Holding Too Much Company Stock

A single Bible verse may contain the most valuable piece of investing advice ever given. Ecclesiastes 11 2 says, Give a portion to seven or even to eight, for you know not what disaster may happen on earth.

That's the principle of diversification, but do we always invest that way, and is there an exception to the rule? Financial planner and teacher Rob West answers those questions, then he takes yours on any money topic. 800-525-7000 is the number.

800-525-7000. I'm Steve Moore, and you're right where you need to be with us here on MoneyWise Live. Okay Rob, you have me intrigued here. An exception to the rule of diversification, is there such a thing? Well, absolutely not, but that's why they call it a teaser, right?

There's no exception, but it turns out a lot of folks think there is. To them, there's one particular stock that's so enticing that they can't resist buying dangerous amounts of it in their 401ks. That would be Tesla.

No, no, that's not what we're talking about. Apple. It's a type of stock. It's not an actual company, and you can't buy that stock, by the way.

Well, now I really am intrigued. What stock could hold that much power over people? It's their employer's stock.

Companies make it really easy for their workers to buy it, plus it's probably, well, it probably feels good to invest where you work. You know, I think that's why smart people who normally understand the importance of diversifying their portfolios just let that rule go out the window when it comes to company stock. That's risky, because again, there's no exception to the diversification rule, and here's why, Steve. There are many sad lessons on this. Twenty years ago, accounting scandals at WorldCom, you might remember, also Enron, resulted in the collapse of their stock. Their employees lost billions in retirement savings, and then history repeated itself. More recently, 2008, you'll remember Lehman Brothers, and then again, 2015 Radio Shack.

Wow, okay. How widespread is this problem or concern today? Yeah, that's the good news, I guess. The horror stories we just cited seem to have gotten people's attention. Vanguard reports today that only 10% of all investors in their defined contribution plans own any company stock at all, but here's the troubling part. Half of those, or about 5% of Vanguard's investors, still have more than 20% of their portfolios in company stocks. Well, that's exposing them to too much risk if something happens to their company. Okay, but we always hear that it's good for employees to be shareholders in the company.

It gives them incentive to work harder, to increase value in something they own, things like that. I think that's generally true, but it's the amount of ownership that's the problem. You see, there's nothing wrong with owning some company stock, but it should be a relatively small part of your portfolio, no more than you would buy of any individual stock. People tend to ignore the inherent risk of buying an individual stock because it's their company. Surely, they would hear about something going wrong in time to unload their stock, right?

Well, not at all. In fact, Enron executives were unloading its stock by the freight car while telling employees and other investors to keep buying. You see, the rule of diversification is intended to spread the risk to keep us from investing too much in any one area. So, consider this, you're already heavily invested in your company even if you don't own a single share of its stock. If something happens to the company, your paycheck and benefits could be lost. So, do you really want to put a big piece of your retirement savings at risk as well?

Yeah, good point. All right, one reason employees may overbuy company stock is because maybe they see the top executives doing it. Like you mentioned just a moment ago, boxcars of stocks were being unloaded. They figure that it must be safe if that's what the smart guys are doing, right?

Yeah, you have to be careful there though. First, those execs could also be investing much more outside the company so they could absorb a hit on company stock values more easily. Second, Steve, research shows that top executives routinely unload their stock incentives over time.

In fact, they tend to sell company stock at twice the rate they buy it. So, the bottom line is there's never an exception to the diversification rule just like there's never an exception to the wisdom found in God's word. And that's the truth. Thanks so much, Rob. We should probably tell listeners how they can double their stock in MoneyWise. What do you think about that?

That's right. Well, here at the end of the year, we want to remind you MoneyWise is listener supported and we need your help to keep God's financial principles on the air. So, between now and December 31st, a generous donor has committed to matching any contribution you make to the program. So, if you listen regularly, prayerfully consider a gift today. Just go to MoneyWiseLive.org and click the donate button and you'll feel twice as glad that you did. Thanks, Rob. MoneyWiseLive.org. Thanks in advance. We'll be right back with your calls.

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Hey, really super to have you with us today. It's Money Wise Live with your host, Rob West. I'm Steve Moore, and I'm told by our crack engineering staff that the entire phone number did not get out because of a faux pas on my part, not their part, Rob, my part. So number one, here's the phone number, 800-525-7000. If you want to call in and talk with Rob West today about anything financial or Christmas related, 800-525-7000. Again, that was all my fault, not Rob.

