How You Can Give Away Money Without Paying Even MORE Taxes on It

Friday, May 10, 2019


Delray Beach, FL.- I know. This sounds obnoxious. But one of my top financial priorities these days is giving away the wealth I’ve accumulated.


What most rich folks do is hoard everything they’ve got until they croak. Then they have it distributed post-mortem by lawyers working with trusts and wills.


From everything I’ve seen and read, this is a terrible idea. The good feelings you imagine your benevolence will engender most often devolves into bitterness, resentment, and altercations among those you leave behind.


I like what Warren Buffett did when he was about my age. He gave a huge chunk of his wealth to Bill Gates’s charitable foundation. Buffett understood that giving away billions was an enormous responsibility. So rather than simply naming some charities in his will, he put the money in the hands of someone he trusted to put it to good use while he (Buffett) was still alive.


K and I have the same general idea: We want to give away most of our money while we are still alive. We are assigning some assets to fund several charities that the family foundation currently manages. (So they will be self-funded in perpetuity.) And we’re putting other assets into the family limited partnership, which will be directed by our sons. But we are also in the process of giving away money to friends and family members. This we are doing with the help of legal counsel.


Not surprisingly, the IRS has restrictions on how much you can give away and to whom. These encumbrances are embodied in the tax code. If you exceed those limits, you (not the recipient of your gift) must pay a tax on it. And, yes, that means you have to pay a tax on money that has already been taxed.


The current limit on yearly gifts is $15,000 per person. So as a couple, K and I can give $30,000 a year to whomever we want without incurring a gift tax.


This is not a problem if you and your spouse want to give, say, $90,000 to your ne’er-do-well brother John. You can do it, tax-free, in 3 years. But if you want to give him enough to keep him in spam sandwiches and reefer for life, you may want to give him $300,000. That will take 10 years.


In our case, $30,000-a-year gifts won’t make a dent in the amount of money we want to disburse. And happily, there is a way to do what we want to do withou tpaying yet another tax on our money.


It’s called the “lifetime gift tax exemption.” Here’s a summary of what I’ve learned about it:

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Copywriting: A Great Freelance Gig, But Is the Market Overcrowded?

Wednesday, May 8, 2019

Delray Beach, FL.- 

I’m retired but I need income. What’s the best part-time retirement job?

I’m sick of the nine-to-five. How can I make good money working from home?


Whenever I’m asked these questions, I do my best to list four or five options. But my favorite – the one I want to recommend to everybody – is copywriting.


Copywriting has always been a lucrative and rewarding profession, especially for independent-minded people. But since the internet revolution changed global commerce, it’s become one of the very best ways to make part-time freelance money.


In addition to far-above-average compensation, copywriting offers many lifestyle advantages:

* working from home or while traveling

* being in charge of your own time

* choosing your clients

* choosing your work

* having an unlimited intellectual challenge


And if you master a niche, you can get rich. Multimillion-dollar rich.


Perhaps the most surprising thing about copywriting is that you don’t have to be a good writer to do it. Many successful copywriters would deny this. They want you to believe that the work they do is art. They want to think of themselves as direct-response Fitzgeralds and Hemingways. But they are not.


That’s because copywriting is fundamentally a selling – not a writing – skill. And anyone that is willing to put in the work can learn how to sell.


As you may know, I have an interest in a business that teaches copywriting (AWAI), so it would be fair to accuse me of bias. But that doesn’t mean I’m wrong.


However, because of AWAI’s 20-year history of successfully training thousands of people to be copywriters, dozens of smaller programs have popped up. And this has led to speculation that the supply has overstepped the demand, and that the prospects for new people coming aboard are not good.


That may be true… unless, of course, you get really good at copywriting.


This is the position that Master Copywriter Bob Bly took in a recent blog post. He made his point by quoting this from P.T. Barnum’s The Art of Money Getting (Great title!):


No profession, trade, or calling is overcrowded in the upper story. The basement is much crowded, but there is plenty of room upstairs.

Wherever you find the most honest and intelligent merchant, or the best anything, that man is most sought for, and has always enough to do.


Whoever excels all others in his own line, if his habits are good and his integrity undoubted, cannot fail to secure abundant patronage, and the wealth that naturally follows.


“Study and practice, coupled with dedication and effort,” Bob says, “can propel you into the top 10% of copywriters in terms of ability and results – enabling you to enjoy success, good income,and financial security. Do that and you will have all the work you need and you will earn more. And you’ll earn 2 to 10 times more than 90% of the other copywriters out there.”


