Exploring Faith-Based ETFs with Brian Mumbert

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Hi, I'm Rob West. That option is Exchange Traded Funds or ETFs and they're worth considering. Brian Mumbert joins us today to discuss the advantages of ETFs and then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is faith and finance, biblical wisdom for your financial decisions. Our guest today is Brian Mumbert and it's always a pleasure to have him with us. Brian is Vice President for Regional Sales at Timothy Plan, one of the oldest companies in the faith-based investing space.

They're also an underwriter of this program. Brian, great to have you back. Rob, great to be back. 30 great years at Timothy Plan. Who would have thought?

Incredible. Yeah, we think of faith-based investing as relatively new and yet you all pioneered the way a long time ago. Well, today we're talking about one aspect of faith-based investing, one particular type of product and that's ETFs. I think many people have heard the term but may not know what this investing option is all about. So give us a definition. What's an exchange traded fund?

Sure, Rob. An exchange traded fund or an ETF is a little different than a mutual fund. An ETF will have an index that it will follow and so it will have a lot of holdings inside of this ETF and it's something that is kind of set forward by the fund manager. Typically it's not actively managed and it'll track big indexes like the S&P 500 or the NASDAQ and essentially allows for someone to have broad diversification while being able to trade it during the day. Yeah, and that's one of the key distinctions but unpack that a bit more. How is an ETF different than a mutual fund?

Sure. So when I buy a mutual fund, essentially I don't know the price that I'm exactly going to get until the day is over and then net asset value or NAV is struck and then I find out what I got. And so ultimately if the market is having a down day, it might be a great day to buy a mutual fund because I know I'm going to get a lower price at the end of the day. With an ETF, I can buy it just like a stock as we talked about earlier. So I can purchase it for the price that I see or close to that price right then and there. And I can also sell it during that time frame too. If the market is having a bad day or I feel like there's something I want to get out of, I can get out of it right away.

Yeah, that's helpful. Certainly one of the advantages. What about tax advantages, Brian? Well, it's capital gains season with mutual funds and Timothy Plan is no exception. We will have some capital gains in our mutual funds because the fund managers sell companies and thus the capital gains occur. In an ETF, there's a special tax exemption for them where they do not have to pass on these capital gains. They trade baskets of stocks and ultimately, if done correctly, you will not experience capital gains in ETFs typically. Very good. I know transparency is also another big idea here because ETFs have to post their entire holdings every day.

So they're highly transparent. But I want to get to the faith based element. Brian Timothy Plan has some ETFs and I'd love for you to describe how you all approach this product. Well, Rob, we approach it very similarly to the mutual funds. And thus every filter that we have in the screenings that we do for the mutual funds applies to the ETFs as well. And we get asked sometimes, what if there's a holding in that ETF that violates? Well, since it is a passive investment, there will be a period of time where we may not be able to get rid of that company like we can in a mutual fund right away.

But we do flag them for removal. And it allows the investor to invest confidently knowing that you're still upholding the screening and the values that Timothy Plan has. Yeah.

And as you said, you've been doing this for a long time, more than 30 years. And so you all have been down this road and you know what it looks like to screen investments based on Christian values. Brian, it strikes me that an ETF might be a great complement to an overall portfolio for diversification purposes. Yes, broad diversification is one big thing. Another great thing is it lowers that barrier to entry for clients that feel that mutual funds might be a bit too expensive on the expense ratio. ETFs tend to offer lower expenses.

And thus it makes it easier for some clients to see a way in and not have to sacrifice for a more expensive product as a mutual fund can be sometimes. Excellent. Brian, how can folks learn more? They can go to timothyplan.com where you can see all the holdings, all the ETFs, and the mutual funds that we have. Excellent. Timothyplan.com. That's timothyplan.com. Brian, thanks for stopping by. Thank you, Rob.

That was Brian Mumburt, Vice President for Regional Sales at Timothy Plan. Check it out. Timothyplan.com. Find out how their faith-based mutual funds and ETFs might be a great fit for your portfolio. Back with your questions after this.

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Mutual funds distributed by Timothy Partners, LTD and ETFs distributed by Foresight Fund Services, LLC. So glad to have you with us today on Faith in Finance. It's time for your calls and questions. We're ready for you.

The lines are open. We just need you. 800-525-7000. With any financial questions today, whether it's your lifestyle, maybe it's your spending plan, how to stay on budget in light of these sky high expenses, perhaps you're struggling with how to navigate this market or paying down debt.