Rob is our chief executive, and I know that because he has a parking space. I, on the other hand, have no space, nor do I have a dressing room. And that's the last time I'm bringing it up this year until maybe sometime in 2021. Couple things on that.

Number one, I don't have a parking space with my name on it. There is enough spaces out there that I find one. And secondly, I have a feeling we are going to hear more about the dressing room at some point. I just have a feeling.

Well, however you're led, I mean, I don't want to get into, you know, sticky territory here, but however you feel. All right, 800-525-7000. If you have a question for Rob today about anything financial, anything you might be struggling with, maybe it's your brother-in-law's sizes.

You didn't get them and now it's too late. And now you don't know what you're going to put in his stocking. Or maybe it's just making your budget work at Christmas time, or maybe it's investing. Maybe it's something to do with the grandkids.

Nonetheless, lots of open lines, five open lines, 800-525-7000. It seems like one of two things is happening here. Either A, you had a lot of coffee today, or B, the Friday vibe has made its way into the program.

It's the combination of friends who knew I'm a coffee drinker have sent me early Christmas gifts. And then of course, there is the Friday vibe, which is even more intense when the air conditioning unit breaks down. And that's the case today.

So the air is heavy with the vibe. And we also have emails. In fact, here's a COVID email, Rob. When COVID is all behind us, should I pay back tithes or that we couldn't afford to pay this year when COVID is behind us?

And hopefully that's sometime next year. Yeah, I mean, I would be careful in saying back tithes. I mean, I understand the spirit behind the question.

We don't want to be legalistic about it. And yet you can never outgive God. So yeah, if there was a season where you paused your giving and I would say, you know, whenever possible, I would just even keep pressing on into your giving, even in a difficult season.

It's really that opportunity to demonstrate our total trust in the Lord. But if you paused your giving and now you're kind of coming through this and you say, you know what? I probably should have given more systematically than I did. And I'd like to make up for that and perhaps make a larger gift at year end. Absolutely.

Go for it. Again, you know, we should be generous and looking for ways to continue to move our giving along. And so do what you can. The Lord sees your heart. And the key is I think we want to be faithful and proportionate in our giving.

And then beyond that systematic giving, always be looking for ways that we can give sacrificially as the Lord leads. All right. And we may get to another email later in the program. The address is, if you have a brief email for Rob, a couple of lines, the address is questions at moneywise.org.

Let's begin by going to Chicago. And Nick, how can we help you today, sir? Hi. I just heard you guys are talking about if you own a lot of stock. So my wife, I mean, she owns a lot of stocks, about a hundred thousand at her company. So does that mean it's, although, I mean, I know the prognosis is good as right now that the stock is growing, but is it wise to keep it or is it good to sell?

Yeah. It's a great question, Nick. And again, I think this is where a lot of people find themselves. In fact, in this study we were citing from Vanguard, you know, 5% of their investors hold more than 20% of their portfolios in their company's stock. Now, why is it a bad idea to do that? Well, it's just violating this principle we find in Ecclesiastes around diversification, which just says simply we should spread the risk and not have all of our eggs in one basket, because despite what might be true about the company today, and it doesn't really matter what company it is because this could apply to any company, despite what's going on today, there may come a time where the company, perhaps even suddenly, goes from being something that is really growing quite well to having real headwinds. And, you know, it could come from any number of avenues, whether it's competition or, you know, fraud or something that was being done, you know, behind the scenes, like in the case of Enron and WorldCom. So I think for that reason, it's always good to say, you know what, as I receive company stock, I'm going to sell and diversify among a larger number of companies, and therefore I don't have all the eggs in one basket. So I think for that reason, I would say yes, you know, probably consider not having more than 5% in any one particular stock. And if this represents a pretty high percentage of her overall or your together overall investable assets, then it would be wise, based on this principle we find in Scripture, to go ahead and begin over time systematically diversifying her holdings into other investments that would be more diversified, if that makes sense. Okay, so even if the stock is just given to us, we don't buy it, it's just given to us.

Yeah, exactly. I mean, assuming you have the right to sell it, and it's what's called vested, right, it doesn't matter how you got it. Really, the idea here is that once you get it, assuming you have the right to liquidate it, it's part of your assets, right? It's God's money that's been entrusted to you, whether you purchase the stocks or they were given to you as a benefit of being employed there. But regardless, it makes up your total investable assets. And when you look at your investment strategy, how you're managing God's money, including that money that's working for you in the market for your future, I think we've got to evaluate that in light of biblical principles. And one of those key principles is diversification.