But there are so many opportunities! So you really don’t have to become one of the best to get all the work you want. And although you probably do need to be an elite copywriter to make $500,000 to more than a million a year, you can make good money – $50 to $200 an hour on a part-time freelance basis – with just mediocre skills.


Consider this: In my day, you’d need a college degree to land a job in the advertising industry. But as a freelance copywriter, nobody’s going to ask you for a CV. They will just want to know what you have done and they’ll want to see samples. And even if the only thing you have is samples that you did as a copywriting student, it’s not difficult to get a test assignment. If you do well with that, you’re on your way.


Eventually, you’ll have more work than you can handle. That’s when you raise your fees – 50 grand, 100 grand… the sky’s the limit!

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6 Ways to Maximize the Potential of Your Superstars

Saturday, May 5, 2019


Delray Beach, FL.- CB recently wrote to me about one of his superstars – a promising young (23-year-old) copywriter who has already contributed many great ideas to the business. In fact, he’s so good, that CB is worried about losing him.

“I’m giving this young man the training courses he thinks will help him and the company, giving him autonomy in content, web design, and other projects, and helping him find ways to generate more income,” CB said. “But how do I continue to support him?”

Here’s what I told him…

That’s a very good question.

It’s so important that I’ve written about it many times over the years. And I’m thinking about it right now because I’m involved in an imbroglio over one of Agora’s top marketers leaving one franchise to join another. He’s leaving because the publishers did not listen to the following advice:

Extreme Value…

 Recognize the value of your superstars. You can populate your business with good and great employees if you put the work into it and create the right environment. But superstars – they are rare. A superstar is worth 5-10 great employees.

Risky Business…

Recognize the fact that you cannot hide them from the competition. I can’t tell you how many times I’ve seen very smart CEOs try to do this. It works for a while. Then one day a competitor discovers them and makes them an offer that is way above what they are making. When that happens, you are screwed. You can offer to meet or even beat the new offer, and you might even retain that superstar. But he/she will never trust you and always resent you.

The Hook…

Understand what motivates them. Superstars are not motivated primarily by money. Nor is praise a sufficient reward. What superstars want and need most of all is the opportunity – the freedom and the support – to accomplish great things. That is what makes an otherwise great employee a superstar.

The Game Plan…

Compensate them strategically. Money is not the primary motivation, but money matters. Superstars should be paid a base plus incentive compensation. The base should be just above (maybe 5%) what someone else would offer them to do the same job. (And by that, I mean someone else that recognized their value.) The incentive compensation should be structured so that they could make a shitload of money – even more than you. But it should never be so much that they are getting more than they clearly deserve.

The Trap…

Don’t overcompensate. This last point is complicated. It’s easy to overcompensate people with incentive plans. And when you do, you can spoil them to the point where you will have to let them go. I don’t have time now to get into all of that. But in this case, since the young man is a copywriter, the challenge is easier to meet because there are existing formulas that work. You are probably familiar with them. If not, I can send you some examples.

One Final Thing

Despite what I’ve said, when your business is relatively small (as yours is), you may not be able to compete with the sort of compensation he could get at a company like Agora. Even if you gave him the same base (say, $80,000), it would be nearly impossible for him to make the same incentive compensation with you because your file size and revenues are too small.

Instead, you have to make him feel like he is working for a good business that is doing good. From what I’ve seen, you are already doing this. In fact, I’m sure you are already doing much if not all of what I’ve suggested above. But I thought I’d write it down this way so I could publish it in my blog and kill two birds with one stone!

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The Chicken Entrepreneur Approach I Used to Become a Valued Partner in Dozens of Multimillion-dollar Companies

Sunday, April 28, 2019

Los Angeles, CA.- I write a lot about entrepreneurship and real estate investing. And since I’ve started a bunch of multimillion-dollar companies and own dozens of properties, I feel confident to talk about what I’ve learned from these experiences.

But If you asked me for the one skill that had the greatest effect on developing my wealth, it would be something I’ve written about only occasionally. That is the skill of rising to the top of every business I’ve been involved in.

I started my career in the information publishing business nearly 40 years ago as a rank-and-file employee. I rose – relatively quickly – to an executive position and then to a CEO position and finally to the level of junior partner. That journey took me from a negative net worth to a positive one. More than $10 million.

After 18 months of semi-retirement, I went back into business. I was officially a consultant to about half a dozen secondary clients and one main one, but my job was always the same as it had been when I was a company’s number-one employee: to work closely with the founder/CEO to grow the business quickly but safely.

Being a “growth” consultant may sound like a much better job than being an employee, and it was in that I didn’t have a boss per se. However, it was tougher because my job had zero security. If I failed to keep the business growing, I was out. Simple as that.

