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July 13, 2020 8:03 am
Just about anyone who's put a dollar in the stock market has wondered, should I hold or should I sell what history shows this is one case were doing nothing can pay off big time talking about timing the market or trying to based on what stocks are doing today financial planner and teacher Rob West has show how trying to project the market cost you a fortune that your calls, and anything financial at 800-525-7000 would love to hear from you.
800-525-7000 four the cost of market timing. That's nice right here on Monday was Rob, this is a program about you, but everything we teach is based on God's financial principles. What verse do you think best describes our lesson for today. While no question Steve. That would be Proverbs 21, five steady plodding brings prosperity. Hasty speculation brings poverty. That verse should be both a warning and a comfort to us. It addresses to human emotions that will derail your long-term investment strategy. Fear and greed that it tells us that if we have a long time horizon or skews me along, investment horizon, I should say where we don't need the money for at least 5 to 10 years. It's safe to invest in things that carry more risk because the market at least historically speaking always recovers. It also warns that trying to make or save a quick buck by attempting to time the market is potentially disastrous. That's right. And believe you have some numbers that really illustrate what the Bible is saying here word you want to start well by looking at Zoom. It's a great videoconferencing service that we use just about every day. Moneywise let's say you bought Zoom stock a month before the coronavirus pandemic had the share price was $63 a share, a month later, just before shelter in place began. You'll notice it's gone up considerably, to $68 a share, so you decide to quote."
Take your profit the means to sell you, then congratulate yourself for making a tidy 8% profit in just 30 days pretty good downturn course you had no idea that millions of Americans would be homebound in the coming months, churches, schools and businesses all started using using zoom like nobody's business. A few months later into the pandemic Zoom was selling at your ready $204 to show my goodness. If you held a stock instead of making just 8%. Well, you'd have made 325% Steve, sorry I was checking my Zoom stock, obviously no one can predict what the market will do. You certainly can't because how could that means you didn't call me and I'd really be upset about that 300% return. Okay so 10, what else, what, what else should we know and integrate into our investing lives. Well, it's one isolated example and it illustrates what can happen when you try to time the market. Let's look at a scenario where you do it with the market in general over a long period of time say about $1000 worth of an S&P 500 index of 500 largest companies here in the United States. Let's say you did that in 1970 and did absolutely nothing with it will by 2019, 2019. The year that thousand dollars would've turned into nearly hundred and 40,000 but if you tried to time the market, either to take profit or prevent a loss and you'd miss just the five best days of the S&P's performance during that. Well, your stock would not be 140,000 to be 90,000 miss the last 25 days in your stock would be only worth 33,000 so we see that the negative impact of trying to time the market can be absolutely huge, and most certainly okay so how do we avoid missing those big days in the market yet. Well the same way you take the sting out of the markets worst days by sticking to a long-range investment plan by dollar cost averaging, which most investors are already doing. If you contribute a consistent amount each month. Your retirement account, you're automatically dollar cost averaging that can be in stocks, mutual funds, it could be bonds and you simply ignore what the market is doing on a daily basis and how exactly does that give you the markets best days while minimizing the worst yeah well it's by investing a consistent amount each month that you're automatically buying fewer shares when stocks are expensive, but then when the markets down and you're still contributing the same amount each month you're correspondingly buying more shares. So no matter what happens on Wall Street. You're also your skews me. You're always building maximum equity at minimum cost and I think we just need this mindset of delayed gratification.
Steve I go back to that verse. We started with steady plodding brings prosperity okay will come back and chat a bit more about this and that were taking your phone calls on anything moneywise 800-525-7000 is moneywise not money and life run on the same track. Unfortunately, sometimes it seems like your money is heading in a different direction from your goal, and never enough three keys to financial contentment. Author Ron blue helps you to break down all your financial options to a basic floor and then shows you how to keep it all chugging along in the right direction on the same track never enough three keys to financial contentment available when you click the store button at moneywise live out of work. Our friends and sound mind investing have been helping Christians reach their financial goals since 1990 with step-by-step guidance for investors.