So yeah, even if it was given to you as a benefit, I would say you should systematically and prudently factoring in tax considerations and otherwise begin to diversify away from those high percentage holdings in a single company. Great question, Nick. And we're glad that you called us today. We hope that helps you guys very much.

And Rob, it certainly is interesting. The Bible obviously talks about diversification in a number of different places, but give a portion to seven or even to eight. That doesn't say five percent or nine percent or twelve percent or well, maybe it does now that I'm doing the math. But you feel comfortable suggesting that five, six percent should be the max in one's portfolio? Yeah, you know, I think you've got to look at it just in terms of what type of account are we talking about and how much overall investments do you have? Meaning, you know, do you have more than you need? So therefore, you have the ability to be a bit more speculative than somebody who's, you know, perhaps a little bit behind and really trying to catch up in terms of long-term savings. But yeah, somewhere between that five percent mark at the most ten percent in any one company would be prudent. Alrighty, let's go to Austin, Texas. Lisa, welcome to Money Wise Live.

How can we help you? Oh, thank you. I am looking to retire next year and that will be a year earlier than I would apply for Social Security. I have been at this job for almost 40 years and investing in the 401k for that length of time, so I've got a healthy 401k. What my question is, is what exactly when I retire to do with that? Should and can I take like a year's worth of of money until Social Security comes in?

Should I take from then? Or I do have some personal savings that I could live off. I just don't know because I know at some point you have to, you're mandated to take money out, so just not sure how that works.

Yeah, it's a great question, Lisa. I would be looking right now for the investment professional, if you don't already have one, that you'd like to hire to actually manage these assets when that time comes because what makes a lot of sense is for you to roll that 401k to an IRA. Again, then have a professional investment advisor begin managing that for you based on your goals and objectives and part of that would include what income needs do you have pre-Social Security and then beyond Social Security so that it could be managed that way where there's a small growth component to keep the returns you know more than let's say one or two percent. We want to try to get up around the four percent range at a minimum but yet preserve the account for the long haul which means not taking too much risk. In terms of how you might approach that, I think the key would be you don't want to take it out in a lump sum.

You only want to take it out as you need it. Certainly if you have maybe three to six months living expenses I'd probably leave that intact and then convert the 401k into a monthly income stream that's going to make up the shortfall until you can start collecting Social Security. If you had more than three to six months expenses saved up in emergency funds then perhaps rather than touching the 401k you could use part of that but I wouldn't go below that that six month mark if it were me and yeah I think beginning to take out only what's needed as income replacement from the 401k until you start collecting would be great and then if you need a little bit beyond that again that would be part of the overall strategy on how you invest the 401k and what you need to pull out. In terms of a required amount that you would need to take out that's not going to come until down the road at age 72 so you have a little bit of time before you'd have to think about that.

Does that make sense? And would you suggest to leave my 401k in my company or take it out when I retire and roll it into an IRA? Yeah I would take it out roll it into an IRA again but I would select that investment professional in advance. If you don't have somebody there's some wonderful certified kingdom advisors there in Austin Texas you can go to our website moneywiselive.org just click find a CKA and I'd interview two or three.

The IRA though Lisa's going to give you more investment options you won't be limited to the options inside the 401k and you'll have more control over the cost structure as well. Thank you Lisa we appreciate that we'll be right back. How did you feel the last time you made a not so good decision? As pastor Andy Stanley points out our decisions are like the steering wheel of our life and so you get decision making right you get life right.

In his new book Better Decisions Fewer Regrets you'll learn five critical questions to apply to every decision you make so you can feel confident you're getting it right. Request your copy with any gift to MoneyWise of $25 or more at moneywiselive.org. Do you feel like your hands are tied with debt preventing you from serving God? If you have credit card debt Christian credit counselors can help. Through our debt management program we can get you out of credit card debt about 80% faster while honoring your debt in full.

For more information on how Christian credit counselors can help visit christiancreditcounselors.org that's christiancreditcounselors.org or call 800-557-1985 800-557-1985. Hebrews 4-12 says for the word of God is quick and powerful powerful and sharper than any two-edged sword. Here's Beth Moore with a quick word. A series of ways that God reveals himself to us as El Olam. You feel these things you experience these things and now you have a name to go with them that we call upon when we go through these very things. How is it in what ways and what experiences does God reveal himself to us as El Olam? Number one he reveals himself to us in our number one frustration that there is never enough time.

