This faith and finance podcast is underwritten in part by Soundmind 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 Hi, I'm Rob West. It's not only okay to quit a bad habit, it's something we should always strive to do, especially with investing. Mark Biller joins us today with a list of bad habits you should quit if you find yourself doing them. And then it's on to your calls at 800-525-7000.
That's 800-525-7000. This is faith and finance. Well, our friend Mark Biller doesn't have any bad habits that we can see. He's executive editor at Soundmind Investing, an underwriter of this program. Mark, great to have you back with us. Thanks, Rob. Appreciate the chance to be back with you. Now, Mark, you've got a great article at soundmindinvesting.org called Go Ahead, Be a Quitter.
We'll put a link to it in today's show notes, but let's unpack it a bit. When is it okay to be a quitter? Well, sure, Rob. It is intended to be kind of lighthearted because we tend to think of quitters and quitting as being generally bad. But quitting a bad thing is a good thing, right? So the trick is discerning which habits are good, which are bad. And that can be a challenge in the area of investing.
So we identified a half dozen things that are definitely in the bad camp. And if you haven't already, you can immediately quit standing on the sidelines. So Einstein allegedly called compound interest the eighth wonder of the world, and it runs on the fuel of time. So you want all the time you can get on your side. Of course, you also want to have good returns. And based on over 100 years of history, we know the best returns have come from owning well-managed growing businesses. So for the average person who wants to grow their surplus capital at a rate that's faster than inflation, stocks have historically been their best option. So the first one is quit standing on the sidelines and start becoming a part owner of corporate America by buying stocks. Yeah, that's well said. Investing really is owning a piece of a company. I think often we forget that.
What's another bad habit to quit, Mark? Yeah, we want to quit waiting for a low risk entry point. And that's just because it's doubtful that you're going to recognize a low risk entry point when one eventually does arrive. The problem, Rob, is that capital risk is low when emotional risk is high. And every day offers us a low risk entry point if you're committed to at least a five year holding period. If we look back to World War II, since then, a diversified stock fund portfolio has lost money only about 5% of the time if you've got at least a five year holding period. Over 10 year periods, it's even more rare to post a loss. And on the positive side, about one out of every six of those five year periods saw gains of 20% or more per year. Wow. So quit trying to pick your entry and exit point.
Alright, what's next? Well, we want to quit looking for a reason to sell. You know, a lot of times we get hung up on the gloom and doom scenarios from the pundits. And even in the best of times, there's always that wall of worry, those economic and market negatives that we can get fixated on. If we're really honest about this, Rob, the biggest risk to our future financial security probably isn't a bear market.
It's probably inflation that eats away the buying power of our dollars. And the best way historically to beat inflation has been to make a significant long term commitment to stocks. Yeah, and a bear market is really your friend if you invest for the long haul because you buy more shares with less money.
Alright, another bad habit to quit. Well, we want to quit making things needlessly complicated. The good news is you don't need to be able to read economic forecasts or do technical analysis or read the company annual reports. You just need to choose solid investment options and hang on to them for a long period of time. It's actually quite a bit more simple than most people think. All right, Mark, I think we have time for one more bad habit investors should quit.
Yeah, well, this one's easy, Rob. It's quit worrying. After all, the apostle Paul tells us God has not given us a spirit of fear, but of power and of love and of a sound mind.
So honor God, apply his principles, trust his sufficiency, give generously and rest in his peace. Well said and great advice. Mark, thanks for stopping by.
Always my pleasure. That's Mark Biller, executive editor at Sound Mind Investing. Check out this article soundmindinvesting.org 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. NMLS number 39179.
For licensing information, please visit NMLS consumer access dot org. Faith and 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. Great to have you with us today on Faith and Finance. We're ready to dive into your phone calls today. The calls are coming in, but we do have a few lines open. That number, 800-525-7000. Let's go to Pennsylvania. Hi, Sherry, you'll be first up. Go ahead.
Thanks for taking my call. I would like to ask you if you think it is financially good to take money out of our IRA account to offset and help with buying a house for us. We're looking at taking out maybe like $20,000 to $30,000.
There's $148,896 in our IRAs and investment accounts. In order for us to sell our house and buy a new one, because we previously, our house, we have about $100,000 left on the mortgage. So we're thinking we might need like $20,000 or $30,000 extra, depending on how much our house sells for, to go into an all one floor home.
