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More Ways to Save Money

MoneyWise / Rob West and Steve Moore
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March 29, 2021 8:03 am

More Ways to Save Money

MoneyWise / Rob West and Steve Moore

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March 29, 2021 8:03 am

There are always more ways to spend money than there are to save it. So, no matter how much you have, it’s important to spend wisely. On the next MoneyWise Live, hosts Rob West and Steve Moore share some of their ideas about wise spending and saving. Then they’ll take your calls and questions on the financial matters you’d like to discuss. More ways to save money on the next MoneyWise Live at 4pm Eastern/3pm Central on Moody Radio. 

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This is Doug Hastings, Vice President of Moody Radio, and we're thankful for support from our listeners and businesses like United Faith Mortgage. My grandma loves iced tea. It's her thing. So I go to hang with grandma for a bit, and I see she's holding her big plastic cup with her tea, but the cup is literally sitting inside one of grandpa's sports socks. And I'm not making this up.

No one could make this up. Uh, grandma, you okay? Of course, dear.

The sock soaks up the sweat and keeps the tea colder. Hey, it's Ryan from United Faith Mortgage. And as I thought about it later, I thought, that's the kind of mortgage team I want us to be. The kind that's willing to take any step needed to get the job done on your new home purchase, refinance or cash out refinance. And can we help everyone? No, obviously we can't.

But if you know we're willing to use grandpa's sock to keep a drink cold, you'll know we're willing to do whatever it takes to make sure you're taken care of. We are United Faith Mortgage. United Faith Mortgage is a DBA of United Mortgage Corp. 25 Melville Park Road, Melville, New York. Licensed mortgage banker. For all licensing information, go to Corporate NMLS number 1330. Equal housing lender.

Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. John B. Rockefeller, founder of the Standard Oil Company and one of the wealthiest men in history, still believed in spending wisely. In fact, he once said, I believe that thrift is essential to well ordered living. That's right, there are always more ways to spend money than there are to save money.

So no matter how much you have, it's important to spend wisely. Today, Kingdom Advisors President Rob West shares some of his ideas about that. And it's your calls on anything at 800-525-7000.

800-525-7000. I'm Steve Moore. More ways to save money. Next on MoneyWise Live. So Rob, I'm guessing you didn't know old John D. He died in 1937, but in today's dollars, he'd be worth something like $420 billion. So it's a little hard to imagine him looking for bargains at the discount store, huh? Perhaps, but he also, Steve, understood that using money wisely was a virtue in itself. Beyond just the financial benefit, perhaps he'd even read Proverbs 10-5.

It reads, He who gathers in summer is a prudent son, but he who sleeps in harvest is a son who brings shame. Yeah, maybe so. Alright, so let's talk about some ways to hang on to the money that we've gathered.

What do you have for us? Yeah, let's start with taking a hard look at your gym membership. It may be costing you as much as $50 a month or more. Consider canceling it and working out from home. You know, there's more and more exercise videos on YouTube that you can access for free. Also, there are some great free workout apps you can try. Nike Training Club is one, another called Ladder, one called Freeletics, and Map My Run.

We'll put links to those in today's show notes. Or you could buy a bicycle and go for a ride. It's a great low impact way to exercise and get some fresh air. Maybe better slightly anyway than a smelly gym.

I can't argue with that one. Alright, next, shop smart for major appliances. If you have to replace a refrigerator, furnace or clothes dryer, don't just look at the sale price. What seems like a great deal could end up costing you more in the long run. So take your time, read some customer reviews, make your choice, not just on price, but also on reliability and energy efficiency. You can compare the Energy Star rating on any major appliance before you buy. A unit that lasts longer and uses less electricity will save you a lot of money over time, even if it's more expensive in the beginning. Yeah, great information.

Okay, what's next? Well, price is still important. So once you've found a quality item that you want to purchase, you need to do some comparison shopping.

Fortunately, that's much easier these days with the internet. Check out sites like and Google Shopping to find the lowest prices available online. Again, look for links to everything we mentioned in our show notes today at And if you're buying something in a brick and mortar store, Steve, make sure to check for lower prices at one or more competing stores. It's usually well worth your time. And did you know that some appliances and products go on sale at specific times of the year?

