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Friday, November 27, 1998

Why It's Foolish to Give Money Away

by Chris Rugaber (TMF RFK)

The Motley Fool's motto is to "educate, amuse, and enrich" the individual investor. Usually, this means discussing investment concepts, analyzing stocks, and tracking the Fool's real-money portfolios, with the spirit of "Foolishness" providing a common thread. However, with the launch of our second annual charitable fundraising drive, we're now looking to enrich our fellow Fools in a different, but still Foolish, way.

Foolishness is about being responsible for your finances, it's about treating money as a tool rather than an end in itself, and it's about sleeping more soundly as a result of how you handle your savings and investments. Fools want to manage their own money, without worrying about day-to-day market fluctuations, in order to better fulfill other dreams they may have. So how does all this relate to charitable giving?

Let's look at the first point: responsibility for your finances. Fools don't do their own investing just because it's cheaper than using a full-service broker. Doing your own investing can be fun, if you're so inclined. But handling your own investments is also a fundamental way of taking responsibility for your future.

Donating money to charity represents a shouldering of responsibility as well. Rather than leaving problems for others to solve, by providing funds to a charity you are Foolishly doing your part. And since there are such a variety of places to direct your money, there's really no excuse for not finding a worthy place for it. If there's a problem out there that you believe needs to be addressed, there are probably several charities working on it, enabling you to choose the one you feel is doing the best job. In fact, this is another responsible act: by comprehensively comparing charities and deciding which is more deserving of your money, you reward more efficient, effective groups, and provide incentives for other charities to emulate them.

The second aspect of Foolishness mentioned above -- treating money as a tool rather than an end in itself -- provides probably the best reason to donate to charity. As David Gardner wrote last year when we announced our first charitable drive: "Money is really just synonymous with opportunity. Money is the opportunity to retire early, to buy a house, to put a child through college. And when you give money away, you're giving that opportunity to someone else. There is no nobler use of the stuff."

What better way to show that you view money as a means, rather than an end, than to use it for an altruistic purpose? Ideally, Fools do not spend the time we do analyzing investments, saving money, and tracking our portfolios, just to sit on top of ever-larger piles of cash. (Well, maybe that's part of the reason). But another part is to do something with it -- to take advantage of opportunities, or to expand opportunities for others.

Finally, Foolish investing should reduce, rather than increase, the stress in our lives. Long-term buy and hold investing produces better returns than other methods, in our view, but that's not the only reason it's a Foolish way to invest. It's also Foolish because of the life it allows you to lead. Rather than obsessively watching stock tickers scroll by on TV screens, yelling "Sell! Sell!" into the phone in order to lock in an eighth of a point gain on a temporarily declining stock, Foolish investing puts your money to work for you. Charitable giving is Foolish for the same reason: it allows you to derive satisfaction from your money, rather than stress. Using your money to help others can provide a different, but still rewarding, type of enrichment than the traditional Foolish activities of saving and investing.

Finally, a fundamental tenet of Foolishness is that everyone should think for themselves, and not just follow the lead of a self-appointed gooroo. So, if you are not so hot on giving money away, then that's fine, too. Figuring out what you're about and being true to yourself are critical aspects of Foolishness. Though perhaps you should consider volunteering your time instead.

Give us your 2 cents! Join the Fool Charity Drive.

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