When I talk about the way I worked during that time, I usually describe myself as an intrapreneur or chicken entrepreneur. An entrepreneur in the sense that I held myself responsible for developing strategies to increase the business’s long-term profits. A chicken because I wasn’t risking my own money – which also happens to be one of the primary benefits of being a company’s number-one employee.

As I rose to the top, I’m sure I made more mistakes than I can remember. And I’m sure I had victories I’ve forgotten. But along the way, I discovered many “rules” that seemed to work with remarkable regularity.

I’m mentioning 20 of them below – with this caveat: They may not work for everyone. Nor will they work in every business. To make them work for you, you’ll have to be willing to work as hard and as purposefully as I did. You will also have to be judicious in terms of the companies and people you work for.

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The “Extreme Poverty Problem”: Hans Rosling Explodes Yet Another Myth

Wednesday, April 24, 2019

Delray Beach, FL.-

Answer this: In the last 20 years, the percentage of the world population living in extreme poverty has:

  1. Almost doubled?
  2. Remained about the same?
  3. Dropped by two-thirds?

The correct answer is C. The number of people living in extreme poverty is less than 9%. It was more than three times greater, 29%, in 1997.

If you answered A or B, you are not alone. In fact, an online poll conducted by Hans Rosling found that 90% of those polled got it wrong.

I wrote about Rosling before. LINK

His life work is correcting misconceptions. And one of the biggest misconceptions he’s discovered is that most people – and this includes most educated people – believe that poverty is getting worse.

Here are the facts:

In 1800, roughly 85% of the world population lived in extreme poverty, deprived of such basic human needs as food, safe drinking water, shelter, and access to medical care.

And this was not confined to Asia and Africa. It existed everywhere. Even in England, the US, Europe, and Scandinavia. The world economy back then was still agrarian. When crops failed, people starved.

The situation improved only slightly for the next 70 or 80 years. But by then the Industrial Revolution was in full swing. Wealth was being created at a rate that was faster, by multiples, than at any previous time in human history. And the beneficiaries were not only big industrialized countries but also their trading partners.

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A Brief Answer to a Surprise Question: The 3 Cornerstones of Career Success

Monday, April 15, 2019

Santiago, Chile.– After my speech, I found myself surrounded by a cluster of people wanting to say hello or ask a question. This surprised me because these were employees, not readers. Like matriculated students attending classes, employees attend company-sponsored lectures under some degree of compulsion. They weren’t there because they were fans.

One of them, a young man who works as a telemarketer, surprised me doubly by asking a question so simple it seemed at once naïve and profound: “What do I have to do to be successful in my job?”

The thing is, this kid was serious. He believed I knew the answer. And I had the feeling that he was ready to put into practice whatever advice I was going to give him.

Other people were listening. The question begged for a long and complicated answer, but the moment demanded a brief and simple reply.

What to say?

As it happened, I’d been thinking and writing about a parallel question: What does it take for a social or cultural group to achieve economic independence? My answer to that question was about values and commitment.

To lift themselves out of poverty and acquire wealth, a social group (even a family) must place a high moral value on three ideas: hard work, saving, and learning. No amount of external financial aid will do the job if the group does not believe in and practice these values, for they are the moral and behavioral cornerstones of wealth creation.

So that’s what I went with: Hard work, saving, and learning.

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Two Vitally Important – and Completely Opposite – Business Management Strategies*

Thursday, April 11, 2019

Delray Beach, FL.- Managing a growing company requires competence in two business strategies: centralization and decentralization.

Decentralization, as the name implies, is the process of spreading out the business from the managing core. It is done by developing multiple profit centers, each with its own management team, in different geographical/market areas and/or with different product lines.

Decentralization is usually a strategy for growth. But it is also a good vehicle for innovation, because you have more people separately working on similar challenges and problems.

Centralization is the contrary process. When you centralize a business, you reduce the number of independent operating entities, bringing them back under the command of a central core management team. You end up with fewer people in charge of more business functions and activities.

Decentralization is generally employed when the business seems to be slowing down because of bureaucratic bottlenecks. When there is a concern that growth has stalled because too few people have too much to do.

Centralization is generally done when the business seems to have lost its bearings. When communication and production and processes are breaking down. When there is a concern that profits are being lost due to redundancies and inefficiencies.

To centralize or decentralize? It’s a  critical decision that every CEO of a growing company has to make – and remake – at various stages. And most of the time, the answer is fairly simple. When seeking innovation, decentralize. When seeking efficiency, centralize.

