In John Steinbecks The Pearl, Kino finds the Pearl
of the World, and discovers in response to the question: What
will you do now that you have become a rich man? That the
essence of pearl mixed with essence of men was a curious dark
Today we need to focus on the measures of care and due diligence
that are necessary in order to manage money after you make
In The Pearl, when the family acquired some wealth the poison
sacs of the town began to manufacture venom Indeed the Song
of the Family, died and the towns greed led to murder,
destruction and death. In the end Kino, flung the pearl with
all his might back into the ocean, and everyone in La Paz
remembers the return of the family.
The truth about money is that ultimately you do not want
it all for yourself. After youve bought two or three
things that youve always wanted, you really want to
use it to satisfy the needs of others, members of the family,
charitable causes etc. You see the nature of man is to be
caring, loving and giving.
The problem begins when those who have no right to your
money, want it more than you. So, as in Steinbecks novel,
they begin to scheme and plan to take it away.
Wealth conservation and estate preservation are disciplines
separate and apart from wealth creation. The tax man is the
first who stakes a claim against your money. But taxation
is revenue generation that supports public administration,
and the society, so the tax man has a legitimate claim.
The ability to reduce your tax liability is usually tied
into governmental measures to sustain long term financial
viability in the economy. The benefit to the consumer is that
of tax avoidance and tax deferral ie postponing the payment
of taxes to a later date, legitimately.
For more than ten years Ive advised individuals to
save money in a tax deferred plan. One of the reasons was
because the money would escape taxation during the savings
years, but become subject to tax, years later. The benefit
of such a plan would be that individuals would fall into a
lower tax bracket when the money does become taxable.
That devise has materialised and many clients now enjoy
not having to pay tax on the first $5000.00 of income in retirement.
They didnt pay any tax on their contributions then,
and do not pay tax on those contributions and income derived
from the strategy, now! Theyve won both ways.
This is an example of estate conservation. Theyve
conserved savings that are not now subject to tax. This device
is still available to consumers who have not yet retired.
Needless to say, many persons doubted that the strategy will
work. But it has!
In its simplest form conservation is the ability to let
sum $X, remain $X, without erosion. Of course the purchasing
power of $X years later is a matter of inflation etc but that
does not erode the value of the devise for reducing taxes.
There are other avenues for estate conservation that we
shall explore next time. Estate preservation is the ability
to secure your estate against claims that erode its value.
This can be achieved via devices that ensure that all debts,
liabilities, and transfer costs can be paid off by money set
aside for that purpose. The objective is to eradicate dark