Investing: Getting the Big Moves Right with Mark Biller

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 Don't sweat the small stuff, but that doesn't mean you can ignore the big stuff either.

I'm Rob West. When it comes to finances and especially investing, it's important to get the big moves right. Mark Biller joins us today to go over the things that need special attention. 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. Well, Mark Biller is our guest today.

He's the executive editor at Soundmind Investing, an underwriter of this program, and a place where they always get the big moves right. Mark, great to have you back. Well, thanks, Rob. I wish that was the case, but we do our best, that's for sure.

Most of the time, that's for sure. You have a great article on this important topic in the latest SMI newsletter, and it's really about setting priorities, isn't it? Yeah, it really is, Rob. So, you know, 25 years ago in the Stone Ages when I first started writing for SMI, there was a popular personal finance idea that was going around then. It was loosely known as the Latte Factor. Yeah, he recognized it.

He must be an old guy like me. Exactly. The idea there, of course, was that focusing on small daily spending decisions like making your coffee at home instead of buying it every day at a coffee shop or bringing your lunch to work instead of eating out, that those types of small decisions were the primary lever to help people get control of their finances. Now, proponents of that, and admittedly, I've made that argument myself, they'd run the numbers and basically say, you know, if you stop spending $5 a day on fancy coffee and invested that money instead, by the time you're 70, you could be a zillionaire.

And, you know, the thing is, that idea is partly correct. When someone's trying to get control of their finances, everything matters. But eventually the financial community kind of came around to recognizing that while those small spending decisions do matter, getting the big financial decisions, right, like how much you spend on a house or your car matter a whole lot more.

And really, it comes down to rob the idea that I don't care how disciplined your coffee game is. If you spend 150 grand more than you can really afford on a house, you're going to have financial problems. So the big idea of the article we're discussing today is that the same principle applies to investing where we've got to get the big things right.

Yeah, boy, I couldn't agree more. Now, the latte factor may be nine or $10 a day here these days. But the point still remains that we need to get the big things right. So what are then those major things when it comes to investing that we should focus on? Yeah, well, what a lot of people don't realize is successful investing actually has more to do with behavioral factors than financial factors. In other words, it's more about how you behave than how the market behaves. And that should come as good news because while you don't have any control over what the market does, you have a lot of control over what you do. So this article covers seven big factors that impact your success as an investor, all of which are under your control. And the first of those is whether you have an investing plan. You know, to paraphrase the Cheshire cat and Alice in Wonderland, if you don't know where you're going, it doesn't matter which way you go.

Now, hopefully, listeners aren't as nonchalant as Alice was about where they're going financially. But to get to your destination, it really helps to have a plan. And a retirement plan starts with your target retirement date and how much you hope to have in your retirement portfolio by that date. From that starting point, you can work backwards to figure out the best steps to accomplish that. Hmm. And that leaves right into the next one. We've got about 45 seconds till our break.

What is that next big move? Yeah, so the next one is how much you invest each month and generally speaking, and of course, this depends on how early you start saving. When you're in the accumulation phase, investing 10 to 15 percent of your monthly income is probably enough. But of course, that's going to depend on how old you are, when you plan to retire, how much you're aiming to save all of those factors.

Yeah. And SMI members can actually dive into this in depth through money guide. If you're a member, this is a powerful retirement planning tool. You can check it out at soundmindinvesting.org while you're there. Be sure to read this article we're talking about today, Getting the Big Moves Right. Mark Beller is here today. He's executive editor at Sound Mind Investing, and we'll be back with much more right after this.

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When it comes to investing, we can make small incremental changes, but what are those big moves, those major things we should be focused on? We're talking today with Mark Biller. He's executive editor at Sound Mind Investing. The topic of the day is based on a recent article in the Sound Mind Investing newsletter at soundmindinvesting.org. It's called Getting the Big Moves Right.

And before the break, Mark shared a couple of them. We need to have an investment plan, and it really does come down to how much we invest each month. But Mark, take us into the next big move we need to think about.