My husband needs, we are on two floors now, and my husband, it would be better for him if we were on one. And my question basically is, what do you think about taking $20,000 to $30,000 out of that account, and what are the tax ramifications of that? Yeah, and would that be, Sherry, just for the float to get you through from the purchase to making sure that your current home is sold and you get the proceeds? Or is it a permanent withdrawal that you would apply to this new home purchase for some reason? It probably would be permanent because what we want to make sure of is that when we go into the next place, we go in mortgage free. We're looking at 50 and older communities, and a lot of times you have the fees that you have to pay there, and so we want to go in there mortgage free. You know, you sometimes have like fees on your lot rent, you know, like a lot rent or something. So I would say it most likely would be permanent. Now, we have no idea how much our home is going to sell for, so if our home sells for way more than what we think and we can put it back in, we will certainly do that.
Yeah. Well, I would try to avoid pulling it out of that IRA. I mean, the tax implications are such that it's just going to be added to your taxable income. So it will be the same as if you earned it, you know, as W-2 income from your employer.
The only difference might be is if that portion on top of your other income pushes some or all of it up into a higher tax bracket, it could be even higher in terms of the amount of tax you're paying than you're paying currently just on your base income. So that's a consideration. What age are you all right now? We're like 67, 68. My husband's 68.
Okay. He's working part time. I am kind of working part time.
I had a job, but it kind of ended, but I still am on call for that. Yeah, got it. Well, you're not going to have a penalty because you're over 59 and a half, so it's just pretty simple. Whatever you withdraw in the year you withdraw it is going to be added to your taxable income.
So I think the question is, do you have to take it? I wouldn't take the withdrawal just to kind of float from the sale of one to the purchase of the other, because if you slip beyond 60 days, which is the timeframe you have when you take it out to put it back in to avoid a taxable event, if it gets delayed or somebody pulls out of the contract, then 100% of that money would be taxable. So I would rather you either try to sync up the closings so that you're closing on one the same day you're closing on the purchase, and then you kind of use the money from proceeds from one to buy the other. Or maybe you sell yours, but you work out a deal with the buyer where you rent it back for 60 days or something to give you time. You could sell it and move somewhere temporarily and put your things in stores. That's less than ideal, but I would just hate for you to pull a significant sum of money from the IRA just to get to closing on the purchase and then eventually find that 100% of that is taxable.
And then it's no longer in the account working for you for the future. If you decided that in order to balance the budget after it's all said and done with the sale of the current home that you needed to pull money from the IRA, I'm okay with that, especially if it's just $30,000. You may want to spread it over two tax years.
But I think at this point, the goal is to get that house sold, figure out how much you're going to get, and then time the purchase of the next one, try to use as little as possible from the IRA. That would be my best advice. Let's go to Missouri. Hi, John, how can I help?
Yes. For one, I want to give a testimony. I've been listening to Larry Burkett to Now Today.
I've been listening for lots of years. And my wife and I are debt-free, and we have a decent IRA, and we also have some money left over from starting a business. I did a ministry helping people with addictions, and I started buying houses in contract deed to people who had messed up their credit but had rebuilt their life with sobriety. And as they paid us off, because we always put a 3D five-year balloon so that they could rebuild their credit and refinance, we have some money that we need to find somewhere safe to pull at it. And we've been high-yield interest rate about 5.5% through a money market, and I know those are getting ready to go away and go way down. And so I just wanted to know if there was a safe place to put that to invest it without long-term.
I want to be able to buy my mom's house in the future for my sister, and so I need to keep that money kind of available. Got it. Yeah, makes sense.
So first of all, thanks for sharing your story and for the great work you're doing to serve so many, John. With regard to this money, do you have any idea what the time horizon is on this? No, I have no clue. My mom could live a month or she could live five years.
Who knows? My sister discussed me buying, you know, there's just two of us, so my wife and I are going to buy the half from my sister, so I need to keep the money available, but I need to put the money somewhere because interest rates are getting ready to go down. Yeah, very good. Yeah, I mean, really, for you to keep, you know, complete liquidity on it and still get a decent yield, I mean, high-yield savings is still your best option right now. It could be that money markets will be a little bit better in the future, but right now I just stick with high-yield savings. Anything else is either going to add an element of risk or it's going to reduce your liquidity. So, you know, you could buy a treasury bond, but you're going to have to lock it up for a period of time in order not to have the risk that the price of the bond falls. With a CD, you have the risk of the penalty if you need the money early, so I think right now you need to stay just in the high-yield savings category or money market. That's going to give you the safety and the liquidity, and yes, you know, the rates are probably not going to be as attractive a year from now as they are today, but that's okay.
