Private Market Investing With Tim Macready

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I am Rob West. God's word makes it clear that we should diversify our investments. Often that means dividing them stocks, mutual funds and bonds and maybe precious metals. But are we missing a completely different class of investments? So Rob, I grew up on the mission field and returned to Australia to study and then spent my early career consulting with pension plans in Australia. But I wanted to do something more meaningful. And I had the opportunity to work with a faith based pension fund in Sydney around this question of faith and investing.

And I spent 15 years trying to answer that question. What does it mean to be a faithful steward of what God has entrusted to us? And today I get to work with pension funds, but also investment advisors and families on this intersection of faith and investing.

It's exciting and I know you're delighted to see how this space is growing and maturing. Seems almost every day there's a new product out there, but perhaps this area of private markets they're less familiar with. So explain the difference between the public markets and the private markets. So in the private markets, you have different investment structures. Instead of mutual funds, stocks and ETFs, you have private market funds, real estate investment trusts and notes and vehicles called limited partnerships. And they're typically targeted at more experienced or sophisticated investors, usually, but not always, larger investment sizes. And what these vehicles do is they often hold different assets within the fund. They still own stocks and bonds, but often different types, maybe venture capital or private equity or private credit instead of the traditional public stocks and bonds that most listeners are probably familiar with.

Yeah, that's helpful. And how are private market investments another way to diversify? Well, we've seen large investors using private markets to get exposure to different types of assets or different specific themes that they want to invest in. And what we're starting to see is these kinds of investments now starting to become more available at smaller investment sizes, not just the multi billions that it used to be. Yeah, and that's really helpful for the average investor. Now, how do faith based investments intersect with the private markets?

So 15 years ago, there was almost nothing in this space. But just as we're seeing growth in the options available to faith based investors in public markets, we're seeing more options in the private markets. Today, there's probably 50 to 100 faith based private market funds and opportunities, plus hundreds of opportunities in a broader impact investing space. Most of these are still only available to qualified purchases or accredited investors. But Rob, I'm excited about where we're headed. If trends from what we've seen elsewhere continue, we should start to see some of these private market investments with specific faith integration available to mom and dad investors in the next few years.

That's really exciting. Now talk for just a moment about the potential for risk and performance with the private markets. So investors need to understand risks, particularly around liquidity. You can sell a publicly traded stock or bond pretty fast, not a private market fund, and that amplifies a range of risks. And with more concentrated portfolios like you see in private markets, performance can be more volatile. But we have seen performance that diversifies away from the public markets and that delivers the kind of investment outcomes that investors need.

That's really exciting. Tim, how can folks get more information about private market investing that aligns with their Christian values? So have a look at our website, brightlightimpact.us, and have a look online at the different faith-driven private market investment opportunities that are available today. Well, this is an exciting development in the faith-based investing space, Tim. We appreciate you stopping by.

I know we're going to talk much more about this in the future. Great to be with you, Rob. That's Tim McCready with Bright Light. Again, if you'd like to learn more, just go to brightlightimpact.us. Brightlightimpact.us. Back with your calls at 800-525-7000. That's 800-525-7000.

We'll be right back. And have been trained to offer biblical financial advice. To find a certified kingdom advisor in your area, visit faithfi.com and click Find a CKA.

Absolutely free. We know you've learned to be suspicious of those words, but really, you can get biblical financial wisdom delivered to your inbox each week absolutely free. Articles, videos, podcasts, and special offers on biblical resources. Nearly 60,000 people receive our free weekly wisdom email, and you can too. Create your free faith by account by going to faithfi.com and click Sign up to begin receiving weekly wisdom in your inbox. Welcome back to Faith and Finance. I'm Rob West. All right, it's time to take your calls and questions today.

Let's dive into what you're thinking about financially, help you process that through the lens of Scripture, a biblical worldview, and see if we can help you have some confidence and some peace of mind as you steward all that God has entrusted to you. So the only thing left is for you to pick up the phone. 800-525-7000.

