you start giving, you won't be able to stop. You can't calculate the ROI on your philanthropic activity, but donating money to others will pay huge dividends.
The best definition of wealth I heard was from a fraternity brother. He said, "I'm a rich man. I'm not rich monetarily but rich with friends, family, and faith."
We are approaching the giving season, so examine your balance sheet to see how you can best help those in need.
"And the King will say, 'I tell you the truth, when you did it to one of the least of these my brothers and sisters, you were doing it to me!' ~ Matthew 25:40
October 19, 2021
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM's custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.
Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren't suitable for every investor.