Maybe it's giving wisely. Whatever you're thinking about today, we'd love to hear from you. The number is 800-525-7000. That's 800-525-7000. You can call right now. All right, let's dive in. We're going to begin in Pittsburgh, PA. Sue, you'll be our first caller. You go right ahead.

Hi, thank you for taking my call. I just wanted to ask you, I'm 60 years old and I want to do an early retirement at 62 and I'd like to pay off my house before I do that. Is that advisable?

Yeah, it certainly can be. I mean, I love the idea of you being at a place where ultimately you can pay off that house prior to retirement. That's going to get your lifestyle down as low as possible. It used to be that folks in this season of life, about half of them would have their homes paid off. Now it's only about, well, it's about a third that actually do that and it creates a real challenge because this is your largest expense and it just makes it more difficult to balance the budget.

I guess the big question though is just always where are those funds going to come from? So why don't you just give me kind of a quick rundown of where you're at in terms of, let's start with the house. What is it worth and what do you owe on it?

So it's worth like $3.50 and I owe $2.50 on it. Okay. All right. Very good.

Actually like $2.30 on it. Okay. And when is retirement for you based on what you know today? In two years, I'm hoping. Okay. Two years. And what is the interest rate on that mortgage?

I think it's 3.7. Okay. Very good.

Yeah. So you've got a nice low interest rate. Now give me a rundown of kind of the retirement assets you have that you're going to be drawing from in retirement.

So I already have that. I'm getting, I started at 55 so I'm pulling from that as well as I'm using that and I'm using part of my paycheck as well. Okay. So what do you have in that retirement account today?

Right now I'm just stocking it away. So right now I have almost, well I have $5,000 in it right now, but when I get a lump sum of like $10,000 or $20,000 then I just put it towards it. Okay. And so what type of retirement account is it that you're building up assets in? That's my pension. Your pension. Okay. And do you plan on taking an income stream at retirement or getting a lump sum?

Oh no, it's just an income stream. Okay. And so you've already started collecting that or that's going to come when you retire? Yes, at 55. Oh, okay.

Got it. And so what other retirement assets do you have beside the pension? Oh, I have my 401ks.

I have, you know, I'm in good shape other than that. I mean, I'll be, it's still continued to be getting my pension until I die. So. Sure. When you put all the other retirement accounts, not including the pension together, what do you think you have in there roughly?

Probably three, three thousand. Okay. Total assets though, 300,000?

Oh, I don't know the answer to that. Okay. Well, I guess what I'm looking for is you've got a pretty substantial mortgage here at 230,000 and you're looking to pay it off in two years. So where would that money come from? Oh, part of my, my pension and also my salary, part of my most of my salary. Okay. So you have surplus income because you're still working and you're drawing the pension right now. Is that right? Yes. And so you're going to try to pay it off out of your surplus income every month over the next 24 months? Yes. Okay. And what do you have in the way of surplus income? How much?

What do you mean? Like my regular paycheck? So after all your bills are paid, how much extra do you have leftover that you could apply to the mortgage principal reduction? 2,000. Okay. So if we do that for the next two years, 2,000 a month, that's only going to give you a $48,000 toward the $230,000 mortgage.

So we've got, uh, you know, we'll still have 182,000 left on the mortgage. Where's that going to come from? I see. Okay. But I might have to work till I'm 64 then, 65.

Yeah. I mean, it's going to, it's going to take quite a bit more than that because if we take 230,000 and we divide it by 2,000 a month, it's going to take a 115 months. That's about nine and a half years more at an extra 2,000 months. Now that doesn't factor in the scheduled mortgage payment. If you're continuing to make that, obviously some portion of that is going to go toward principal reduction. And as you get later in the mortgage, although with this balance, you still, are you in the, is this a 30 year mortgage and you're still in the first half of it? Yes.

Okay. So the majority of your scheduled monthly payment, that amortized payment is going toward interest. And a smaller portion is going toward principal. Now, every month you get a little bit more toward principal and a little bit less toward interest, but in the first half of that 30 year mortgage, the majority of it is going to interest.

So even if we were to cut that 9.6 years down to seven years, I mean, you're still a good ways off from being able to be able to do that. So I think what you might want to do as a next step would be to just go into a search engine on the web and search for mortgage payoff calculator. You'll find a hundred of them and they're all free. But what you're looking for is one of them that would allow you to say, okay, here's my balance today. Here's my interest rate. Here's my scheduled monthly payment. And it will automatically calculate the amortization and factor in how much goes to principal and how much interest.