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Everyone shares what can I think everyone is going to be talking about no place else to go through this place is a really cute someone who can make a decision option from the station waiting if that is robbing you of freedom and peace of mind.
Christian credit counselors can help Wear nationwide nonprofit counseling organization has helped over 3000 individuals in the last 27 years get out of credit card debt 80% faster while honoring that data and phone to learn how Christian credit counselors can help you visit Christian credit counselors.org Christian credit counselors.org or call 800-557-1985 today and also great is we have open phone line so if you've been thinking of calling wanting to call. Maybe something came up over the weekend and your thinking what a what Rob thinks about this. Well, now's a good time to find out open lines and 800-525-7000 driving you might want to pull over and make it safer that way. 800-525-7000 when we went to our break we were discussing Proverbs 21, five steady plodding and know that isn't the way that Rob West runs a marathon.
It has to do with prosperity and visit Rob steady plodding no doubt that there is not to take umbrage to your word. Thank you. I hadn't heard from you in a while that keeps people from steady plodding and you do have to have a mindset that you gonna hang in there during the good and the bad right yeah it could be any number of things. Number one is fear.
I think you know we have go to sleep at night. Perhaps we don't have peace of mind.
Concerned that maybe there's going to be a massive reversal in the market. Maybe there's going to be a massive recession. Obviously times like these exacerbate that quite a bit and I think so often we have misplaced trust and we need to realize ultimate our trust is in the Lord. We need to make wise decisions based on his principles and that would mean that we do take that long time horizon. Here's a good thing. Over the last 100 years. The date is on your side if you take the long view, because the very best way to see good performance with low risk is by investing in a well diversified stock and bond portfolio and not trying to time the market you I think the other side. Steve is some greed that can creep in and you know we see what's happening in the news with Tesla stock. For example, over the last three or four months and we think well that should be made and I'm going to try to jump in and jump out what the problem is for every test. There's a thousand other ones that went the other way and so it's just more kin to gambling. It's not how we should be managing God's money for the average investor.
I'm not talking about a professional trader on Wall Street working for a big firm does that profession. I'm talking about the average person who's just trying to seek a good return. With God's money. We need to take the long view.
Okay well said 800-525-7000. Let's begin by going up to Bloomington, Minnesota hi Sally, I will turn your mind today. Well, wondered that I would like to write about what you and I repeat grandparenting I property I get credit in the bank. I can do it it I don't need it right now because I'm for Kelvin.
Later on, no best way to handle it.
Yeah once it got you called Sally and this I assume was the sale of an investment property.
Is that right actually retire home or find a fire while wow that's a feels good in some sense to be out from under the responsibility and yet if it's been in the family a long time that may be challenging as well. Tell me, where you're at with that and what are your plans moving forward. But I'm very comfortable living rental might.org and rank 19 benefiting and paying off their rental rate bank and I I I just wanted to invite all I could do when there are other things I again yeah and you don't plan to buy another piece of real estate and if that's true, my second question would be do you anticipate needing to draw any portion of it in the form of income to supplement other income sources.
No, not really. I delegate and I and all my need to take care of left me blessed our family and I should I just leave it meant yanking an interest or not. I'm not dock and bond kind of person. No, I didn't know what well you know I think that's the next question is, once we know the time horizon what you said really could be quite a while the Lord to reason you have good health and this is really money you plan on either giving away or passing on to your errors than this is money that you don't need at least based on what you know today we'd wanted to be there.
Obviously if you had an unexpected major expansion needed some long-term care needed to go into assisted living beyond you know what your family members could provide for you and that could be costly but but apart from that, we just want this money to grow at a reasonable rate. So then we have to decide okay how much risk are we willing to take with any or all of it doesn't sound like by you saying I'm not a stock and bond type of person we certainly don't want to put it all. At the risk of the market and so I think with that portion that you want to keep ultraconservative meaning it has a certain interest tied to it, but ultimately it's prepacked protected by the full faith and credit of the United States government that would mean that it has FDIC insurance will then you're going to have to settle for current rates, which right now are obviously very low. I suspect we'll see some higher rates down the road were talking probably between one and 2% on that money, whether it's in a high-yield savings that has us FDIC insurance or a CD and I wouldn't lock it up in the long term CD just because of this low interest rate environment.