That's 800-525-7000. And Laura is our phone screener today. She'll be receiving your call.

Let's start in, let's see, Lake Worth, Florida. Hi, Charlene. Go right ahead. Hi, Rob.

Thank you so much for taking my phone call. I am a single 76 year young woman. I live alone.

I'm single. I have my own home. I don't owe any money on anything. My home, I have probably a little over $600,000 invested in it. If I was to sell it, my realtor says I could get over a million dollars for it. At this point, after remodeling it for the last two and a half years, I'd really like to stay and enjoy it. But I only have $80,000 in a cash account.

It's making less than three and a half percent. I earn $2,000 from Social Security. That's my check that comes in every month. I like to live well. I like to go out for dinner. I'm a member of Kravitz Season ticket holder. And I don't know what to do.

Yeah. Well, I can certainly appreciate that, Charlene, because you have this beautiful home. As you said, you're 76 years young. You want to be able to enjoy it. You like going out to the theater.

And I know the Kravitz Center well being from Fort Lauderdale. But you've got this huge asset that you're sitting on. And your bills are probably right up to the edge with your fixed income there on Social Security.

So what do you do with that? Well, let me suggest you consider and listeners may be surprised when I say this, consider a reverse mortgage. Now, here's why. And let me put a big disclaimer on the front end of this.

These are not my first choice. Because as we talk often about this, on this program, you know, I love the idea of pursuing this goal of being debt free over your lifetime and getting completely out of debt. Including your home by the time you retire, which keeps your lifestyle as low as possible, and keeps you unencumbered. And when we look at the Council of Scripture, although borrowing is not a sin, you know, there are clear warnings about the use of debt. Now, if you are going to use debt, there are some rules that I think you should follow. So only borrow when you have an appreciating asset. Well, that would certainly be your home. Only borrow when you have spousal unity. If you're married, you understand you're single, make sure that there are no other alternatives.

I mean, so we can kind of run through the list. But the benefit of a reverse mortgage in your situation would be essentially where you could begin to systematically, you know, for the rest of your life, pull out a monthly amount out of your home in the form of, you know, an income, a check, and you would never have to repay that. In fact, the home equity conversion mortgage, which is the fancy name for a reverse mortgage, is backed by the Federal Housing Administration. So regardless of how long you live, you'll never have to pay it back until you die or leave the house. Which means that, you know, your estate, unless you're to sell it, move somewhere else, your estate would take care of that whatever is owed on the reverse mortgage that you pull out throughout the rest of your life. But the key is, they are not allowed to get more than the home is worth. Now I realize, you know, it'd take you a long time in monthly checks to pull out over a million dollars.

So I'm not even thinking you would get there. But even if you did, one of the benefits of the home equity conversion mortgages, they can't collect more than what the home will bear on the market when it's sold at your death. And so if there's a shortfall, meaning they paid out more than your home is worth, well, that's where the Federal Housing Administration steps in and they pay the rest to the lender. So you never, you know, you'd know that you'd never owe anything more than what your house is worth. And it would be a way that you could enjoy being able to systematically pull that equity out to, you know, significantly increase the monthly income you have available and you could stay right there. Now, if at some point you decided to move or you wanted to downsize, the home became too much for you. Maybe you needed to move into assisted living or, you know, nursing home. Well, whatever was owed at the time of the sale, you would have to pay that back.

There's an interest rate embedded in this, even though there's no payments, you are accruing interest on what's paid out to you. But that would be one thing that would come to mind that would allow you to stay there and increase your income. But give me your thoughts on that. Well, it sounds interesting, but those reverse mortgages have had a bad rap.

Yeah. And that's why you need to have someone that really understands them because they're not all created equal. I mean, I wouldn't be following a phone number on an ad you see on the television. I would talk to, well, there's only one place I would go that I would trust, which is Movement Mortgage.