And then here's my additional payment of 2000 a month straight to principal. And it will tell you exactly how long it's going to take to pay it off. And you can move those numbers around to say, well, what if I put 1500 a month and what if I put 2500 a month?

But once you figure out what that is, let's say I'm going to guess it's seven years. Well, then that's going to allow you to decide, okay, do I want to continue to work for till I'm 67? It would allow you to, if you're eligible for social security, it would allow that to grow. And number two, it would allow you to enter into retirement, you know, completely debt free because now your home's paid off. But it also may mean that you're having to extend the amount of time you're working by, you know, instead of two years, maybe you're going out six or seven more years. Does that make sense? Yeah, I mean, isn't it best to be debt free by the time you retire?

Absolutely. I was just trying to solve for your goal of being able to retire two years from now. And I'm just saying that's not going to work.

So yeah, as long as you're willing to work longer, that's great, but I would get a plan and you're going to need to use that mortgage calculator to do it. Thanks for your call, Sue. It's a great question.

God bless you. Well, folks, we're just getting started here today. We've got room for a lot more questions, although many are coming in now. The question, or excuse me, the number is 800-525-7000. Again, that's 800-525-7000. By the way, here at Faith and Finance, we want to not only give you a godly counsel on this program each day, but we want to help you find a community of godly folks who can come alongside you because we realize that part of your stewardship journey is seeking that wise counsel along the way.

That can come in many forms. If you're in credit card debt, reaching out to our Friends of Christian Credit Counselors. If you need help with, you know, making sure you have offset the cost of healthcare and you can do that in a way that's affordable, Christian Healthcare Ministries can be a great resource. If you're looking for a professional advisor, think financial planning, investment management, accounting, insurance, estate planning, and you want somebody who shares your values, who's met high standards and character and competency, and they've had a pastoral reference and a client reference and a regulatory review. Well, that's the Certified Kingdom Advisor designation. It's our go-to here for godly professionals that can serve you.

You can find a CKA in your area when you go to faithfi.com and click find a professional. I hope that's helpful for you. We're going to take a quick break, come back with more questions just around the corner. Again, a few lines remaining open, 800-525-7000.

We'll be right back. Are you a financial advisor or CPA seeking to build your practice on biblical wisdom? Not only does the Certified Kingdom Advisor education provide you with deep biblical insights, the CKA designation sets you apart. Each year, almost 50,000 people search for a Christian financial advisor. Join our community and share your expertise with clients looking for someone who shares their faith and values. Find more information at kingdomadvisors.com Great to have you with us today on Faith and Finance, our hope each day to provide wisdom from God's Word on financial decision-making, to be reverent as we approach the Scriptures, to be hopeful and encouraging, also empathetic, knowing that, listen, we all make mistakes in our financial lives, and we can put those to the foot of the cross. The goal is to move forward seeking to be that wise and faithful steward. We want to be your partner in that each day, providing you encouragement and great, sound, practical advice. So if you have questions today, call right now, 800-525-7000. All right, let's go to Texas.

Hi, Cheryl. How can I help? Yes, thanks for taking my call. My son has started a new outside sales position, and he will be receiving a base salary. My question is, how can I advise him on how to begin a budget and maintain it when you have commission as your main source of income?

Yeah, very good. You know, I think that's it's a challenge. And the the where it's going to get easier is over time, it's going to be more challenging right up front, because he probably if this is a new position, if he's in a new career, you know, he's going to need some history to figure out what is kind of the what he should actually budget on because normally what you do with variable income budgeting is you say, Okay, let me look over the last 12 months or the last six months unless you're in a real seasonal business, and then you may need to look at the last 12 months and say, what is that kind of consistent conservative average that I can plan on budgeting each month, knowing that in the peak months, I'm putting a little bit in savings and in the lower months, I'm pulling out of savings. But you know, I'm putting myself on more of a fixed income situation by having all my income paid to a savings account.

And then, you know, paying myself a fixed amount every month. And as long as you do that, based on historical averages and, and being conservative, hopefully the money's there to kind of smooth that out. The problem is in his situation, being that this is brand new, he's going to have to predict what that, you know, amount is that he's getting in commissions beyond his base. And that's harder to do in the early days. So, you know, what I would say is, you know, he can talk to other people that work there, he can talk to his new employer, trying to get a, you know, a good idea of how much he should expect beyond his base per month.