I'm thinking in particular Memorial Day, Fourth of July, Labor Day, some things like that can be really effective. And knowing when that happens really could save you a bundle. Yeah, but how do you know when something like that's going on sale?

Well, I'm glad you asked. Amazon actually has a price tracking feature to help with that. Don't ask me why, but it's called Camel, Camel, Camel.

When you sign up, they'll send you alerts when the price of an item drops. Well, of course, a camel has humps and, well, no, I have no idea why it's called Camel. I was just reaching for it. They're hoping something would come to mind. Okay, what else do you have, sir? Well, next is a way to save 100% on something. Instead of buying an item that you need for a one-time project or event, consider borrowing it instead.

The odds are someone at your church or in your neighborhood already has that extra long ladder you need or maybe folding chairs for a party. Don't be afraid to ask. Of course, that's a two-way street. Offer to reciprocate if the lender ever needs anything from you. And most important, always return a borrowed item in the condition you got it. That's right. Okay, good.

Time for one more maybe. Yeah, you know, we talk about this one a lot, but it's so important that it bears repeating whenever the topic of saving comes up, and that's to use cash whenever possible. Imagine saving 10 to 30% when you walk in a store. Well, that's what studies say you'll save by using cash. It's the psychological factor of using real money makes you want to spend less. Seems too simple to be true, Steve, but it really works.

There you go. Your call is next on Anything Financial, 800-525-7000. He's Rob West.

I'm Steve Moore. You're listening to MoneyWise Live. Welcome back to MoneyWise Live. Timeless wisdom, God's timeless wisdom meeting today's financial choices and decisions. And if we can help you with a choice or a decision or where to find the dipstick for the oil in your car. It's not always the same in every situation. Can you tell I've been helping my daughter recently?

800-525-7000 800-525-7000. And there's another one, Rob, you know, if you don't check your oil regularly, meaning minimum once a month, that could cost you a lot of money in the in the long run. So checking your oil on a regular basis and the air in your tires will save you some dollars and some angst, as they say. Now checking it so you can't just rely on the gauge. No, you actually want to check the dipstick and actually see where it measures. And interestingly, some of the German cars like BMWs these days don't have a dipstick.

They have a little meter on the dash. But that's newfangled stuff. And I'm kind of an old fangled guy. So I look for the dipstick.

Okay. And if they don't have one, you're going to be looking for a long time. Well, I was, as a matter of fact, 800-525-7000. Give us a call today. Let's chat. Ed in Indianapolis, how can we help you, my friend?

Hi, good afternoon, gentlemen. In regards to credit scores, is it better to pay off a credit card or to carry a small balance and make payments on it? Yeah, you know, it really doesn't matter either way, Ed, for the most part, because here's the reality. When you dive into the algorithm, the formula that determines your score, what's key is that you have a good payment history. That's going to make up 35%, the largest percentage of your score. So the fact that you're an on-time payer every month is really critical. In terms of the amount of debt you have, the credit usage, that's key because when you get that threshold of what they call utilization above 30%, both on an individual account, so a card that has a $10,000 limit. If you owe more than $3,000, you're above 30% utilization.

That's going to start to pull you down. And in the aggregate, the total of all your credit accounts revolving, looking at the total of the limits for all of them, plus the total of all your balances, if that's above 30, that's going to start to pull you down. But what you described in terms of carrying a small balance month to month versus paying it off in full, in either case, you're well below that 30% utilization, and there's no reason to be paying the interest, even on a small balance, because it's just not going to help you. So the key is to have a good credit history over a long period of time, pay your bills on time, keep your credit card balances at or near zero.

I would always advocate for zero, and you'll be doing what you need to do to make sure that you have the very best credit score you can. Did you follow that, though? Oh, yes. Yes.

Very informative. Good. All right. Well, hey, we appreciate your call. Yes, sir.

Thanks very much. 800-525-7000. If you have a question, excuse me, and you'd like to talk with Rob West today, this is a great time to call. We have a number of open lines at 800-525-7000.

