This Faith in Finance podcast is underwritten in part by Sound Mind Investing. For more than 30 years, do-it-yourself investors have relied on SMI for proven strategies and trustworthy guidance. SMI helps people build wealth so they can provide for their families, prepare for the future, and give generously. Learn more at soundmindinvesting.org. You don't need a fortune to start investing, just a few small faithful steps.
Hi, I'm Rob West. It's easy to assume investing requires a large sum of money, but today we'll show you why that simply isn't true. Mark Biller joins us to explain how starting small, staying consistent, and keeping it simple can put you on a lifelong path of wise stewardship. And then it's on to your calls at 800-525-7000. This is Faith in Finance, biblical wisdom for your financial decisions.
Well, our guest today is Mark Biller, Executive Editor and Senior Portfolio Manager at Sound Mind Investing, one of our longtime faithful underwriters. Mark, great to have you back.
Well, it's great to be here, Rob. Mark, you've got a great article in your latest newsletter reminding readers that they don't need much to start investing, just a willingness to take those first steps.
So, for someone ready to begin, where would you point them? Yeah, Rob, we always start with a person's financial foundation. You know, as exciting as it is to jump right to the investing part, it just doesn't make sense to start risking money in the financial markets if your foundation isn't solid yet.
Now, regular listeners of your program already know what having a solid financial foundation means. It's paying down any consumer debt. Building at least a small emergency savings fund, and then creating and following a budget. You know, somebody who's paying a double-digit interest rate on credit card debt, or even high single-digit interest on a student or car loan. They're usually going to be better served by taking the sure return of retiring that debt before they start to invest.
Now, the one exception to that, Rob, is if somebody's overall debt load is pretty small and they have at least a small savings reserve, well, in that situation, if their 401k or their other workplace retirement plan matches contributions, then we might say that it's a good move to contribute at least the amount that they need to to take full advantage of that guaranteed return from the employer matching. Yeah, that's a great reminder. And it really is important to hit these financial steps in the right order.
So based on that, Mark, is a person's workplace retirement plan the first place they should focus when they're ready to invest? Yeah, that's what we usually recommend. You know, a good workplace 401k or other retirement plan at work is going to provide two or three very specific, very key benefits. First of all, it's going to provide a tax-advantaged vehicle to invest within. And that tax advantage, putting the tax off, is going to make a huge difference in a person's long-term returns.
Second, the workplace plan is going to easily automate the investing process. And that's just a huge behavioral hack. To help people actually be consistent with their investing. And lastly, if there is a contribution match, well, that's going to be an immediate 100% return or 50% return, however, the match is structured. Those immediate guaranteed returns are hard to come by in the investing world.
So they're a really big deal. And that's why we usually suggest investigating your workplace plan first.
Now, for people who don't have a workplace retirement plan, the next best thing is typically an IRA. And for younger investors, a Roth IRA typically makes the most sense. Yeah. All right. That's good advice.
Now, a lot of people who are new to investing tell us they feel overwhelmed by the sheer amount of information out there.
So, how can they stay focused without feeling buried by it all? Yeah, well, the first thing I'd encourage listeners with is you don't have to know everything before you get started. It is very easy to feel overwhelmed and kind of paralyzed because everybody's worried that they're going to do it wrong. And, you know, the reality, Rob, is you might do it wrong, but just getting started is the most important thing because investing is like most things in life. You're going to learn a lot just by doing it.
So getting moving, getting some momentum, there's plenty of time to course correct as needed later. And secondly, you know, investing is a habit.
So, like any habit, if you can just get started with consistent contributions, even if they're small, a little each pay period, that habit is going to build strength over time. Yeah. Well, we'll get into some of those very specific next steps you can take. This is so helpful because I know so many in our listening audience have a desire to invest, they just don't know where to begin. Again, Mark Biller is here to help you with all of that.
And if you want to read more, check out this article, Starting Small, Finishing Well at soundmindinvesting.org. Mark Biller, executive editor at Soundmind Investing, is our guest today. Back with much more after this. Stick around. If you love what you hear on this program, there's even more waiting for you at FaithFi.com.
Explore podcasts, videos, articles, Bible studies, and devotionals, all designed to help you see God as your ultimate treasure and money as a tool to advance his kingdom. Pursue wisdom, practice generosity, and steward God's resources in a community with others who share your faith. Visit FaithFi.com to take the next step in your faith and financial journey today. That's faithfi.com. Faith in Finance is grateful for support from Sound Mind Investing.