Sure. Well, the third big factor is your asset allocation. There's no such thing as a perfect portfolio that's going to put you on the right side of every market move. So instead of thinking that way, we should really be thinking about the right mix of investments, which is the one that's going to most closely match your time horizon and your personal risk tolerance. So we always start our members with a risk tolerance quiz. We have it on the SMI website, helps determine the appropriate level of risk in a portfolio. And that really breaks down to the mix between stocks and bonds.

For most people, that's going to help them create a portfolio that'll generate the level of gains that they need specifically when the market is growing, as well as what the acceptable level of losses is in market downturns. Okay. And we'll put a link to the risk tolerance quiz in today's show notes. Okay. I think we're up to the fourth big move now. Yeah.

And this, this next one, Rob is a little bit dicier. It's how you choose your investments. And there are a lot of different ways you can go with this at SMI. We focus on objective process driven investment strategies that help our members build these diversified portfolios. Then we walk with them month by month, step by step, whenever it's time to sell one holding and buy another one. Now other investors don't do that. They just focus on figuring out the right blend of stock and bond index funds to create a diversified portfolio that doesn't really have to change much over time. Whatever a person chooses, they need to do it thoughtfully. And the big thing, Rob is not to get sucked into buying things kind of haphazardly based on articles you read or things you hear on financial TV. So we would encourage folks to try to focus on establishing a good process for selecting investments rather than focusing too much, at least right away on what those specific initial investments themselves are going to be.

Hmm. Yeah, that's really helpful. Well, the next big idea is kind of related to that one and that is how do you measure your results to know if you're on the right track? And the key there is finding the right point of comparison. The reason this is a big deal is it's so common for the financial media to focus on popular indexes like the S and P 500 that it feels like everyone ought to be using that as the benchmark for their personal portfolio.

But if a person owns anything other than a hundred percent large US stocks, the S and P 500 is going to be a really difficult hurdle to match. So we would say a better way to measure whether your portfolio is succeeding or not is to compare it to the average return that you need to achieve in order to accomplish your specific financial goals. And that really comes from the earlier steps when we were setting up our plan, figuring out what our target is. That's how you figure out what do I need to be earning on an average basis to meet my goals? You know, beating the market that always feels great. But the real key is whether you're getting the returns that you need to ultimately hit the objectives in your plan. Yeah, that's well said market performance isn't the same thing as meeting your investment goals at milestones along the way in your journey. All right, Mark, this has been great.

What's next on the major moves list? Yeah, well, brace yourself, Rob, because this one's uncomfortable for a lot of people. It's how often you look at your investments. You know, if you pay close attention to the stock market every day, it can drive you a little crazy.

You know, the market goes up, it goes down a lot of the time it's moving without a whole lot of rhyme or reason. And we intentionally because of that design RSMI strategies to just be updated once a month. For most people we found that's enough for them to check in on the market once a month. Now, some people might even do better once a quarter to be honest with you.

But if you're checking daily, it's probably going to be too much. It leads to too much trading, too much activity and people changing their minds about what they ought to be doing all the time. And along with that one, Rob, the last of our seven big factors really comes down to your level of commitment. You know, as in so many areas of life, it's always easy to think that the grass is always greener on the other side when it comes to your investments. And that can lead to some dangerous behaviors. You're jumping from one investment to another, from one strategy to another one advisor to another. And you know, the reality is there are appropriate times to do all of those things.

They just come along way less frequently than most investors think. So we would say choose your strategy carefully, commit to it and then stick with it. Yeah. All right, we've gone over the big moves we need to keep our eyes on. But you have a few little things that we can free ourselves from. So why don't we wrap up with those today?

Yeah. So if you've gotten the big things, right, you've taken the most important steps toward investing success. But there are still a few of these little things that will help you a lot if you can let go of the first of those we touched on it, it's the daily market news that usually has very little to do with investing for the long term. Second thing to let go of is the what if game and that's imagining how rich you'd be if you'd only bought this or that at some different point in the past, or some similar variation on that idea. Keep your eyes on the future and what you need to do now. The third one is focusing on whichever holding in your portfolio happens to be performing poorly at the moment.