There you have a perfect revelation of El Olam. Is it not the death of us that we cannot seem to get enough time? There's been the same segment of time it looks like God would have known that our that our generation was going to be more important than all of the rest and would have just extended the daylight hours for us. You know what I'm saying? Because every generation thinks they're more important than the last and it would seem that God would have done something to give us a longer day.

We have more to do after all but he has never budged it. You got your 24 hours and he said you have your night you have your morning. I love that the Hebrew day works from darkness into light.

Your night and your morning is the first day you got your 24 hours and that's what you got. You'll never be so important to have 25. You will never be so insignificant that God said you know what you really don't do all that much I'm giving you 20 days. You've been listening to Beth Moore with today's quick word. Beth is dedicated to encourage people to come to know and love Jesus Christ through the study of scripture.

Why wait? Click online today with a podcast or television teaching or both. Just visit BethMoore.org. Merry Christmas from Beth Moore and the team at Living Proof Ministries. Our phone number is 1-800-525-7000.

You're listening to MoneyWise Live with Rob West. I'm Steve Moore an honor and a pleasure to have you with us today. This program is all about finding God's wisdom for your finances not our opinions but to the best of our ability God's wisdom what God says about your money your finances and the ways that you're to monitor it use it give it leave it behind to other generations things like that 800-525-7000. Naples Florida David thanks for holding and what's on your mind? Well good afternoon gentlemen and just first of all I'd like to thank you for your wonderful program. Larry Burkett convinced me to get out of debt back in 98 and it was the best decision I ever made.

It's amazing how many lack of restless nights you get when you're debt free. My concern today is the last of my parents has recently passed away. Everything's involved in trust split between my sister and I and of course some of the recommendations are that we split the trust and you know kind of each go our ways. It's pretty heavily invested in some good bonds some of which are I think 4.8 percent some blue chip stocks and so forth but there's a couple concerns. I don't anticipate even having to use this money so I'm more interested in putting it back into a trust or what have you so it could pass through to my sisters, daughters, my nieces and their grandkids and so forth.