For more than 30 years, they've offered financial wisdom for living well. SMI provides step-by-step guidance for do-it-yourself investors, from those just getting started to those getting ready for retirement. More information, including a short video webinar on profit and peace of mind no matter what's happening in the market, is available at soundmindinvesting.org.
So, you're ready to start investing. You just don't know where to begin.
Well, we've got some help for you today. We're talking starting small in investing with Mark Biller, Mark's executive editor and senior portfolio manager at Sound Mind Investing, a longtime underwriter of this program. And before the break, Mark was talking about just the importance of starting, just beginning where you're at. Even if you're starting small in dollar amounts, even if you don't have all the know-how, just get going. And often, your workplace plan, if you have one, is the best place to begin.
If not, a Roth IRA or a traditional IRA if you're a little older. Mark, you were talking about some of those basics that you can begin with, the steps, if you will, to faithful investing. Unpack those for us. Yeah, sure.
Well, one is that especially when you're starting out, just stick to the fundamentals. As we talked about a little bit earlier, there's so many different ways you can go with investing. But if you focus on the basics, which are saving consistently, diversifying to avoid taking on unnecessary risk, and then staying invested through market ups and downs, that's a big part of the battle. A second basic that I'd encourage listeners to consider is. Try to find just a few investing resources that you really trust, and then importantly, actively try to tune out the rest.
There's just so much noise on Twitter, CNBC, you name it, it really can be overwhelming if you're trying to take it all in. That's going to lead into a third point, which is try to steadily grow your investing knowledge while resisting any sense of panic that you don't know enough and you're going to mess this up. And just to follow up on that point, If the financial voices you've selected are stirring any kind of fear or greed or even an unhealthy sense of urgency within you, you probably need to cut out those voices and find some new ones, because those are not the emotions that you want governing your investing. Yeah, that's well said. Mark, let's go back to workplace retirement plans for a moment.
You said that's a great place to begin. And in particular, it has to do with the matching contribution that is so important. I don't want folks to miss this because I believe this is often misunderstood. Explain why that is so key. Yeah, well, I mean, to bottom line it, Rob, the match that your employer provides is essentially free money.
I think of that as being part of your compensation that you only receive if you contribute to the plan.
Now, that is obviously going to accelerate your early growth when your balance is still small. It's also going to build the habit of saving into a long-term account because you don't have access to it. It really helps kind of avoid the temptations of dipping into that early and so forth. You know, I guess to bottom line this, Rob, you know, skipping the match. Is really like turning down part of your paycheck.
You know, when I talk to young people, sometimes they're evaluating job offers where the salary might be a little lighter than they'd hoped. And I'm always quick to point out that a good 401k match can add a few thousand dollars per year to their overall package. And you're right, a lot of people don't think about it that way, but it really is money that your employer is offering to pay you. And most people don't usually turn down pay raises, nor should they turn down the match in their 401k. Yeah, it is so significant.
All right, for those who are just getting started, Mark, that don't have access to that workplace plan, I know you've pointed them even today to an IRA and especially a Roth IRA for younger investors. Talk about why that's such a strong place to begin. Sure, let's quickly go through the basics of a Roth IRA. With a Roth, you contribute after-tax dollars that then grow tax-free as long as you wait until retirement to withdraw them.
So that's why we say it's a helpful, a similarly helpful tax-advantaged environment like a workplace plan would provide.
Now, when you put after-tax dollars into a Roth, that's especially beneficial for younger workers because younger workers are typically paying very low income tax rates to begin with. If we contrast that with older employees who are paying higher tax rates, it's pretty easy to see why people like you and I often take the shortcut of just saying that younger investors should probably look to a Roth in most situations. As you get closer to retirement age, Roths have other benefits. They're great because unlike traditional IRAs, You don't have to take mandatory distributions from Roth IRAs in retirement.
So Roths give you a lot of flexibility and potential tax diversification in retirement. And like we've said here, Rob, you know, any IRA, whether it's traditional or Roth, is going to help encourage a long-term investing mindset. And that's really key for building wealth over time. Yeah. Now, after the account is open, Mark, the very next question we hear is: okay, now what do I invest in?