People do this all the time. We ran an article a few years ago that was titled diversification means always having to say you're sorry, and why you should do it anyway. And the point of it was that the very nature of diversifying means you're always going to have some things in your portfolio that are performing well, and others that are performing not so well. The key is those things, those specific portfolio positions, they're going to move around and change places at some point in the future, which is why we diversify in the first place.

Hmm, that is great. Mark, sum this up for us. We're just about out of time. Yeah, well, I'd sum it up this way, create your investing plan, pick your strategy with care, commit to it, and then stick with it. You know, on this side of heaven, life is never going to be perfect. And when we apply that fact to our investing, it reminds us to focus on getting the big things right while letting go of the little things. Yeah, and above all of that is trusting God that he is our provider and in control of everything.

And so we really handle money as a tool to accomplish his purposes. But Mark, these are some really insightful ideas today on how we should think about our investments, which is a key part of our stewardship responsibility. Thanks for your time today, my friend. Always my pleasure, Rob. That's Mark Biller, executive editor at Soundmind Investing.

You can read much more about today's topic in the SMI article titled Getting the Big Moves Right at soundmindinvesting.org. That's soundmindinvesting.org. All right, your calls are next. The number, 800-525-7000. That's 800-525-7000. I'm Rob West and this is Faith and Finance.

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All right, we're going to dive into your questions here. Lines are filling up, but we do have room for a few more. If you'd like to get in on the conversation today, just call 800-525-7000. That's 800-525-7000. You can call right now.

To Chicago. Hi, Gladys. Go ahead. Hi, Rob.

I just want to say thank you again for your long-standing faithfulness for this kingdom of God we're in. And I do listen regularly and I've noticed that you advise against life insurance policies. Well, my situation was in 2020, I opened up a life insurance policy. My children are now grown independent. The policy was $410,000 and I checked because I was going to do what you considered about switching it over, but there's like $30,000 into the policy.

So what would be the best way to move that $30,000 somewhere else? Okay. Yeah. Let me clarify first though, because you started by saying, I know you don't like life insurance.

Let me just clarify. I absolutely like life insurance. I think everybody needs life insurance during your working years. Did you perhaps mention, or were you thinking whole life insurance? Well, this was a universal policy.

It was called a flexible premium variable universal. Okay. Got it. Yeah.

Yeah. So I recommend again, everybody has insurance during their working years, but for most people, and I mean that this isn't for everyone. For most people, term insurance is the way you spend the least amount of money to get the adequate coverage that you really need.

So you're not underinsured, you're properly insured, but you're paying as little as possible. And I think that's the ideal so that you have more to put away to give or to save or to put into your retirement account, something like that. Where whole life comes in is for somebody who has maybe a business and they need a buy sell agreement, or they have a lifelong dependent or something like that where there's a need beyond just your working life for insurance. And so you protect that death benefit throughout your whole life by having a whole life policy. And in some cases to you know, use to accumulate cash value. So for someone who let's say is starting late on retirement savings, and they're trying to, you know, they can't put enough away in a company sponsored plan. Well, a life insurance policy is another way to save for retirement. In your case, you've already got it. You've had it for a long time, and you've built up some cash value. So you've got 30,000 in there. Do you still need the death benefit? Gladys, is there anyone depending upon you for your income or something?

No, not at all. Okay, so then the question is, you know, is it best to take that 30,000 and put it somewhere else and give up the death benefit, but also give up the premiums that you're paying every year, or just to continue to ride with this policy, make the premium payments and let the cash value grow, assuming it's growing. What are you spending per year and premiums anything? It's $107 a month. Okay. And what is the death benefit today? $110,000 death benefit.

All right. And is that 30,000 going down each year? Is that declining? It will at some point start to decline.

Right now, I'm just riding with it. But at some point, the premiums will go up as I get older. Yeah. And what is your age now? I'm 70. Okay. And are you in pretty good health? Yes.