They'll still be better than probably, you know, the last 20 or 30 years' averages, and the goal for you is the return of your money, not the return on your money. And so, you know, we want to keep it safe, we want to keep it liquid, and unfortunately that's going to really limit your options. Okay.
All right. I just was hoping there was some kind of a product out there that was totally safe, that was, you know, I could cash in whenever I needed it. No, unfortunately I don't have that silver bullet for you, but I would keep an eye on Bankrate.com because they're pretty much the best source for folks, you know, just to monitor who has the best rates at any given time.
You might want to check that every six months or so. Also, our friends at Christian Community Credit Union, they've got some pretty compelling products as well, and if you want to partner in the banking area that's aligned with your values, that would be a great choice. Just go to JoinChristianCommunity.com. John, thanks for your call, sir. We appreciate you being on the program today. Back with more questions after this.
Stay around. As a faithful listener of the Faith and Finance Program, you know that there is life-changing financial wisdom in God's Word to meet all your needs. More than anything, Faithfi is here to help you and millions of others see God as your ultimate treasure. As a nonprofit, we're grateful for our partners that help expand our outreach every month with their generosity. Has God provided financial answers for you through this ministry?
Please consider becoming a monthly partner by visiting faithfi.com and clicking Give. We are grateful for support from Praxis Mutual Funds. Praxis Mutual Funds has seven impact strategies that are designed to create positive, real-world change. More information is available at praxismutualfunds.com. The fund's investment objectives, risks, charges, and expenses are contained in the prospectus and summary prospectus. This and other information is available at praxismutualfunds.com. Investments involve risk.
Principal loss is possible. Foresight Fund Services, LLC. Thanks for joining us today on Faith and Finance. I'm Rob West. We're taking your calls and questions today here in our final segment. Let's head right back to the phones, get to as many questions as we can. We'll go out to Indiana. Eric, go right ahead.
Hey, Rob. Thanks for taking my call. As my wife and I are looking to align our finances and our investments in a faith-based, I guess, ETS is kind of the way we're looking just to capture the market, overall movements. Didn't know if this was a good strategy, diversification between small cap, large cap index.
If there were certain ETFs that you would, I guess, recommend with low ERs and just kind of point us in a decent direction. Thank you. Yeah, I'd be happy to. So you manage your own investments, make your buying and selling decisions, right? Yes. Okay.
Yeah, very good. And you're wanting to limit it to ETFs, not use mutual funds. Is that right? No, not necessarily. Just that's just what we've done in the past. Got it. Yeah, it makes sense. Well, I love that.
And a couple of thoughts. I mean, just kind of with traditional investments, our friends at soundmindinvesting.org could be a great resource for you when they publish every month their buy and sell list using mutual funds. And that's a proven strategy that goes all the way back to Larry Burkett's days. A lot of our listeners have found success with that, specifically in the faith-based investing area. Let me give you a website to go to faithandinvesting.com slash faithfi. That's faithandinvesting.com slash faithfi. You can download their free PDF and they have a listing of basically all the faith-based investing investment managers. And it'd be worth you just kind of looking into each of those couple that I will highlight. One is Eventide is just a great faith-based investing fund family.
You can check them out on the web. Eventide Asset Management. They've just released their most popular fund is their dividend fund. And they just came out with an ETF version of it. And it's I mean, the returns are stellar. The stories are incredible. Kind of what they're investing in and how they apply what they call Business 360 where it looks at just how the business is creating human flourishing and loving their neighbors across all of their stakeholders.
You know, clients and customers, supply chain employees, even people in the surrounding area of the the actual plant from an environmental standpoint. So they have a really compelling strategy, but it's, you know, screened for faith alignment for Christian values. So that would be one to check out. But I think if you get that fund family list there at faithandinvesting.com slash faithfi, that would be a great start. And again, if you want more of kind of a guided strategy, that's more of an active approach using momentum strategies and a rules-based approach. That's where soundmindinvesting.org could come in. But hopefully that'll give you some great options.