So what's your guidance for keeping it simple here? Yeah, well, considering most of the people that are starting out are hopefully going to be operating within a company retirement plan, you know, starting with the broad, low-cost index funds that almost every plan offers is a really good way to go. SMI's first strategy over 35 years ago that we still offer today is an indexing strategy. We call it just the basics. It's simple, diversified, and very beginner-friendly.
Index funds are great for newer investors because they quickly and easily spread your risk really widely across a lot of different stocks and/or bonds. And index funds are really easy to use. That's going to give you plenty of time to learn more about maybe some other involved investing approaches as you gain some experience. But you don't have to start with the harder stuff. Start with the easy stuff.
And that usually is. As easy as a single total market index fund. Just focus on plowing that money into that index fund consistently. You know, SMI also, we have a lot of articles. We talk on these programs a lot about developing a personal investing plan, a really good idea for new investors.
And also, you know, on our site, we have a bunch of other strategies that listeners can begin to learn about if they ever want to branch out from the simplicity of indexing. But indexing really is a great place to start for a new investor. Yeah. And Mark, they can use any of the discount brokerage houses to implement this strategy, right? Like a Fidelity or a Schwab.
Yeah, that's exactly right. Plus, if they're in a workplace plan, almost every workplace plan is going to have a good selection of index funds to use. Yeah, excellent. All right, as we begin to wrap up today, when you think about someone listening who's just beginning their investing journey, what encouragement would you leave them with?
Well, Rob, I'd tell them that yes, investing can be complicated, but it doesn't have to be. It's probably one of the best examples of the 80-20 rule that I can think of, where just 20% of the knowledge and following through is going to give you 80% of the benefits of investing. And that 20% is simply: you don't need a lot of money to start. Time is your biggest ally. Keep your heart anchored in biblical stewardship and trust that God is going to use small beginnings for great outcomes.
That is very well said. And I would add to that: head over to soundmindinvesting.org and read this article, starting small, finishing well, and then connect with the team at SMI to help you implement it. Mark, thanks for being here today. Thanks, Rob. Always my pleasure.
That's Mark Biller, Executive Editor at Soundmind Investing, a longtime underwriter of Faith and Finance. Your calls are next: 800-525-7000. We'll be right back. Imagine having biblical financial wisdom delivered to your inbox every week, helping you integrate your faith and financial decisions for the glory of God. At FaithFi.com, you can join a community of over 70,000 people who are already receiving our weekly wisdom email, filled with articles, videos, podcasts, and exclusive offers on resources that will deepen your understanding of biblical stewardship.
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They want to help investors do well by doing good. To explore a new way of investing that aligns with your values. More information is available at 1ascent.com and by clicking Analyze My Investments. Great to have you with us today on Faith and Finance. It's our final segment.
We're taking your calls and questions today on anything financial, helping you apply the wisdom from God's word, the principles and passages that we see on money. By the way, there's 2,300 of them to your financial decisions very practically. And so, if you have a question today, call right now. You can get right through. 800-525-7,000.
We'll probably have room for two or three questions before we round out the broadcast today. Again, 800-525-7,000. You can call right now. Let's go to Florida. Peter, go ahead.
Hey, thanks for taking my call. Of course, sir. Just want to uh let you know that your you and your team It's a great thing you did. I've listened to you a few times on the road and um the people that you help out and uh It's just a It's definitely a good ministry.
So thank you for that, man.
Well, thank you for saying that, Peter. I appreciate that a lot. And I would second the idea that my team is what makes all this happen. They are amazing. But how can I help you today?
Well, I've been super blessed. And my wife and I, And uh You know, God is he can do things in a few years that Some people were A lot of years to do. But anyway, I got a business partner and we started a company ten years ago and You know. about five years into it, we started doing really good in its construction. And um Yeah, we want to built the church in Haiti and multiple construction projects and Honduras and El Salvador.
And so it's been an incredible ride. Yeah. We saved a lot of money. My wife and I are pretty we're super through going. We don't do extravagant things and uh So We didn't really have a retirement.
We've been saving up these dividend checks and well, we put We put some in an account Like $250,000 in an account with an LPL financial. And I'm not sure if Kyle's a certified kingdom advisor. I'm going to find out. He does love Jesus and he does care about helping us to do well with some retirement. Yeah.