So far, praise the Lord. So, you know, you're, I mean, let's say, you know, you live another 30 years, I mean, you're going to spend a lot of money and eventually completely erode all of that 30,000 in cash value, you know, not to mention the increasing premiums over time. I mean, right now you're spending 1200 a year, which is not a whole lot. And you've got that $110,000 death benefit. But I think the better question is, you know, what else could you do with that money if you got rid of the 1200 a month that you're sending in premiums, and you got the 30,000 out that you can invest, and let's say you put that 1200 a month somewhere else, and you don't have to deal with the rising premiums as you age, because let's assume the Lord tarries and you're in good health, you're going to be with us for quite a while, and the Lord's not done, then, you know, I kind of like you, you know, having that money positioned elsewhere, if it's just going to be dwindling down over time. Does that make sense?

It does. Yeah. So but I think the key is to perhaps visit with an advisor who could just kind of look at your overall financial picture, and see how this universal life policy fits in with everything else, and decide where you would put the money before you go and cancel the policy. I'd love for you to have a plan. And for that plan to involve some counsel from an advisor who understands you and everything going on in your life.

Do you have an advisor you could connect with who's not just an insurance agent, but somebody who could really help you just analyze everything that you have? No, I was going to go to your website. Okay, yeah, that'd be good. So just go to faithfi.com.

There's some great certified Kingdom Advisors there in Chicago, Gladys, and I know they'd be happy to help you even on a one time basis, just as you're trying to figure out where you go from here. Let's finish in Nebraska. Monica, go ahead. Hi, I watch your show.

I hear your show a lot on the radio here as I'm driving home. I had a question. So my dad is starting to retire from his job. And he's got equity in his home. I was had a question about the reverse mortgage. He has a significant amount of credit card debt, that because he is retiring, we're going to have trouble paying that but he has didn't know if it was a good idea to do the reverse mortgage to pay that debt off.

So that he Yeah, didn't live. Sure. Yeah. You know, I mean, I think you would need to look into it and just see if he qualifies for a reverse mortgage.

It could be a great option. I mean, does he have at least 50% equity in his home? And he's over 62? Yeah. Okay. Yeah. So I mean, he may be a great option for essentially, well, let me ask you, is there a mortgage still? Yeah, there is. Yeah.

Okay, got it. And so, you know, essentially, what would happen is, the reverse mortgage could at the very least pay off the existing mortgage, except now he wouldn't have a mortgage payment unless he wanted to, but he wouldn't automatically so that would come out of the budget, which that by itself may allow him to balance it. And then we could focus on getting the credit cards paid off. And then, you know, he'd be out of debt and once and for all and then if he wanted at any point to start repaying the reverse mortgage he could, but this I think is a planning tool to consider.

I mean, it's one of your biggest assets. I mean, some people have IRAs and 401ks. And, you know, we have home equity. And so when we're planning in this season of life, ideally, we'd get out of debt and be completely out of debt and just live on Social Security and some sort of income stream from our investments. But the reality is, two thirds of retirees are entering retirement with a mortgage, whereas half, it was only half a few years ago, now it's two thirds. A lot of them are ill prepared with regard to assets to use to fund their living expenses.

And so they're just struggling to make ends meet, let alone have any margin to kind of enjoy this season. And that's where a reverse mortgage is an option, not the option, not for everybody. It's not without fees and expenses and interest, but it is an option to consider and either getting rid of that mortgage or getting rid of the mortgage and getting a monthly check that he knows as long as he's alive and lives in that home, he doesn't ever have to repay it.

And nothing beyond the home will ever be required from his estate or him. You know, it can be a great option. To check it out and get an illustration, I'd go to movement.com slash faith. That's Movement Mortgage, our underwriter. Thanks for your call today. Big thanks to my team today, Sandy, Jim, Devin, everybody here at Faith Buy. Couldn't do it without them. We'll see you next time. Bye bye. Faith in Finance is provided by Faith Buy and listeners like you.