On a conservative basis, he may need to start by just budgeting on the base only, because maybe it's going to take him some time to build up his clientele and actually see some commission starting to flow. And so, you know, always better to, you know, be surprised on the upside. But you know, that's basically the idea on how you do it. Does that make sense? Yes, thanks so much. I appreciate it. All right. Thanks for your call today. God bless you. Let's see. Tennessee's where we're going next. Hi, Mary.

How can I help? Yes, I was wanting to find out about a book you mentioned. I think it was for widows or for women for budgeting who may not know how to do that per se. But I didn't get the title of that.

Yeah, absolutely. So the the book is by our friend Miriam Neff. And it's called wise women managing money. And Miriam's husband passed away. And she was kind of thrust into that role like so many women are, who have not been giving primary attention to the finances. And often it is the wife that's doing that.

But in many cases, it's not. And so she wrote this book just to be an encouragement, but also to provide practical help to widows finding themselves now managing the assets of the family after their husbands pass away. Wise women managing money, and I'd be happy to send you a copy if you're interested. That would be great. Thank you. Okay, very good. You stay on the line and we'll get that right out to you. Thanks for calling. Let's go to Montana.

Hi, Craig. How can I help? Well, quick question here on how to decide what to do. We're revising our wills here and deciding how much to give to our heirs, how much to give to charity and how what counsel do you have on how to come up with that decision? Yeah, let me give you some thoughts on that. And I'm going to send you a book called splitting heirs from Ron blue. I'd love you and your wife to read through this and pray through it.

And I think he's he's got the best book on this topic to help you process this. You know, there's only three places you can leave money, US government, we don't want to do that. They've got plenty, your heirs and charity. And so you're trying to figure out how much to each of those latter two. And I think the first question is, you know, number one, you are the steward. And so I think making this a matter of prayer, and determining where you'd like to see this go, I think on the charitable side, you're really thinking through what are those issues and causes that are on the heart of God, that also align with your passions and priorities, you and your wife. And you can look at that both geographical, you know, Judea, Samaria, Jerusalem, and the ends of the earth.

So you can look at your local community, you can look at your state, you can even look at globally, and then you can look at the issues. So there's the ministry of God's word, preaching, teaching and discipleship. There's the ministry of God's mercy, the ministry of God's justice, it might be widows and orphans, or rescuing the oppressed, I mean, or, you know, taking the gospel to the ends of the earth.

I mean, any of those, clearly we see, you know, encouraged in Scripture, and put a plan together for those causes that you want to fund. With regard to inheritance, I think what you have to recognize there is, you know, the operative question is, is the next steward not only chosen, but prepared? Because keep in mind that think about the inheritance like the fuel that's going to propel your heirs in the direction they're already going, but even faster. And so the extent to which you might have one that's, you know, pursuing the Lord and loves Jesus and is demonstrating wise money management principles, well, that's going to fuel that child in that same direction.

That's a good thing. If you have one who's kind of, you know, a bit off the reservation and, and not walking with the Lord or not demonstrating wise, you know, financial management, you could actually, by dropping a large sum of money in their laps, propel them even further faster away from the Lord. And so I think that's where a lot of discernment comes in. And one of the principles that Ron shares in the book is, if you love your kids equally, you'll treat them uniquely. And, you know, I think a lot of times we struggle with that thinking, well, wait a minute, that's not fair. And you may decide to give equal amounts, but I think the key he's making is there are different needs for different children. You know, you might have one child who's an attorney and you know, is, is making a good income and you've got another one who's a single mom and a teacher and has a lot more need, you know, or whatever it might be in any number of scenarios. And so you may think about the inheritance is differently, but I think you also need to think about their spiritual and financial maturity with regard to what the inheritance might do, because the most important thing beyond the money is their spiritual condition and the spiritual capital that you're passing and that they have a walk with the Lord.

And we wouldn't want to inadvertently kind of do anything that's going to propel them away in any way. But I've thrown a lot at you there, Craig, give me your thoughts. No, I, it all makes sense.

I like it. And I, we've thought about those aspects and just appreciate your counsel and the book. What's the name of the book now, Splitting Heirs? It is, and I'm going to send it to you, Craig. It's our gift to you.

So you stay on the line, Sandy, we'll get your information and we'll get Splitting Heirs by Ron Blue in the mail to you and you and your wife enjoy that. Okay. Many thanks. God bless you.

All right. God bless you, sir. Thanks for being on the program today. Thanks to my team today, Pat, Jim, Taylor, and Devin.

Couldn't do it without them. We'll see you next time. God bless you. Bye bye. Faith in Finance is provided by Faith Buy and listeners like you.