Out to Spokane, Washington. Leo, you're thinking of buying something, huh? Yes, I've got my first grandson coming and we want to play with Yeah, with some kind of gift that will pay off later, like a 529 for college, or trust or stock account where when he's 18 or 21.

He could he could open it. What are your thoughts for the best way to go here? Yeah, Leo, first, congratulations on that first grandchild.

What an exciting season of life. You know, I think the first step is for you to bring just a bit more definition to what it is you in fact want to be able to give him. Because, you know, if you are willing to say, you know what, we want to make this gift a gift that's going to go toward his education, so we're specifically going to save toward college, I would lead you in a different direction than if you said we want to be able to have funds just available to bless him with and give him the choice on how to use it, whether it's college or, you know, something else. Do you feel like you have a good feeling on between you and your wife what the answer to that question is? Yes. We think we just want money available at, you know, 18 if he goes to college, 21 if not. Yeah.

Okay. Yeah, well, and that's important to think through because you know, inside that college savings, and I would recommend the 529, you're going to get better growth because you're not going to have the drag of the taxes. But it does need to be used for qualified educational expenses with some exceptions, you could transfer it to another grandchild if you didn't need it, you could take it out on a pro rata basis for scholarships and grants. But if you want real discretion over how to use it, you don't want to be penalized in any way if it's used for something other than college, then you do in fact want to save outside of it. Then the next question is what type of account Leo, and a lot of folks will use what's called a custodial account. It's in other cases, it's called uniform transferred a minor act account or uniform gift a minor act account.

The challenge with that is I don't recommend them because, you know, if you get to that season of life, and you know, this young man who's now 18 years old, reaches age a majority in his state, that becomes his asset. And if he's making poor lifestyle choices, he's not ready to handle that kind of money, it's all of a sudden his and he could use it to buy a sports car if he wanted to. So I'd rather you keep it in an account in your name or jointly held with your wife, but separate from your other investments.

So you know that it's for him. And then you have more discretion or control over how that's handled. You mentioned a trust and, you know, that would be something if you had a trust where you could title it in the name of the trust, and then you could designate that it be paid out under certain conditions. But if it's just for that account, that might be overkill. But I think that's an important consideration to make. And then if you do that, let's say you keep it in your name, a joint held account, then you know, you would just want to invest it in some good high quality, I think probably index funds, or mutual funds that follow the broad indexes. So you're just capturing the big moves of the market rather than trying to pick the winners and losers on individual stocks. And if because of the amount, you know, given that you're just starting out, I'd probably use one of the robo advisors like Schwab Intelligent Portfolios or Vanguard has a similar product or Betterment, which is one of the newer fintech companies that does the same thing. But I threw a lot at you there. Do you have any questions on that?

I do. Yeah, you know, going out 18, 20 years for them, would we want to do a mix of index funds in the US as well as maybe Europe? You would, yeah, and not specifically Europe, you'd want to have a good international component to it. The good thing is with both the Schwab Intelligent Portfolios and Betterment, there would be a mix of not only domestic indexes, but they'd also have some international exposures, probably some in the emerging markets. There'd be a mix of large cap and small cap. That's the size of the company, growth and value and a very small allocation to bond. So we're talking about a really well diversified mix of investments. And that's really one of the main benefits to those types of investments.

When you're just starting out is with a very small amount of money, you're going to get a real good mix of stocks and bonds across the board. Hey Leo, thank you very much for calling today. You sound like a generous grandpa and we hope you have a Dickens of a good time with your first grandchild.

Thank you very much. I know I love and had lots of fun with my grandchildren. I only have three. Actually, I have two, one on the way and I don't know what Dickens means. Enjoy the Dickens. We'll look that up during the break.

He's Rob West. I'm Steve Moore with my Thesaurus and my dictionary. We'll be right back after this. Good to have you aboard today. It's Money Wise Live. Whatever things might be going on in your life that you'd like to talk about, I don't know what that would be.