So that's my first concern. So I think what I would best for you today would tell me like my first three steps I should make you know I've been advised to get a CPA and an advisor so I is it the ambassador advisors the rest go so anyway with that in mind if you'd like to tell me what my first three steps should be. Yeah well David I'm sorry to hear about your parents passing and I'm glad to hear you're really leaning into this. I think having some competent biblical counsel come alongside you in the form of a certified kingdom advisor both in the tax area and in the investment and a legal area would be good. I mean typically what you would do when you have a trust along you know as a part of an estate you'd want to obviously get the original trust docs with any amendments or any restatements make sure you understand exactly what's there read them to understand the trust terms and find the names of any beneficiaries again a lot of this may be a fairly plain and understood but you just want to make sure you have that then you want to gather brokerage statements bank statements and insurance policies you'll of course need the date of death for each bank account and insurance policy and you'll contact any brokers involved here or investment professionals request to print out of the securities and you know those will you know you'll want to understand exactly what's in the trust then typically what would happen is you'd go online and obtain a tax id number from irs for the trust and open a bank account in the name of the trust and that's what's going to be the recipient of any of the proceeds the life insurance payouts that the beneficiary was being paid to the trust any liquidated assets there's going to need to be an income tax return filed for the trust and so you want to keep careful records so i think really just getting everything in order getting all the documents together so that when you sit down with some professional counsel you can you know go over everything get everything consolidated into one place and then as the funds are distributed again keep careful records of that then it will be your decision at that point for whatever portion is coming your way as it's paid out to decide what you want to do with it and then that really segues into your own estate planning whether it's your will or whether you may want to set up a trust so that you can handle the disposition of your assets for your loved ones and you mentioned family members that you'd want this to pass through too but a trust the benefit there is that can go into effect prior to your death if ever needed or beyond your life and really handle how those funds are distributed especially when we're talking about minors david we hope that information helps you thanks so much and we're happy to hear that you're now debt-free god bless you brother and thanks for those kind comments more money wise live after this christian health care ministries enables believers to show love for one another by sharing each other's health costs through chm's voluntary health cost sharing programs members uplift each other spiritually and financially chm is an eligible option under the affordable care act and a better business bureau accredited charity interested learn more by calling 800-791-6225 or online at chministries.org investing is more than just returns it's an expression of who you are and what you value does the way you invest your money reflect your identity as a christian at eventide we design investments for performance and a better world so you can invest with the confidence to reach your financial goals while remaining true to your christian values and commitments we call this investing that makes the world rejoice more is available at invest eventide.com that's invest eventide.com is there a place for you in heaven find out when you read heaven and the afterlife a one volume set of irwin lutzer's hallmark works on eternity heaven and the afterlife lifts the veil on eternity and reminds us that this world isn't all there is this book will challenge you to seek what cannot be lost before it's too late heaven and the afterlife available online or at your favorite christian retailer for more visit moodypublishers.com what you're reading josh oh today in the weeds helps me uh grow weeds the weeds grow by themselves i suppose what are you reading today in the word because christians don't grow by ourselves i mean we need the word of god daily maybe i should get out of the weeds and into the word a fresh passage of scripture and a devotional that helps you live it out that's today in the word in print podcast or email bring it today in the word.org the financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst in splitting heirs giving your money and things to your children without ruining their lives ron blue explains why it's important to make these decisions now instead of forcing your heirs to do it later splitting heirs will foster a real appreciation for the precious resources that god has entrusted to you and it's available when you click the store button at money wise law with srn news i'm john scott the legislative branch of government rapidly moving to receive the coronavirus vaccine with both house speaker nancy bellosi and senate majority leader mitch mcconnell getting the shot today the top capital doctor urging all members of congress to join them the u.s stands on the verge of adding a second vaccine to its arsenal as the coronavirus outbreak descends deeper into its most lethal phase yet the fda is evaluating a shot developed by moderna and the national institutes of health and a decision could clear the way for its use as early as monday u.s stock indexes pulled back from their record levels as the weight drags on to see if congress can reach a deal to send more cash to struggling workers and businesses the dow fell 124 points that azdak dropped nine and the smv was off 13 this is srn news good to have you back with us it's money wise live still lots of time for lots of calls if i don't take it all up by talking but rob our last caller mentioned our good friend the late larry briquette and from 1985 which is when i first met larry until the day he passed he was incessant about the envelope budgeting system he talked about it he talked about it he talked about it we all had envelopes i think we kept the number 10 envelope companies pumping just on our own system here but i'm thinking and not only was it effective but now we're we're in a new digital age not as many people have envelopes i'm thinking if only there was a a digital way of doing a way that used computers but it would it would represent the old envelope system wouldn't it be cool that would be incredible in fact we've got it steve now you're right uh there was no iphone so the iphone wasn't introduced until 2007 uh larry briquette passed in 2003 so yeah this was smartphones were