Now's not the time to do that but if that's can give you the peace of mind to know that it's protected it's gonna be there even though you're not making much on it, then you certainly could do that.
I think the second option would be if you're not comfortable necessarily making decisions and then a stock and bond portfolio.
Would you be comfortable hiring a professional. Now that doesn't mean again that the full amount would be at the risk of the market. I could see in a portfolio like this that has a 10+ year maybe 20+ year time horizon where at your age and given your goals and objectives maybe 20 or 30% of it is at the risk of the market which means that you know you can wave out any type of recession that may come your way.
Typically, a bear markets or recession would last somewhere between 18 months and three years. So even if stocks took a dip year. Not having to sell out of that position. Even if you needed some of the money for current expenses.
You could pull it from the cash portion. The benefit those of that Sally would be that 20 or 30% over time would provide a little bit of a growth factor to offset the lower interest rates that would be provided in the fixed income portion. You could also add some bonds, some short duration very high quality, either corporate or US government bonds that would add a little bit more return, but that type of portfolio would be something that would be built and managed by a professional and that would be the way that I would go unless you said to me, Rob, I just don't feel comfortable with anything that's not guaranteed and then I would tell you to stay right where you are, so just come your thoughts on wanted to share right when question that I have my health and about that. He only intricate director hundred and 50,000 right right so you can actually have thought that's per institution and that's per account type so if you had it in joint account and then you had another one in the trustor another one titled some other way you could have 250,000 multiple times if not, then you would have to use a second institution so you could put 250,000 that Ally Bank, which is an online bank FDIC insured provides great customer service, great rates, but another you know hundred and 50. Let's say capital one 360 or Marcus and by doing that with multiple institutions. You can actually expand that FDIC coverage Sally. I hope that helps.
You are a great question. Sounds like you guys are moving in the right direction. There we wish you the best.
Thank you very very much. You're listening to moneywise with Rob West taking phone calls today at 800-525-7000 going to cause novel will be back with a question about using an annuity to pay off the house also a question about capital gains tax and some others as well.
Please do you know if you have enough money of house. Do you know how much is enough.
If not, one blue can help with this book. Master your money a step-by-step plan for experiencing financial contentment. Learn how to save and invest and give wisely to create a long-term financial plan and how to get out of debt. Find it all in master your money by Ron blue available when you click the start button moneywise live.org separation weeks ago something happened so family that my family knows call me and tell me conversation. I'm sorry to say straight on the carpet for the other family not sending it texting inside my own family. That happened to me that we now God will return when you don't know what are you about something here. Explain you in this manner knowing that we can explain them to somebody just before the Holy Spirit and listening to morning with word now right study of Scripture, the financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst, and it splitting hairs, giving your money and things to your children without ruining their lives. Ron blue explains why it's important to make these decisions now, instead of forcing your heirs to do it later.
Splitting hairs will foster a real appreciation for the precious resources that God has entrusted to you, and it's available. Click the start button moneywise live.org you can always visit us online. Oh RG. There you'll find past radio programs from the last year or so. Lots of budgeting resources and materials in our store.