From the perspective of our hypothesis, centralization can be seen as an exercise in concentration and decentralization as an exercise in expansion. But, in fact, decentralizing requires a good amount of relaxation (of control) on the part of senior management. Breaking up one marketing division into four almost guarantees that protocols and practices will begin to change. Some for the better and some for the worse.

To support decentralization, you have to be “loose” enough to accept some degree of unexpected and unfortunate outcomes for the sake of longer-term growth. To support centralization, you have to believe that the policies and practices implemented by the core management team will be better than the sum total of those that had been in place before.

Most managers arrive at their jobs predisposed to one or the other strategy. Those that favor control prefer lots of meetings, memos, monitoring, and “feedback.” They feel safest when the power structure is hierarchical and everything is regulated, so they do everything in their power to keep that order.

Other managers arrive with a more flexible disposition. They are not comfortable with rigid structures and formalities. They prefer fewer meetings and memos. And they provide employees with a good deal of freedom in deciding how to do their jobs. These laidback managers feel comfortable with a more horizontal power structure.

Of course what actually happens in most growing businesses is that there is an ongoing fluctuation between these polarities, depending on external market conditions and internal goals and resources.

Thus the challenge for managers is twofold: to understand their own preferences in terms of control, and to adjust their behavior when circumstances demand that they manage otherwise.

In other words, the concentration-prone manager must understand that there will be times when he/she must make an effort to loosen things up. And the relaxation-prone manager must understand that there will be times when he/she must tighten things up.

The most effective managers can do both.

* In this series of essays, which hopes to become a book, I’m exploring an idea I’ve been thinking about for a long time: that our knowledge of the universe and our experience of living can be understood by the metaphor of pulsation – of contraction and relaxation. And that such an understanding might be helpful in succeeding in life and accepting death.

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When Making Tough Business Decisions, You Can’t Depend on the Facts  

Thursday, March 21, 2019

Delray Beach, FL.- Years ago, a professor of philosophy introduced me to a concept that has helped me make business decisions time and again.

We were discussing Nietzsche, the German philosopher and poet. I knew a little bit about Nietzsche. I knew that he was anti-religion (as we say today) and believed that man could perfect himself by self-assertion. But it was what he had said about the decision-making process that intrigued me. Specifically, according to the professor, he predicted that assumptions made from secondary knowledge (what we learn from studies, books, newspaper accounts, etc.) as opposed to primary knowledge (what we learn from experience) would one day replace experience as the basis of judgment.

I had never given much thought to the distinction between primary and secondary knowledge. But after our discussion, I realized that many of the opinions that I held were, indeed, based on information that I had read, not on personal experience. And the more I thought about it, the more I have become convinced that Nietzsche was right.

In fact, I think it’s fair to say that Nietzsche’s prediction has already come true. Because it seems that these days, most people, most of the time, are making important decisions based more on secondary knowledge (Nietzsche called it wissen) than on knowledge from personal experience (erfahrung).

It’s understandable.

There is so just much information out there. Every day, we are bombarded with facts and figures from the media. And it’s incredibly easy to research just about any subject on the internet. Often, what we learn confirms our own experiences. Sometimes, it contradicts them. But here’s the problem. Instead of using our experience to judge the validity of all of that secondary information, we tend to judge the validity of our own experience by what we’re reading and hearing.

 In business, for example, I know from experience that when I invest in something that I know little or nothing about, I lose money. Yet, I can talk myself into making such an investment if I am shown a business plan that is loaded with impressive numbers. (Even though I know, also from experience, that numbers can be rigged to support almost anything.)

In fact, when I think about bad decisions I’ve made in business, it was most often because I allowed myself to favor the wissen (the outside knowledge) over the erfahrung (the knowledge in my bones).

Case in point: A former business partner and I spent a year attempting to succeed with a publication aimed at new mothers. We were convinced – by the numbers we had come up with – that it was going to be a huge winner for us. The fact that neither of us had any experience in that segment of the industry didn’t faze us.

The result: We were a quarter of a million in the red before we gave up.

Another example: I’d always liked the idea of being an art dealer. So when I first retired, I bought a half-interest in a dealership in Boca Raton. I had read everything I could get my hands on about how to make a success out of that business, and I was confident that I could do it. But what I didn’t know – what no amount of research could have prepared me for – was the day-to-day reality of selling art. It took just a few weeks for me to realize that it’s not about sitting in an elegant gallery and answering erudite questions posed by wealthy people stopping by. It’s about high-pressure selling tactics that I just didn’t have the stomach for.

The result: I bailed. (Needless to say, my partner was happy to see me go.)

I’m not saying you should ignore secondary knowledge when making critical decisions. But when it’s wissenvs. erfahrung…  trust your bones.