Maybe buying a car, going to college, paying off your college loans, saving, giving, generosity. More than likely the Bible has something to say about it, which means Rob has something to say about it. So give us a call right now. Open lines at 800-525-7000. Rob, we began today's program talking about saving money. Greg is with us now from Missouri and you bought quite a system. Tell us what you bought for your home, Greg, and how well it's working. Yes. Hi, Rob and Steve.

Thank you for having me on. I bought a geothermal system for my home. It was about a $25,000 investment and it was a little bit more than what your normal furnace system would cost. We probably could have got both because we had upstairs and downstairs, we had two AC units, heating units, and we probably could have got both from the other for $18,000 or $19,000.

We got a little bit more of a federal discount, 26% if we had it in by the end of last year, which we did. I thought it was a win-win and I didn't really research it a lot. I just felt like, yeah, it's got to be a win-win.

Yeah, I'm paying a little bit more, but over the years it will save money that they talked to us about and stuff like that. It just doesn't seem like the heat coming out of there is only about 93, 94 degrees. I should have researched it more and also another principle of the Bible, I should have listened to my wife a little better. She kind of didn't want to go in and do it and I kept pushing, yeah, yeah, yeah, it's a win-win.

We can't lose. And now we're not happy with it, really, really happy with it. It doesn't really keep up when it gets really cold out, like zero, five below zero, those types of stuff. So I made some mistakes in not researching, not following along with what my wife said and being in agreement with her and stuff like that. So I just want people to know it's something you ought to really look at.

It's a big investment and you want to be comfortable and stuff like that. Well, that's right. Well, I appreciate you referencing that, Greg. Couple of thoughts. Number one is, you know, we've all been there, whether it's a husband not taking his wife's counsel or the opposite.

You know, the Lord gives us our spouse for a reason to complete us, not to frustrate us. And I think we need to always be seeking each other's counsel, especially with a large purchase. And so I certainly appreciate your reflections on that. And also, just because we get a discount or a tax break on something.

You know, a lot of folks were doing this with cars that they were more expensive than they needed back when, you know, you get a tax break either for an electric vehicle or for a larger vehicle years ago when that was being offered. And they found out that the upkeep and the maintenance and so forth was more than they bargained for. So we just need to be careful and always evaluating these decisions. There's a lot of great, useful information out there where we can read tons of reviews on things before we proceed with a major purchase. And that's always going to serve us well.

You know, Jim Henry, who does research for us, quickly weighed in on exactly what you're saying here. He said, you know, these geothermal systems really are an upscale heat pump. And in general, they're undesirable because when the weather gets cold, they pump out colder air than a regular heating system. And so you have a tendency to just always feel chilly.

And even 90 degree air feels cool on the skin, surprisingly. So, yeah, I think lesson learned. Right.

We've all been there. And now you've shared this wise counsel with the rest of our audience so everybody can benefit from what you're sharing. Greg, we do appreciate the call. Thank you very much. Guess, you know, we'll have to follow things like this geothermal energy and for heating our houses because more than likely they'll get more efficient and better along the way.

But that could take a few years before that technology really catches up to the way we live. Greg, again, thanks for your call. Spokane, Washington. Hi, Julie. How can we help? Good afternoon.

Thanks for taking my call. So we're trying to my mom is 80 and just starting with dementia and she has everything is paid off and she's already gotten rid of all of her assets. So what she has is about four hundred thousand dollars in stocks and she takes about thirteen hundred dollars a month to live off. Plus her Social Security. And we're just trying to see if we can if we can find a safer way where she can still pull money out without having it in the stocks so that she still has enough money to live off of. Yeah.

So one hundred percent of the four hundred thousand Julie is in a stock portfolio. Correct. From what I can find so far. Yes.

Yeah. And who's managing this money? Who's making the decisions where she is so far as she is with with a investment company. But I'm I'm really not up on that at all. So I just want someone besides an investment company to kind of maybe put me in a right direction. Yeah.