Also, a lot of the material that you can download and use with your personal budget and it's also way that you can make a donation if you'd like to support Robin I do here on a daily basis. We are a ministry 501(c)(3) year. Your gifts are tax-deductible, but we trust. If you consider giving it's because the benefits that you receive from hearing our program on a daily basis along with our partners at Moody radio. It's moneywise orkut.org just click the donate tab at the top of the page Chicago, Illinois hi Mary, thank you so much for holding which question about four years ago I started studying stocks and options investing and I started actually practicing it on real trading platform that with fake money. So my question here is how I know when I'm ready to use real money yeah yeah well Mary's I'm like what you been doing here is you been kind of learning how to go about this. Tell me what your style of investment has been as you been using the fake money to come up learn the ropes and so forth of you and buying individual stocks. If you been looking at charts of you been trying to jump in and jump out of the market relatively quickly. You know, give me the overall sense of what you been up to show what I've been I would either buy a stock or I would buy an option and I would plan my Reggie. I bought a socket option so that I didn't have to continue watching all the time. I would hide that the computer and think it works. It takes emotion out of it a little bit more sure, sure, yeah. And is this something you're doing kind of as a hobby or is this. You obviously are trying to generate a return here but give me a sense of how the money that you're thinking about using in this type of strategy relates to the total investable assets that you have a question. The money that you would potentially use in this type of strategy that you been learning.
Is it the full amount that you would have available today for investments or is it some smaller portion that you're using in this investment strategy you been learning and you haven't another portion and I'm in a 401(k) or in mutual funds or some other strategy okay so I do have a I do have money that's going into a retirement account so this would be maybe half of it but I've been studying also risk you know the amount of money I would put into each investment versus how much is my total portfolio risk too much, so much that I would cry if I lost all yes and are you still working right now okay and what is your time horizon. How far out as retirement, probably five years.
Okay all right you know I'm a little concerned about the strategy that I'm hearing it's not that I want to take anything away from the research you've done the training you've taken on. Obviously you've been learning along the way you been able to demonstrate that to yourself on paper using fake accounts and fake money to see how the strategies would play out and some nuts and you do anything wrong. I guess I would just say that the time and effort that will go into it just generally based on the all the books I've read the research I've read the studies I've seen. It just doesn't pay you end up taking more risk than you need to and end up with subpar returns when you try to time the market, and even the most skilled and experienced traders really can have a difficult time and know they can go through years where their strategy is, quote unquote out-of-favor and other years where they do exceptionally well subject trying to take a couple classes and then taking up to 50% of your retirement money, which is a significant amount in trying to time the market, even though you're using perhaps tested strategies, whether that's sharding or through fundamentals or whatever that might be.
I just haven't seen that work out very well in most cases, and especially was such a significant amount of money.
And while this is your primary focus. You've obviously got the rest of your life and your working in all the other things that go into it and so you can't dedicate as much time as even a professional trader would. So my bias here. Mary is going to be toward a more conventional strategy where you would just continue to systematically invest in well diversified investments and you try to capture the broad moves of the market or through actively managed mutual funds. You try to invest in a strategy of a professional money manager is not just buying indexes but might be looking to pick winners and losers based on no certain underlying factors trying to do that yourself in a situation like this, with half of your retirement money is just not something I could get comfortable with it. If you want to take what you've learned though and apply it.
I would take a far smaller portion of it to do that, at least for the next couple of years I would say perhaps 10% of the most you may disagree. And I certainly would appreciate that. But I just wouldn't be able to get comfortable with what I'm hearing Mary that helps you. We like and what you trying to do and I just want to be honest with our encouragement and I wish you the best in that regard.
Thank you very much Rob a quick one out to Sheridan, Wyoming hi Judy, what your question just a little bit of time at home and yeah you know you're talking about physical cash that's there in your property. It's a good idea to have some cash at home. In the unlikely event that I mean that I'm not someone who thinks that the banking system's enough to come crumbling down. But in the unlikely event of a short-term banking system crash something like that.
It's not a bad idea.
I would think just on average, most people would say probably you know somewhere between $500 and $1500 would be about the way to go. You could also look at how much cash you would need for a weeks time of a shutdown that would be another way to go. Just look at your expenses over seven days and that should probably come in jointly. Which of the best with that. Thank you very much.