Will you ever miss out on a great opportunity? Maybe. But my experience tells me that you’ll go broke before you succeed at something you don’t understand on a gut level.

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So You Want to Be Happy?

Sunday, March 17, 2019

Delray Beach, FL.- Start by doing this: Spend less time thinking.

“Homo sapiens” means thinking human. But for the great majority of our species’ development, we did very little serious thinking.  Most of our brain activity was directed toward survival.

You might think that a lifetime spent searching for grub worms and running from predators would be an unhappy one. The evidence, according to Yuval Arrari, writing in Sapiens: A Brief History of Humanity, suggests otherwise. Prehistoric man seems to have led a reasonably happy life, in part because he had very little time for thinking.

I remember reading about an experiment in England, where a group of volunteers went off to the woods and lived prehistorically. Their lives were very simple. They spent three or four hours a day hunting and gathering, and 20 to 21 hours sleeping. And what did these intrepid volunteers have to say about their experience? They said it was the happiest time of their lives!

There have been several significant studies on happiness in recent times, including the famous Harvard Study that spanned more than 70 years. Most of them came to the same conclusions:

* If you ask young people what they think will make them happy, they will name the usual suspects – wealth, fame success, etc.

* But when you study the actual data, it turns out that happiness comes from experiences rather than things and relationships rather than accomplishments.

These sorts of studies dovetail with the teachings of the Stoics and Transcendentalists and Buddhists. Their view was that wellbeing comes from living “in the moment” and not fretting about the future or the past.

It takes a fair amount of thinking about oneself to achieve success, acquire wealth, and/or become famous (when fame is the goal). But achieving happiness in life is mostly the result of caring about others and living in the moment, which is almost impossible to do when your mind is active with thought.

As someone that spends 98% of his waking day thinking about anything and everything other than what I’m actually doing, I could be a poster person for the deleterious effects of living in one’s head. My bouts of anxiety come, at least in part, from thinking frantically about the future. And dredging up thoughts of the past only exacerbates my bouts of depression.

I believe in the positive effects of meditation. The practice is meant to bring the mind away from transient thought and toward a more grounded state of consciousness – one in which your essential self somehow stops paying attention to the thoughts and feelings that race through the mind and focuses in on the present moment, in all its wonderfulness. But perhaps because I’ve spent so much time thinking, I find it difficult, if not impossible, to meditate in any serious way.

I don’t seem to have much trouble thinking and caring about others. I don’t do it naturally, but I can do it. And when I do it, my mood improves – sometimes into the happiness zone.

But it’s not just caring about others that stimulates a sense of wellbeing. I find contentment, too, whenever I’m working well on something I care about. A building project, for example, or landscaping my botanical garden or a writing a book or playing the French horn.

So what does that all mean?

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Would You Like to Start a Serious Art Collection?

Friday, March 15, 2019

Delray Beach, FL.- “What do you think of this painting?” he asked me. “They want $250,000 for it.”

SP is a former protégé and current partner. He’s had a very successful career. He’s got a beautiful house and lots of expensive toys, but he doesn’t spend money foolishly. So it didn’t surprise me that if he was going to venture into buying fine art, he’d ask one of the few people he knew that had some experience.

The image was well done but conventional. I was only vaguely familiar with the artist. But since I knew the broker, I was pretty sure the piece was being offered at an aggressive price. So I looked up the recent history of the artist’s pieces sold at auction and saw that the painting my colleague was interested in was, indeed, seriously overpriced. I told him so. He didn’t buy it.

He sent me a note, expressing consternation at the process of buying investment-grade art. “It’s not like stocks and bonds,” he observed. “There is no transparency.”

That is partly true. If you are buying art from a dealer, you may find yourself relying exclusively on the information he provides. This gives an unscrupulous dealer, knowing how little most buyers know about art, a big advantage. Art brokers, though, usually won’t lie. It could get them in trouble. But they can and will select the facts they want to convey and omit those they would rather not divulge.

When I first went into the art business in 1989, the retail buyer was greatly dependent on the honesty and integrity of his dealer. Although there were records of auction sales, they were published in large bound volumes months after the auctions took place. Hardly anyone but art dealers and auctioneers even knew they existed.

I used those books then and they taught me a lot. Among other things, they taught me that once you understood some basic facts about valuing art, researching past sales for a particular artist could give you a very good idea of what a piece from that artist was worth.

Today, you can find just about everything you need to know about prices online. Which means you can figure out whether a particular piece is worth the asking price by doing your own research.

If you have read any of my essays on art collecting, you know that my first rule is to start small. And by small, I mean two things:

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