I think you'd be wise to get a second opinion here, especially as you're, you know, providing more influence and oversight of what's happening here. The good news is that, you know, with a four hundred thousand dollar portfolio, you know, the thirteen hundred a month that she's pulling should be very doable. You know, we would typically use four percent where if it's invested properly and certainly not one hundred percent in stocks, but with a conservative income based portfolio where you'd have the major portion and fixed income type investments with a smaller portion in stocks that could provide some growth. But not where you're taking the risk of a full hundred percent stock portfolio. You should be able to pull out four percent a year and over the years maintain that four hundred thousand dollar balance so that it lasts the rest of her life. And there's something to give to ministry, charity or her heirs. The key would be to make sure that she's not taking unnecessary risk in doing that, because the last thing you'd want is to have one hundred percent of the stock market. We had a recession a couple of years down the road, markets down thirty five percent. All of a sudden you open the balance and it's one hundred and thirty, one hundred forty thousand dollars lower, you know, after a 30 day period. And, you know, certainly nobody wants that just because it's not necessary.

So I think it'd be time well spent to get some second opinions. I'd encourage you to connect with two or three certified kingdom advisors there in Spokane and just have them talk through what type of portfolio they would recommend for somebody in her situation, dementia, living on this this portfolio and it being a critical part of maintaining her expenses. You can find those C.K.A.s there in your area when you go to

Just click find a C.K.A. Julie, thanks. Thanks very much for your call today. We appreciate that. And we appreciate you listening today.

Eight hundred five two five seven thousand. This is MoneyWiseLive. Really nice to have you out there listening today. We appreciate that. Whether you're driving or still at home, maybe you're doing a load of dishes or feeding the dog, whatever it is, we're glad that you have us there on in the background.

Eight hundred five two five seven thousand. Rob, were you able to check the the app this weekend? I know that sometimes you check it out to see you might be floating around there. There's a little bit of a community, right? A MoneyWiseLive community.

There absolutely is, Steve. If you haven't downloaded the new MoneyWise app, I'd encourage you to do that. We just released version 2.0 in the last 30 days and it's got some great new features.

You'll find it in your app store, the Apple App Store, the Google Play Store. Just search for MoneyWise Biblical Finance. Yeah, I jump into the community. In fact, I'll be there tonight after my son's basketball game and looking for your questions. We've had recent questions of folks asking about umbrella insurance. I answered one over the weekend about investments for teens.

We recently dealt with gift card scams. So when you download the app, just click on community. Once you create an account, then you can post your questions.

I'll be stopping by to answer many of those tonight. And then our MoneyWise coaches are in and out of there as well. So just download it today and you can jump into the MoneyWise app community. Now when you allegedly show up there out of the ether, out of the fog, Rob West shows up. How do people know it's really you? Maybe it's some scofflaw representing you, but it's not. I mean, it could be me.

Two ways. First is you'll see my name. It'll say Rob West. The other is I have a special little MoneyWise logo by my name and not everybody can get one of those. In fact, I'm not sure if we've given you yet one of those, Steve, but I'll get on that. I'd appreciate that.

Can I choose my own color? Well, I don't know. Let's not take this too far. OK, there you go.

Check it out. Rob might be there tonight. In fact, Rob said he will be there tonight after his son's basketball game. Probably have a hot dog, maybe some fries, head over to the side, but you'll get his best advice.

Kelowna, Illinois. Hi, Jack. Thanks for holding my friend.

How can we help you? Yeah, I've got a question about taking some money out. I retired about three years ago and I've got through. Oh, another about six years funded, had some inheritance which came in nice. I put that in that's in CDs and a little bit in some CD type annuities, which I'm essentially using as a CD.

So not a big deal there. But what my question was. So for money starting about six, seven, maybe eight years out is I was thinking of the idea.

I've got both IRAs and nonqualified mutual funds, but I was thinking out of the nonqualified take those dividends, the dividend capital gains distribution and pulling those out and setting those aside is kind of a way to, I guess, reduce risk. So you're not stuck if you're in a down market at that time. I was just wondering what your thoughts on that might be. Yeah, it's not a bad idea, Jack.

He was thinking about too. So, OK, very good. Give me a sense. You said you you are retired. What is your age?

Fifty eight. OK. And you're not planning on going back to work. Is that right?