Not that it's any of my business Rob but still using a shoebox feeling no way reluctant to say anything at all when I show the way, but maybe he'll talk to you at 807,000 investing is more than just returns. It's an expression of who you are and what you value is the way you invest your money reflect your identity as a Christian that eventide redesign investments for performance and a better world so you can invest with the confidence to reach your financial goals while remaining truly are Christian values and commitments. We call this investing makes the world rejoice more is available and invest eventide.com invest eventide.com Christian healthcare ministries enables believers to show love for one another by sharing each other's health costs through CHN's voluntary health cost-sharing programs members uplift each other spiritually and financially. CHN was an eligible option under the affordable care act and the Better Business Bureau accredited charity interested. Learn more by calling 800-791-6225 or online at CH ministries.more Moody radio verse of the week is found in Revelation 59 and they sang a new song, saying where the are you take the scroll and open it seals, for you were slain by your blind you ransomed people for God from every tribe and language and nation nation 59 radio verse of the call one 800 family things important subjects this month somebody like legacy giving your family to send closer together and closer to true financial freedom and practical advice to shrink the financial mutation in your marriage is more budget friendly family activity since you got a lot more free money wisely magazine subscription is waiting for you. What was work/site runs on scrub but all doctors warning of Florida's rapidly increasing number of coronavirus cases is turning Miami into the epicenter of the pandemic epidemiologists is the region situation is extremely grave assessments.
KM is Florida recorded more than 12,000 you confirm coronavirus cases today after a record-setting weekend, the officials of the fire suppression system was in operable blaze erupted aboard the USS Bonn home restart in San Diego. Helen guest system had been turned off while the amphibious assault ship was undergoing maintenance work of our erupted Sunday morning and it continues to burn at least 57 people were injured. Stocks gave up early gains in turn lower, barely finishing mix today that I'll gain 10 of the NASDAQ drop 226 points. This is SRM news packets moneywise live last time Steve Moore left Annapolis. I'm chagrined that I mentioned Indianapolis till I have been since a child in the 500 fan. I did not used to listen to it. Back then was all day long because the cars were so much slower when I was a boy in this year because of the of the virus to having the Indy 500. Or maybe you can move it later in the year, but I think to not having it sets bittersweet like yeah okay well anyway hi Sue, sorry to talk around you that I think doing the Indy 500 this year.
To your knowledge, I think you're not think yeah I don't think so either.
Maybe next year. Maybe next year. Nonetheless, how can we help you what your question about your annuity, you knew when he retired to pay off all pandemic content made up really at a charity and importance and check that out right way to go.
Yeah. So if I understand correctly you you're on track to pay off your house and how many years, we had 20 years to get home okay. Still 20 years ago and my notes say here you about 176,000 and then you have this annuity worth about 225,000 what you have in investable assets outside of the annuity account about right now we do have a 401(k) under my employer and IRA. You okay and so does that represented the 401(k) and the IRA is that about the same as the annuity is it worth more to me a sense of how that relates to this platform probably caught in a combination of those work product talk about, 30, $35,000 OIC okay and how many years until retirement.
Based on what you know today year all your year out okay and when you look at your retirement income and what you expect to earn in retirement. Have you worked up that budget pension and will take home growth. About 4200 and continue to work.
Probably retirement in the trade retired early and continue to work at a high pain, but it might keep himself busy and out continue to work in my career for at least another 5 to 10 years. Okay alright well ideally concern I have here is the tax bill that could be associated with taking it out all at once and so there's where I would be somewhat hesitant. Assuming this is most of it is pretax, if not all of it. Do you happen to know what the tax situation is on the annuity now. Right now okay so would be the first thing I would look at, it's likely that that would create a pretty sizable tax bill and so that would be the main reason I wouldn't do that right now you know. One strategy that people take is to perhaps rollover a sum of money from their retirement and put it into a fixed annuity that could then pay out toward that mortgage.
If you wanted to do it that way. And so it would pay out the annually and then ultimately you'll pay off the mortgage. I think the other approaches just to continue especially with you continuing to work. Continue on your current track, but try to accelerate the payoff so you're not pulling it in a lump sum out all at one time and driving it up into a higher tax bracket which are systematically paying it off button faster than the current scheduled 20 year payoff rate at any point. Obviously, you could take these assets and pull them out and pay it off, but I just like the idea, especially if you're doing better inside the annuity and the 401(k) and the IRA.