not a thing back then so there was a lot of number 10 envelopes floating around but nevertheless it is an incredible way to manage your spending control the flow of money in and out and when it can be in the palm of your hand and you and your spouse can share accounts uh it's a beautiful thing and that's where the money wise app comes in it's uh brand new just released in the last couple of months and it's incredible so yeah go to your app store apple app store google play store search for money wise biblical finance download it today and get started you can set up all your envelopes you can download your transactions electronically from all of your institutions they automatically if you want them to get placed into your envelopes everything's in sync in real time there's a community there for you to chat with and talk to about the questions you have and we would love to have you a part of it so head over there today money wise biblical finance is the name of the app i love it rock island illinois is next denise we know you've been holding and we sure appreciate that what's your situation and we understand good news as far as your son is concerned huh yes thank you so much uh he's been accepted to medical school and um he will be graduating this spring our son in um in a pre-med program from a christian college and our concern is that uh how to do the funding because we operate he will be coming out debt-free he doesn't feel the military is his route but we're we like to operate romans there's 13 no no men anything except to love one another so what do we do yeah well there's no doubt medical school is expensive now the good news is it's a profession that when you come out the other side you should have a commensurate paycheck that would allow you to pay this back the key is coming out of medical school making sure if there is debt incurred and hopefully we can keep that to a minimum that uh like the lifestyle is is modest that he keeps expenses low so that those first 10 years out of school he can really focus on paying down debt just as quick as he can uh you know without seeing a lot of increases in spending on lifestyle that would take away any surpluses that may be able to be applied because we want to try to try to get that paid off in this in the first 10 years if possible uh you know scholarships obviously is the place to start denise uh if your son happens to know what specialty in med school he's going to pursue i would go online to that professional association to determine what financial aid and scholarships they have available so for instance the american association of colleges of osteopathic medicine has several different scholarship programs available so if he knew that's the direction he was headed he would want to look into that and apply for some of those scholarships if he had any interest in becoming a medical missionary i realize that may not be the path that he's on but if he was there's a phenomenal organization called med send and you'll find them at medsend.org and they make grants to prospective doctors who want to use their expertise overseas for the needy there's also federal assistance programs so there's the public service loan forgiveness program that would forgive student loan debt which includes you know the direct subsidized and unsubsidized loans plus the the plus loans and consolidation loans but this is where you work in the non-profit sector and through government organizations and if you do that for uh you know a certain length of time uh then you know that loan would be forgiven you have to make the payments while you're waiting but at some point that would all be wiped out but again that's for a narrow slice of those doctors that are either planning to go overseas admissions or willing to work in a public service employment so if that doesn't apply then i think the key is just trying to you know work in the summer trying to keep those uh loans as low as possible and then really focus on uh repaying that debt just as quick as he can when he comes out of school uh if this is the path that god has him on thank you so much i greatly appreciate it absolutely denise god bless you hey merry christmas god bless you too merry christmas thank you so much thanks denise god bless give our best to you son uh kilgore texas hello roger what's your question hello uh good to talk with you uh thank you we are uh retired 71 years old and we have a home loan uh of about 87 000 left and we also have a car loan of about 22 000 and we are considering paying these off with about half of our investment for our portfolio is that a good idea or not yeah i appreciate the question roger tell me just a bit more first of all i guess then you know if you're looking at roughly 110 000 you've currently got about 225 000 or so in investments is that right that's correct exactly right all right very good and then are you pulling any portion of that out to supplement your other income sources to live on each month or is that just sitting there and growing no we are pulling out uh about 1400 a month which is about seven plus percent yeah okay so you're pulling out around 17 000 a year um on 225 000 so yeah about seven percent okay um in terms of the home if you were to pay this these two off would you still have to pull out i assume you would would you still have to pull out of the investments we would have to pull out some but but not nearly as much as we are now what would you estimate you'd have to pull out at that point well we would probably pull out about 400 or 450 a month okay all right so at that point you'd be pulling off uh go ahead yeah most of these and we would have to divest uh all of the basically all the mutual funds and stocks that we have and what mostly would remain are are a couple of annuities yeah okay uh very good well you know i i like that plan i mean the key i'd like for you to do is to get that down i mean if you pulled 5400 a year on 110 000 we'd be talking about roughly five percent which is manageable at that point i think the key is you don't want to pull this out all at once because i don't want to an extra 100 000 added to your income so if you do this you're going to want to do it over a few years and i'd talk to your tax preparer about the best strategy for not pushing any portion of this up into a higher tax bracket so what for instance he or she may recommend you do this over three years um the key would be we want to get if possible your expenses down such that we're only pulling four percent a year uh ideally so on 110 000 if that's what's left um you know i'd i'd love for you to only be pulling about 4400 a year which is about 360 a month so if you could pay this off and cut some expenses and get down to roughly 350 a month and i think this is workable um but i would spread it out over a couple of years and check with your tax preparer on how many years to do that roger