That's right. And are you living off of these portfolios? Essentially, I do have some pension.

My wife's still working right now. And then I use and I started figuring about thirty three thousand a year. And then I index that up for inflation every year. So that'll increase.

So right now we're at thirty four ish, something like that. And that's what you're pulling out to supplement your pension. Yeah. And just kind of spending as needed. If we don't spend that much, that's OK. What do you have in those portfolios?

Roughly. Almost two million total. All right. And what percent of that roughly two million Jack, would you say is in stocks? About a million and a half.

OK. All right. So I guess that would be my you know, my main question is, you know, if three quarters of that two million dollars is in cash and you're only pulling out thirty four thousand a year, you know, are you taking unnecessary risk? Because, you know, I mean, you could you could get away with pulling essentially two percent a year. And after taxes are paid, you're going to have your thirty four thousand.

You'll have a little bit more than that. And, you know, you're taking the risk of the market on with three quarters of the portfolio. And, you know, that's been great in this bull market. But, you know, forget what portion is coming off of the dividends in distributions of the taxable portion.

Let's look at the whole thing and say, are we being too aggressive? And if we were to get into, you know, a not a depression, but a recession a couple of years from now, you know, cyclically speaking, not that I can I'm saying that's going to happen. But at some point we will because the markets tend to roll over with the economy. And, you know, let's say the market was down thirty five percent. Is that really where you want to be?

And is there a reason to be given how much you've been able to build up over time and how little you need to support your lifestyle? So I would just say perhaps take a broader view of the whole thing and say, what would it look like for me to get a lot more conservative? So I would only have perhaps 30 percent at the risk of the market that could provide the growth component to it.

But I'm taking a much more conservative posture with the lion's share of this. Give me your thoughts on that. Yeah, I've kind of thought about that. And then I get a little nervous about the question.

OK, where do you put it? You can get some more than less than one percent. Right. And obviously you'd have to talk to some investment professionals about that. I mean, if we expect inflation to be, you know, headed up, the tips would be an option. You could look at some government securities. You could look at preferred stocks.

You could look at a, you know, appropriately diversified bond portfolio. I mean, there are options for you to look at, I think, you know, for that portion. But the whole idea would be, why don't we reduce some risk here?

There's not a need to take unnecessary risk at this point. I think the other option is always just looking at giving opportunities, especially when you have a. Well, it's always a good idea to look at giving opportunities, but in particular with those taxable accounts as you're generating profits, rather than realizing those. I like the idea of making gift to ministry or your church or charity directly out of those portfolios, getting a tax deduction, blessing that ministry and, you know, saving a bundle on taxes. So that would be something else I'd be looking at actively now. So I just challenge you to think about that.

And if you want to consider some other advisors, perhaps do that just to get some other ideas as to what could be done to reduce the overall risk, but still get an appropriate rate of return as you are a steward of God's money in a really substantial portfolio. We appreciate your call today, Jack. Thank you very, very much for that. When we come back after our break, we'll say hi to Linda. Say hi to Linda in Orlando, Kathy in Indiana and Jean in Bradenton, Florida, before we get there.

Rob, I'm not sure if you knew this, if it was marked on your calendar or not. But today, sir, is national mom and pop business owners today. Oh, and I'm not sure if there are many mom and pop businesses out there today. They were when I was a boy, quite frankly, and they were really cool, but they seem to be kind of disappearing. Well, there's still some great ones. And I would say absolutely be looking to frequent those in your neck of the woods as soon as you can.

Yeah, exactly. And my tip of the hat to margins market that got me through my teenage years. This is Money Wise Live. It's a great day on the radio. Good to have you out there.

Eight hundred five to five seven thousand. But to be honest with you, our lines are full right now. So let's quickly go to Orlando. Hi, Linda. Thanks for holding.

How can we help? Good afternoon. Yes, ma'am.

Thank you for my call. I am wondering about Robin Hood. I have a couple thousand dollars that I would like to invest and I'm wondering if that's a good starting point. You know, it's it's gotten a lot of notoriety lately just because it's been in the news initially around it being a really popular platform because of its fee free approach. You know, there's no account minimum. The stock trading costs are at zero.