If you're doing better than the current interest rate on the mortgage, assuming you don't have just the absolute conviction you and your husband. We just absolutely want to be a dad, and that if you do I'd go for it, but if not then I would keep your options open.
Try to accelerate the payoff of the mortgage not created an onerous tax liability and then see if you can use that to systematically pay it off over time. But let's say make a goal of cutting that in half 10 years instead of 20 or something like that. I think I'd be a little more comfortable without approach as to not create or pay any unnecessary tax.
Thank you Sue. We hope that information helps Mulberry, Florida. Joseph looks like you trying to help your daughter a little bit hello I am right I can blank you might call it a moderate three-bedroom follow in a nice neighborhood. He paid cash for that you to go thousand dollars you paid for the house he bought an SUV: 815 get that down the roof where he into the backyard right now. He did learn past year he learned that money back because it baby but you can't defend it and she didn't have that she's trying to get learn to work yet know Mark find our college debt or school that is about $9000. He is working in that industry. The cosmetology and there are doctoral good job years growth is about 20 think the year 30 year, I was just wondering what with her. Given that the loan thought she having that savings don't lock thought she had a plan like 135 year plan to work. Money can be removed work. Check that you'd be let into trying take it out 401(k). Happy happy happy to get money taking paycheck and not touch yeah yeah well I appreciate so much going in with this is like she's made some good decisions and yet she's learning along the way so couple of things Joseph I think the first thing is, she really needs to learn God's way of handling money as we all do because understanding and eternal perspective of of money in these principles we find in God's word that really help us to navigate managing his money as stewards are so critical and so often we just don't know what they are. So when you finish your today Samo I will send you a copy of Howard Dean's book your money counts love for you and encourage her to read through that. I think they'll be a big help. Second thing is you gotta have that plan so she doesn't have that spending plan. She needs to get that in place and have a system to track the flow of money. Once she has it worked out where it really reflects what's important to her, including a building up that emergency fund and paying off that student debt as quickly as she can.
Which means that she cannot live well within her means and have some margin and I suspect you know with her trade being cosmetology in the current environment of COBIT. That's obviously going to create some challenges. Hopefully there's not a disruption in income but in terms of putting that budget together. Our money was coaches would be happy to help, or just go to moneywise live.org. Click on connect with the coaches. No charge. They be happy to walk alongside her and help her get that set up in terms of how she could put that away. I think having an automatic deduction, not to a 401(k) yet because she doesn't have the emergency fund, but having that automatic deduction to her an online savings account at separate from her checking account, perhaps linked to at an Ally banker markets or capital one 360. At least it's good to get it out of her checking account and if she wants to use it, just enough to transfer it back now it's still there, which means she could get to it. But hopefully that extra step adds that incentive. I think it's all support for her to really think through why it is she's having that that emergency fund and it's there for the unexpected. And it's really critical for her to be able to accomplish whatever the Lord has for so interconnected with the coach and get her set up with an automatic debit for that savings. I think that'll help.
Thanks Joseph. We appreciate that more moneywise coming up after this many people are experiencing financial challenges such as credit card debt downsizing that in jobs, savings, more than half of all divorces are the result of financial pressures at home, but there's hope in your money counts biblical financial expert Howard shows that the Bible is a veritable managing your finances will discover the profound relationship, your money counts as available when you click the start button moneywise live.org hi I'm very tired. I'm a car guy here to help you understand the urgency and how fun it is a share your faith in every opportunity. If the boats but would you counter to sourpuss, just the person was rooted foul to treat you like dirt it takes to fight so don't like the Scriptures tell us the returning good for it was like piling burning holes in their heads in a good way saying is a sport changes everything.
Their attitude, their anger is your competition and your coach that God is expecting to win the game by playing your position well there by accident. Your goals and make them smile when interrupting their anger with love. They don't expect love conquers all. It is that don't know you're my disciple by your love.