I would also mention, you'll see on that list, Inspire. That's one of the faith-based investing investment managers. They've come out with some really creative options recently, one that is basically a replacement for the S&P 500. It's a low cost option.
I think it's nine basis points, so less than one tenth of one percent. And it basically mirrors the indexes, but just eliminates the companies from the index that might conflict with your values as a Christian. And so if you want kind of an index play, that's a Christian screened approach to that. Again, very low cost. So that might, you know, have a place in your portfolio as well.
Do those sound like good options, though? Yeah, Inspire was the one that we were looking at, but I didn't want a name drop on here. Okay, yeah, no worries.
But you weren't allowed to say. Yeah, no problem. Yeah, that's completely fine. So Inspire, Eventide, or all two of, you know, those are two of the ones that you'll see on that list. But then there's One Ascent and Praxis and, you know, Guidestone and others, Timothy, that you'll want to check out as well, because, you know, they all have kind of their own specializations.
And, you know, there's probably 13 or so that are, you know, really significant investment managers in the faith based space now. Wonderful. Thank you, Rob. All right, Eric. God bless you, bud. Take care. Let's go to Illinois.
Hi, Sydney. Go ahead. Hi, I just want to thank you for your show and tell you how much I've learned from you and the finance area and so long.
That's awesome. Yeah, I just want to share a testimony about our faith and how it drives our finances. As a church, we recently read the True Riches book, and it caused my husband and I to look at our finances differently, our earning and our spending and our savings. And during that time, I was offered kind of a promotion, and as we're negotiating pay, I was reading John Wesley talking about earning as much as you can to give as much as you can and having this kingdom-minded mindset about your finances. And so I'm just kind of in the process of praying how God's going to provide and what he's going to provide and then how I can turn around and build that right up into the kingdom.
And we're just seeing what a contrast that is to what we were taught and what we're seeing in the world. Wow. Boy, Sydney, I'm so grateful you called and shared that story. John Cortina is the author of that book, True Riches, along with his co-author Greg Balmer, our good friends. John actually is a contributor here on FaithFi, and he's a faculty member at, adjunct faculty at Kingdom Advisors. He's actually, right now, I'm not participating in it because I'm here hosting the program, but he's actually right now leading a session on setting a financial finish line for a couple of hundred Kingdom Advisors. And, you know, he's just got such great insights on this topic.
But he would be so thrilled to know, and I'll share this with him, that it was an encouragement to you and the others in your church. And you're right. I mean, this is countercultural. You know, this is not what the world teaches. And yet when we see God as our ultimate treasure and money a tool and we kind of live according to and live through a biblical worldview of money management, it's a game changer. What are some of the big changes you and your husband are praying through right now as a result of going through that study?
Sure. Right off the bat, we decided to cancel Amazon Prime and not because of the, you know, annual fee of it, but because of what it, like an attitude of materialism and instant gratification and kind of like this consumerism where as soon as a thought comes in our head that we want something, it's just so easily accessible. And so we've decided by canceling that that we have to be a little bit more intentional about our purchases. That's big, having teenage daughters and also how we want to spend our money investing into people.
And we were kind of newlyweds, been married a year, combined our incomes. And sure, we're tithing, but we're trying to learn how to be generous above the tithing. You know, and just, you know, realizing, like you said, that it's gods and we're just the managers.
But there's a particular section in the book where a doctor decides to live like a nurse. And so what we're trying to learn is what is enough to live on. And we've only been married a year, so we're still trying to figure things out and how we're going to live. But like, it really changed the way that we decided to look at our finances moving forward. So we love it. That's powerful.
I love that. And I'm so grateful that you shared your story today. By the way, folks, pick up a copy of this book.
It's called True Riches, What Jesus Really Said About Money and Your Heart by John Cortenez and Greg Balmer. Sydney, I really appreciate you calling today. I'll share your encouragement with John. Thanks for being on the program. Big thanks to my team today. Jim, Amy, Dan and Anthony couldn't do it without them. We'll see you next time. Bye bye. Faith and Finance is provided by Faith Buy and listeners like you.
Whisper: medium.en / 2024-11-19 04:29:15 / 2024-11-19 04:39:07 / 10