The option trades are at zero. And so, you know, it obviously is something that's gotten a lot of attention by millennials. There would be a monthly fee. But generally speaking, the ratings have been good. Not great. You know, they've gotten a lot of slack over what happened with a couple of things in particular. One was, you know, during the steep market declines in February and early March last year at the beginning of the pandemic, they had extensive outages that affected users ability to access their platform. As a result, they invested substantially in kind of their back end system to try to prevent that because there was a kind of an outcry from folks. And then they got a lot of press at the end of January around restricting access to certain securities that were involved in the Reddit forum known as Wall Street Bets related to GameStop and a few of the others. But the bottom line is it's fine. You know, they they don't offer a whole lot in terms of the there's no quotes that are streaming in real time.

They offer very little research. And then, you know, there's some questions as to how the trades get routed to generate payment for the order flow, not always the best price. So I guess the thing I would ask to you, Linda, is what is it you're trying to accomplish? And are you looking to buy individual stocks or mutual funds or, you know, what type of investment portfolio are you trying to build at this point? I just would like to, I have a seed and I would like to grow, have that grow.

And so that's what I'm trying to do, find a way to do that. And it's not enough to start a business up. So yeah, that's what I was thinking. Okay, well, how much are we talking roughly, if you don't mind, Sherry? Maybe to $3,000.

That's not a lot. Yeah, that's okay. And do you have a retirement account, Linda? Separate from this? Okay.

So you're contributing at work, perhaps? Yes. Okay, great. And do you have an emergency fund separate from this $3,000 you're looking to deploy and in stocks? Yeah.

Okay, great. And as long as you don't have any, you know, high interest consumer debt, I think this is a good idea. I would tend to recommend, especially as you're just getting started, that you take a broader approach to your investment and be really well diversified as opposed to trying to pick individual stocks. A lot of folks using Robinhood are trying to buy individual stocks and pick winners and losers.

And that's just typically a losing proposition. You know, with the reviews that Robinhood has gotten as of late, I'd probably encourage you to go in the direction that I advised one of the previous callers today, and that is either Schwab Intelligent Portfolios or Betterment. This is going to be a robo-advisor type approach where you'd answer a long list of questions, and then they would build for you a very low cost, very well diversified portfolio of what are called exchange-traded funds, where you'd have a broad investment portfolio focused on, you know, the stock market indexes, both domestic and international, large and small cap.

You'd have probably a small allocation of bonds, and that overall portfolio would then mirror the overall growth of the market. But you wouldn't get stuck in a position where if one company had a bad quarter or, you know, became out of favor, you know, you could lose a lot of money. And I think that systematic approach on a low-cost basis would be something that would achieve the objectives I'm hearing you describe. So those two that I mentioned get very good reviews by the independent third parties out there, and they are Betterment, which is more of a fintech kind of app-based approach, even though they have a great website. And then the other would be a more traditional investment broker, Charles Schwab, and it's called the Schwab Intelligent Portfolios. So I'd recommend you check those out before you do anything. And fintech, Rob, that's financial and technology? Yeah, financial technology, a huge new kind of growing segment of the finance universe based around leveraging technology in both banking, investments, saving money.

A lot of it is app-based or web-based. Okay, you thought I was going to say something about it being fish-related, but I wouldn't do that because I have a higher level of comedic reference. No orcas involved in this.

I hope not. Westfield, Indiana, Kathy, how can we help you? Yes, I have a question. We have a 529 account that we started for our boys, and we've been blessed. One did very well in school, got a lot of scholarships, and the other one is a police officer.

He didn't go to college, but we have this account now. There's about $50,000 in it, and I don't foresee them using it. They're going on 25, 30 years old, and it's sitting there. So I don't know if it's best to take the penalty to cash it out or what to do with this money. Yeah, and Kathy, it sounds like there's no loans out there, correct? That is correct. Okay, yeah, because one of the options under the SECURE Act was allowing families to take tax-free 529 distributions to repay qualified education loans.