thanks so much and merry christmas to you you probably have a strategy for your finances your career even your retirement but do you have a strategy for your giving at the national christian foundation we can help you create a giving strategy to inspire your family maximize your resources and leave a lasting legacy of faith to learn how visit moneywise.org ncf siri i need some help what's up well sometimes i feel like i can't get a handle on my money i mean where does it all go hmm it sounds like you need the money wise app it's a free app that will help you plan your budget and track your spending like the three dollars you spend every morning on coffee well not every morning you'll also get access to free biblical financial advice sounds awesome let's do it okay searching for money wise on the app store learn more at app.moneywise.org this is barry mcguire i'm a car guy here to help you understand god's purpose for your life through the eyes of a layman tis the season to be jolly someone didn't get the memo in fact a whole lot of people didn't get the memo did you read the headlines this morning it's business or should i say chaos as usual our world is coming apart as it seems the contrast between the headlines of our day and the message of christmas could not be further apart how far we have fallen and how it must break god's heart if you want to point figures try pointing them at the church as we've allowed the reality of a god who loves us in spite of what we've done to be lost by our silence and fear of offending people with the truth jesus came to manifest his love and sacrifice his life so that we every one of us can receive his gift of eternal life your job is to ignite revival outside the walls of your church by moving everyone every day closer to jesus for help doing that go to rotw.com hospitality dustin willis and brandon clemens say it's the simplest way to change the world gospel-centered hospitality makes a powerful witnessing statement as we open our lives and homes to others the simplest way to change the world will show you how you can be hospitable even if you don't have the space for it most people are more likely to step into a living room than a sanctuary so why not read the simplest way to change the world more at moodypublishers.com if you're feeling that it's time to make a change in where you work maybe you should investigate the possibility of a position with moody bible institute moody bible institute is looking to fill a number of full and part-time positions in education at moody publishers and moody radio you'll find positions in management clerical professional and non-skilled labor it may be worth your time to take a look at the more than 40 position openings available now you'll find each job description online at moodyjobs.org that's moodyjobs.org hey we uh we hope you're having a great day wherever you are if you're circling the parking lot at the mall we hope you find a space real soon before you run out of gas but nonetheless you're listening to us and we appreciate that most of all gurney illinois and barry what's your question for rob west well sir first off love your program and merry christmas to everyone thank you i work for a comp there you're welcome uh i work for a company that matches my 401k and i'm maxed out on that now they also have options to where i can convert part of the money i've saved with that to a roth ira i was wondering if i converted that now would be any tax advantage well there would be a tax bill that you would owe but the advantage would come later because it would start growing tax-free let me just ask barry are they talking about converting a portion to a roth 401k as opposed to an ira um they said a roth ira i haven't explored it all together and might be there but i'm not quite sure okay typically unless you separate from the company you can't move it out uh into an ira so it's probably what they're saying is they have both options they've got the traditional 401k and the roth 401k and they're gonna perhaps let you uh convert a portion of it you know one option to consider if there is both options there barry would just be to kind of freeze the 401k that you have now in terms of not continuing to contribute to it and obviously it would stay invested in whatever you have it in and whatever makes sense moving forward but then begin contributing moving forward to the roth 401k i actually like the idea of you having both buckets available in retirement both the tax deferred that you would still have to pay tax on and the tax free which is the roth option where you've already paid the tax because that way depending on where the tax code is and who knows where it'll be when you get to retirement plus however much income you need to pull out plus the required minimum distributions which apply to the traditional and not to the roth it would give you multiple options to decide which is the most cost effective bucket to pull from so rather than converting it and paying a bunch of tax on the amount you've already put in again i'd probably consider starting to contribute to that roth 401k moving forward but now at the end of the day this is a tax consideration so i'd probably get with your tax preparer and just ask that individual to weigh in on this conversation before you make that decision barry we're glad that you i did yeah go right ahead thank you and i just learned that i don't i can wait till i'm 72 to start pulling it out which is a nice little advantage too so that's right thank you thank you sir for the good advice all right we appreciate it barry merry christmas to you thanks barry and what's that 72 thing that barry mentioned i think it doesn't last forever right well you know i mean it can change at any time but it used to be 70 and a half when you would have to take your required minimum distributions but the age has been moved to 72 if you hadn't started taking your rmds yet through some legislation changes yeah okay uh wooster ohio benjamin do you have a question for rob today yes i do hi all right go right ahead i want to say thank you guys very much for what you do oh thanks i got a question yeah i got a question regarding refinancing my home mortgage loan okay i'm just curious uh with your guys's uh wisdom and understanding uh whether or not it would be ideal for us to refinance sure a couple of questions for you benjamin first of all what is the value of your home roughly uh well i've talked to a couple other uh loan specialists and they've looked into it and we haven't had it appraised uh recently not since we bought the place but they were estimating about 130 okay and what do you owe in your current mortgage yeah 101 okay and how long have you had this loan five years now all right was it a 30 year loan when you started yes it was okay and uh what is your current interest rate four percent all right you have a good credit score yeah