Well, let me just say when you do have that conversation, tell him that if he's not, he can become one. And there's a huge and growing community of CKAs inside LPL right now. And they have a community where they meet monthly on, you know, on electronically with a national conference call. And they get together at our conference every year.
So not only can he get the designation, but he can plug into a community of other believing advisors within LPL, which is really cool. All right, I will definitely. mention that to 'em and find out.
So anyway, we put some money in an account and we talked about a retirement plan and you know hey this is what we'd like to do. And so okay, we'll see how we can get you there.
Well then Uh yeah. I I got this letter from the Oxford Communique and and uh I signed up and got some stock tips and A friend of mine's wife works at uh Edward Jones.
So I said, Hey, will you purchase these stocks? I think they're going to do good One of them was Breaktire Hathaway about five years, six years ago. Man, it's done amazing. And a couple of other ones have done good. And And so I've got this account with like two hundred and fifty grand in it.
And I've got with the stocks. And then I've got this One would uh LPL, that's like four hundred now. And I just wonder if it would be smarter to combine those take the stock money and put it in the LPL So it would it would grow quicker and maybe consolidated and and I just was hoping you would Well give me some good advice on that because you have some wisdom.
Well, I appreciate that, and I will certainly try. You know, I like that a lot. I mean, obviously, you picked a stock and you picked a good one. I love Berkshire Hathaway, and it has obviously done very, very well. But I think one of the benefits of you moving that over to your LPL account is.
Not only having everything under one roof can often reduce fees because usually there's price breaks when you get over a certain amount, maybe at $250,000. And then if you get over $500,000, maybe you get a price break there. It simplifies the paperwork because now you're just getting tax documents from one custodian instead of two. You're not getting monthly statements from both, but it allows you to make the investment strategy more consistent. And have one person, ideally a fiduciary, which is probably what your LPL advisor is, where he or she is legally bound to put your interests above their own, and you can avoid duplication or conflicting strategies with the various investments in the accounts.
And so, you know, you've had a stock that's been a big winner, but you're probably more highly concentrated in that one investment when you look at how much you have in that one investment versus your total investable assets of about $650,000, such that it would be good, I think, even though it may continue to do well and maybe you keep it. I would say in one particular investment like that, I wouldn't want more than 10%.
So that'd be $65,000 of your $650,000. But it would allow you to take a good bit of that, including all the profits that you've got because it was a winner, and move it into a more diversified position so that you're just not unnecessarily concentrated beyond what I would say would be a max of 10%. Does that make sense? Yes, it does.
Okay. Yep.
So Well, that's just one stock that I did that was good.
Some of them didn't do so good. I probably have about. 25 in the portfolio thing, you know, and I'm not super educated, but like I said, man, God's been super good to us, and you know, as well as I do, you cannot give them. That's exactly right.
Well, a couple of thoughts there. Number one is: I mean, you know, the bottom line is you having this money, which is a significant sum of money that the Lord has entrusted to you with an advisor, regardless of whether you're good or, you know, or not at picking investments, having somebody who can take a rules-based approach where it's their responsibility, can make sure you're properly diversified, not make emotional buy-and-sell decisions when something goes up or goes down, I think is just always the better approach.
So, when we're talking about a sum of that amount, I much prefer you having that with an advisor, unless you just have a unique skill set and the time, you know, to manage it yourself and you can do it in a way that doesn't cause you to react emotionally. But let me also just affirm what you said there. Yeah. Because I love what you're doing. God has obviously blessed your business.
I love what you're doing with these churches around the world. You know, money is meant for kingdom impact. I mean, everything you've earned, saved, built, or invested flows from God. And it's intended to serve people and glorify him. He's the giver.
Money's a tool. And as we like to say, you can't serve God and money, but you can serve God with money. And you're doing that, my friend. And your testimony today, I'm confident has been an encouragement to many of our listeners.
So thanks for calling. God bless you, my friend. Take care.
Well, folks, that's going to do it for us today. Big thanks to my team today, the amazing Josh, Omar, Taylor, and Tahira, plus everybody here at Faith Phi. Listen, if you love the program, one of the things you could do to help us reach more people as a listener supported ministry is become a FaithFi partner when you support us at $35 a month or $400 a year. We'll send you great resources. Learn more at faithfy.com/slash partner.
We'll see you tomorrow. Faith in Finance is provided by FaithFi and listeners like you.