I'd go to movement.com slash faith, fill out the information. And, you know, when somebody reaches out to you, tell them you want to talk to the area that handles reverse mortgages, because I agree with you, they're not all created equal. The fees can be, you know, very high. But if you get a great, you know, a quality reverse mortgage, where the fees are in line, the interest rates in line, it could do exactly what you're talking about, which is boost your income, keep you in the house, never have to make a payment and never, you're not even personally obligated. Basically, the only collateral is the home. Now, you said that it never goes over if once I die, and the house has to be sold, or they have to retrieve their money. But what happens if the house is worth more than what the reverse mortgage was meant for? Oh, yeah, all you have to pay is what you owe in the amount that was paid out to you plus the interest and fees. And undoubtedly, there would be quite a bit of equity left.

And all of that would be in your estate and then able to be given away charitably or pass on to your heirs, you only owe up to what was paid out, but never more than the value of the home. Okay. Do you think this is probably the best way to go? Do you have any other suggestions? Well, the only other suggestion would just be, you know, to stay right there and, you know, just live modestly on 2000 a month. Because apart from that, really, the only other option is to sell and downsize and put a portion of the proceeds to work because you'd get a million dollars out. Maybe you buy a townhouse for, you know, 500,000 and you got another 500,000 that can generate income.

Let's talk a bit more off the air. We'll be right back. We are grateful for support from sound mind investing in the faith and finance program. For more than 30 years, they've been helping Christians reach their financial goals with step by step guidance for investors at every stage from those just getting started to those getting ready for retirement through scriptural principles and practical suggestions. SMI offers financial wisdom for living. Well, more information, including the short video webinar on profit and peace of mind, no matter what's happening in the market is available at soundmindinvesting.org. We're grateful for support from movement mortgage who provides residential home loans in all 50 states guided by a mission to love and value people and a goal to redefine the mortgage process movement seeks to help others achieve their financial goals. You can find out more at movement.com slash faith movement mortgage LLC supports equal housing opportunity in MLS number 39179.

For licensing information, please visit in MLS consumer access.org. Welcome back to faith and finance. I'm Rob West. All right, back to the phones. We're going to round out the broadcast today with your questions. Let's go to Indiana.

Hi, Brian. Go ahead, sir. Yes, I own a rental property that's a joint of my home property and the renter wants to buy it. So I'm considering selling it and he also wants to buy another additional acre behind the property.

Yeah. So my question is, am I better off to sell it as one parcel concerning capital gains and I do like the passive income. So what I'm thinking about is selling the home as is on the land and then doing like a rent to own or at least to own the additional acre over like a 10 year period just to get me kind of weaned me off that passive income. I've only owned the property for three years, so I don't know if there are other penalties for buying and selling property. I've never done it before.

Yeah, no, there won't be any penalties. And because you've held it for more than a year, you've got long term capital gains, which, you know, for most people that are making if you're married, filing jointly, anywhere between 89,000 and, you know, about 450,000 in income, not the gain, but your adjusted gross income, you're going to be at 15% capital gain. So, you know, that's going to apply to any sale, whether it's the parcel, if you, you know, section that off, or you know, the the home, or both. So I think it really you need to decide what do you want to be left with in the end, both in terms of your total portfolio, including the income generation piece, which you would be losing, and whether or not you want to be a landlord, or whether you'd rather pull that capital out and go do something else with it. And, and then what would that be? And can you generate the same kind of income, I like the idea of you being diversified among multiple asset classes, whether that's a portion in real estate, like you've got now, maybe a portion in stocks and bonds, if you have access to a company sponsored retirement plan, or some other, you know, tax deferred environment, maybe some precious metals, you put all that together, and you don't have your eggs in one basket. But obviously, with real estate, it's not a passive investment, unless you're sitting on a piece of land, waiting for it to be improved, or, you know, infrastructure to be put in or for it to appreciate, but with a home that you're renting out and generating income, there's work that goes along with that. So I think I wouldn't let the tax tail wag the dog, so to speak, I would, you know, decide what you want to be left with in the end, and then figure out the very best way to structure and I think you're already on the right track here in terms of the various options you have with these different pieces.