i'd say so all right last question do you plan to stay in this home for at least five to seven years yes okay uh yeah so i think uh clearly it'll it can make some sense for you to refinance i wouldn't go with a new 30-year mortgage i'd be looking at a 20 or a 25-year loan uh but at uh you know if you look at a 20-year mortgage you should get down around 2.6 right now and as long as you don't pay an inordinate amount of uh closing costs i'm thinking maybe one to two percent so on a loan like this you know we're talking uh you know three thousand dollars at the most hopefully around two thousand um then you're going to save quite a bit in interest about a point and a half and you know that's going to really save you a lot of money over the long haul the key will be you just want to make sure that the monthly payment still fits into your budget when you go with that 20-year mortgage that's going to shave five years off but with that lower interest rate too you're going to save a ton in interest if though that mortgage payment pushes up even with the lower interest rate with the 20-year term if it pushes up kind of out of your reach where it's you know becoming onerous or it's above 25 of your take-home pay then you may want to look at a 25-year mortgage but given that you're going to save over a point almost a point and a half on the interest rate um as long as you don't pay too much in closing costs and you're going to stay in this home for a while you're a prime candidate for a refi hey the key thing there is make sure you shop it around get at least three quotes i'd look online at bankrate.com to see who has the most attractive rates right now and then you could also check with your current lender or bank as well just to see what they might have and compare it to what you find ben we wish you the very best thank you for your phone call today i think we can squeeze in one more here let's see how about greenwood indiana and rob we say hi to cindy cindy we're so glad you called today uh how can we help well hi i'm happy i called too well i have something very quick i want your um opinion on trust versus will versus the transfer on debt our finance advisor favors the trust my husband's not sure if i need a will and my sister and husband have a transfer on death okay cindy well let me just define them really quick will is probably the simplest option it allows you to specify how your assets will be divided and distributed to your errors upon your death it doesn't go into effect until death and the process is overseen by the probate court in your county a trust can do that and more it allows you to bypass the probate court but it's a bit more complicated and therefore a little more costly to set up there's the revocable kind which would be more typical and then the irrevocable kind you maintain ownership in the revocable trust until death with an irrevocable you sign over ownership of your assets to the trust so with a revocable trust what are the benefits well it allows this to go into effect prior to death so if you were incapacitated you could designate somebody to take over and manage the assets inside the trust again it could pass anonymously and therefore outside of probate and even outside of the public record it can last beyond your death so if you wanted to give directives around how assets were to be distributed so like if you had minors that were you know you're going to be giving an inheritance to or to somebody on their behalf you know prior to their age of majority you could control that through the trust if you had a lifelong dependent that would be another reason why you'd want to trust so it can allow you to really specify how the assets are distributed at various points and based on various triggering events and then the transfer on death just lets the beneficiaries receive the assets at the time of your death without going through probate so it's again it's a little bit more expedient you know this would apply to retirement accounts 401ks things like that and you would choose the beneficiary you know with a married person a spouse would a lot of times have rights to some or all of the account on death but it just creates for a little more efficiency with certain types of accounts so I think the next step for you is to decide first of all you absolutely need a will the question is whether a trust would benefit you based on your situation the assets the complexity whether there's a business whether there's minor children whether you want somebody to be able to take over prior to your death or you want to be able to control the distribution after your death as opposed to it just passing according to your will through probate and those are really the considerations I like for you to to visit with a godly estate planning attorney to make these decisions somebody who can ask a lot of questions and help you draft the documents that you could also at that time put a power of attorney and a health care surrogate and a living will in place as well which are really separate legal instruments that I think are required and necessary for everyone now so if you don't have an estate planning attorney who's a believer there in Indiana connect with a certified kingdom advisor at our website and ask for a referral you can do that at MoneyWiseLive.org just click find a CKA and I hope that's helpful to you. Cindy God bless you and thank you so very much Rob almost out of time but give us 30 seconds on with Christmas still a week away how can we stay focused on the reason for the season any thoughts in that regard? Well yeah Steve I think you know it's such a wonderful time of year and yet we can get lost in you know just the the things that are other than the real reason and so we want to enjoy family we want to enjoy just all the sights and the sounds and just hopefully slowing down a little bit at the end of a tumultuous year and yet we want to keep Christ at the center as you said and so I think really celebrating the Advent and the coming of the birth of our Savior really getting into scripture and spending some time just talking to the Lord and as a family perhaps reaching out to those in need in your community maybe you can adopt a widow or a widower at your church or perhaps there's still time to connect with a family who's really been devastated financially this year see if your church can connect you with someone I would just say be others focused and be Christ-centered and if you do that then you can enjoy the real reason behind what we're doing this time of year. I like it Rob thanks so much God bless hope you have a great weekend my thanks to our technical crew Amy, Aaron, Dan and of course our own Jim Henry thank you for listening today good luck this weekend say something nice to someone and then please come back and join us again Monday MoneyWise Live is a partnership between Moody Radio and MoneyWise Media.