That's not a factor here. Yeah, so I think you've got a couple of options. One is just to take that non-qualified withdrawal, which your contributions won't be taxed because they were made with after-tax dollars.

But any gains made in the account will be subject to income tax and a 10% penalty. The only other option to consider other than that non-qualified withdrawal would just be to hang on to it and at some point transfer it to another beneficiary when, Lord willing, some grandchildren come along someday. Or if you decided you wanted to go back to school and get some sort of advanced degree, perhaps. Other than that, you're going to want to take that non-qualified withdrawal and then redeploy those according to your overall goals and objectives. So then my question is, if we did cash that out, would it be better to put that towards our retirement or the only other thing that we have is our mortgage payment? So is there a better option there? So do you feel like, Kathy, that you're on track with retirement at this point?

I think so. We have about 10 more years, 10 to 15 years to work, and we're in a fairly good place. And like I said, the only thing that we owe is on our mortgage. There's about $100,000 left on that.

So that's the only thing that we have that we're looking at. And you said about 10 years till retirement. On your current schedule of the mortgage payback, when are you planning, if you just continue doing what you're doing, to have that paid off?

Hopefully in about seven years. Okay, great. Yeah, I think the key is to try to get to a place where as you enter retirement or shortly before that you have that mortgage paid off so you keep your lifestyle expenses as low as possible.

So I could go either direction. I kind of like the idea if you do feel like you're on track with retirement, you're putting away enough, you've done some planning. And by the way, if you haven't, that would be well worth your time and a financial planning fee to an investment professional or financial planning professional not to necessarily manage any money, but just do a comprehensive retirement plan to say, yeah, based on your lifestyle and what you're trying to accomplish, you're in fact, right on target. But if you determine that you are, then I'd say going ahead and prepaying that mortgage, accelerating that payoff so that you could recoup that mortgage payment once it's gone and redirect that into additional savings or giving would be a great idea.

So you could either just go for it and make that lump sum payment to the house or wait and do that retirement planning to confirm that you are in fact heading in the right direction based on your overall goals. Kathy, thank you very much for that. We appreciate it. Quickly, let's go to Bradenton, Florida. Hi, Jean, you're our last caller for the day, I think.

How can we help you? Yes. Last year I sold my home and I did a buy-in in a retirement community and I had 30,000 left from that and like to know where would be the best thing to put that. I do have a small IRA of about 35,000 and half of that is in stocks. And so I'd need to be able to draw from some of the 30,000, but where would be the best place to put that?

Yeah. When you say, Jean, you'd like to be able to draw from it, in what timeframe do you think you might need to access this? And is this really your emergency reserve? Well, I have about a 5,000 emergency reserve. Okay. And what are your expenses every month? I have the monthly fee here and so I can cover that with my income. Okay. And what is that amount in total, would you guess on a monthly basis, all your expenses? My expenses? I would say $1,000. Okay.

Yeah. I mean, I'd love for you to have at least a year's worth of expenses liquid and available. That means probably a high-yield savings account. And if you're comfortable with doing business online, I'd probably look to either Ally Bank or Marcus or Capital One 360, get it linked to your checking account.

You'll only earn about a half a percentage point right now, but that'll increase over time. Are you looking, though, with what's left over? Let's say that's 18,000 beyond the 12,000 in emergency savings. Are you looking to take some risk to try to grow that, like in the stock market? Or what did you have in mind?

I don't think stock market. I'm 79, so I'm not looking to do that. In fact, I've been advised to even a half of my 35,000 in stock that maybe I don't need to do that.

I would tend to agree with that. So I think at this point, what you're probably looking for is putting it all in a high-yield savings and then waiting until interest rates begin to move up. And at that point, probably buy some CDs. 6-month, 12-month, 18-month, you could ladder them. I wouldn't do that now, though, because rates are so low.

So I'd start with that high-yield savings, keep it safe, and earn a little bit of interest. Thank you, Gene, for that. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. My thanks to Amy, Aaron, Dan, and Jim for their technical expertise today. Join us again tomorrow.
Whisper: medium.en / 2023-12-10 02:57:53 / 2023-12-10 03:15:17 / 17

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