And you're probably going to want a real estate attorney to help you to figure out how to kind of, you know, develop this land into multiple parcels so that it could be sold off. Thanks for calling today. We appreciate it.

To Miami, Florida. Hi, Tricia. Thanks for calling. Go ahead. Hi. Hi, Rob.

Thank you for taking my call. So my question, I want to purchase a home, and I'm thinking to invest in this little business that I found where I can make, like, residual income, but where I am here now, the rent is, like, extremely high. And I don't really have much cash flow to save. I don't have cash flow at all, really. I'm just basically making it month to month. And so I'm considering taking out a loan so that I can help, you know, pay off some debts and invest in this little business that I think will bring me, you know, extra income and then try to use that to pay off a loan and then start saving and pay off whatever debts and stuff like that. I don't know.

That's what I'm thinking to do to try to get myself out of this pickle where I feel like I'm just going day to day. Sure. No, I can certainly appreciate that, Tricia.

Let's talk about this just a bit more, though. So do you have a full time job or are you in business for yourself full time? Yeah, no, I'm full time employed. Okay.

And then you're looking to start a business on the side. Is that right? Yes. Okay. So with your full time employment where you're working and getting a salary or hourly, that's just enough to cover your bills, but you have nothing left over at the end of the month?

That's correct. All right. And what debts do you have that you're trying to get paid off? So I have a couple of credit cards that I want to pay off and there's a personal loan also that I'm trying to pay off. All right.

How much on credit cards? So, let's see, it's about $6,000, $7,000. Okay. And the personal loan? That's the big one.

That one is almost $30,000. Okay. And does that to an individual or a bank or another institution? Yeah, credit card company. Okay. Got it. All right. Yeah.

And so you're servicing the debt, you're staying current every month, you're just not able to make any progress on these. Is that right? Exactly. Yeah. I'm on time and everything, but yes. Yeah.

All right. And what is the side business? So it's something in cryptocurrency, which I know is a little bit volatile, but... Yeah. I would need to know a lot more about that. I mean, I have obviously a lot of concerns when I hear crypto, especially because you're talking about going deeper into debt in order to do it. And I think it is very volatile and unproven.

We don't know where that whole space is headed from a regulatory standpoint. And so you trying to pursue something like that in order to get out of these other things, I feel like is just not a recipe for success here. Not to mention you buying a house before you're ready as much as you want to, especially there in South Florida, that's going to be really difficult to do.

So I think what I would feel more comfortable with, Tricia, is you got to stay in the course with what you've got. I mean, you certainly could be looking for other options that might give you more income if you make a move to another company. But trying to start on something on your own in the financial condition you are right now, I just don't feel good about. I mean, it'd be different if you were out of debt and you got some savings and you had a new venture. Forget what it is for a second, but any kind of startup just takes more time and expense than you imagine it will.

Not to mention something in the space that you're describing here. So if it were me, I would probably set the side business aside. I would set the home aside and I just really focus on kind of getting your financial house in order, limiting your lifestyle, looking to cut back on your spending. Trying to, you know, if you want to get a second job or work extra hours or make a move to another company where you could get more compensation, great. But let's focus in on that budget. And I'd probably reach out to our friends at ChristianCreditCounselors.org, see if they could help you get on a level monthly payment that fits into your budget, but with much lower interest rates so you can actually make some progress toward paying these debts off.

And if you want to decide, you know, to start a side job, I only look at things where you don't have to make an investment out of pocket, especially where you're having to borrow to do it. So I wish I had better news for you, Tricia. We'll certainly pray that the Lord will give you some wisdom here as you navigate this. And God bless you. Thanks for your call today. Well, once again, our time went by way too fast, but tune in next time and we'll do it all over again. Before we go, I'd like to thank our incredible production team, Amy, Devin, Jim, Robert, Brandy, Rob and Ben. Couldn't do it without them. Have a great rest of your day and I'll see you again next time for another edition of Faith and Finance. Faith and Finance is provided by Faith Buy and listeners like you.