It might take several meetings when that smile finally comes better than catching the winning passage Is there's nothing more exciting than knowing God just use you to lead somebody to join firstname.lastname@example.org this is a engram lots of daily light for daily living. Does this tell the Israelites in Deuteronomy chapter 6 verses six and seven. These commandments are to be upon your hearts. Impress them on your children, our homes should be places of Morrow spiritual, social, emotional, and physical benefit. If you think what you do within the privacy of your home is your own business, think again.
God is made it his business.
You and I will experience serious consequences if we refuse to follow his directions for homes. If we don't instruct our children about God and his creators, directions for living will develop their own standards and values based on what they feel what they think what their friends are doing and what seems to work.
Listen to me. God has given us directions on how to live a life that works there found in the Bible. If we were to prevent brokenness homes should be centered read God's word teaches to your children. This is a engram lots. Many people adopt an attitude toward marriage and finances that it will all work out somehow. But sadly, it often doesn't financial woes can devastate a marriage but there is a better way. God's way, money, and marriage counseling by Howard Tate will help you discover God's approach to growing your finances and strengthening your relationship with your mate and cultivating godly joy, money, and marriage counseling is available for an moneywise live.org Rob we know our radio signal is getting out as far as Wichita, Kansas because that's where Leith is calling from Aletha thank you so much for holding in there hanging on for switch request amount of money given to me from 29 years ago. 39 and I was given the opportunity to take that money and and I will back.
I wouldn't date a test that money until 65. I don't do right now at holding account with Vanguard. I've been told to use it, put it in a self-directed Ira and I was wondering should I do that now what do I need to wait until the market is currently resident some other type of account and another type of account because it didn't holding account. I have been right and what to do with it right but there's the type of the account and then there's the investments inside so an IRA could be made up of only money market doesn't have to be invested in anything so on your statement or if you pull it up online. It's can tell you what type of account. It is, it's a 401(k) with Vanguard is the administrator. It's an IRA it's some other type again. I suspect it's already an IRA. It's just currently in the money market portion in terms of the investments.
Does that sound right or do you think I'm missing something. I think you're right okay right now and when you hear self-directed IRA. That's not what you need a self-directed IRA would be somebody who want to invest in an alternative asset class. I like real estate.
So you could leave it right where it is and you'll have it invested through Vanguard. It's a wonderful company that very high quality investments that are low cost and to get some ideas on how to invest that money right there in Vanguard, I visit with our email@example.com sound mind investing.org they can help you with all the information you need and you can do it all right there in Vanguard, leave it right there in that IRA and get it to work for you. Now's a great time to do it leave so I thank you for calling today. If we can help you further. As you investigate this. Let us know.
Great suggestion Rob, thank you, Spokane, Washington Launa, thank you so much for calling in today and what's on your mind a long time. I know that every planet all all all. Clarence went about 225,080 camber drinking water, but waited only amount I would like to take in a reverse mortgage on a home and you know it can dictate monthly income, but that I think yeah yeah well you can appreciate that little and you do plan on staying in this home is possible for the foreseeable future now and A felony on Medicare, no okay well I'm not a huge fan of reverse mortgages. But I also am not one to say that's never a good idea so it could make some sense in your situation you plan to stay in the home you have enough income to keep up with the taxes and the insurance so you you keep everything paid there and just recognize that as this reverse mortgage is paid out. Obviously that is money that's going to reduce what's available and the proceeds at its sale either when you sell it and move somewhere else and you have to pay back the loan, or when your heirs sell it and they may not be able to keep the property in the family know at that point or they may just depends on what the situation is, but nevertheless it's can have to be paid off. The other downside is the fees associated with it. They just tend to be somewhat expensive in terms of all of the various fees that go into the loan itself and then there's you know for five other fees, not to mention the imputed interest rate inside of it for the money that's being paid out to you so if you found another option that would be better. I would love that friends and some people where you know they might have a child whose you get up systematically by the property from them or something like that will hold the mortgage to create some income.
They in some cases will downsize and buy something less expensive and take the proceeds and then you know generate an income, thereby investing it, but if you explore all those options and you're comfortable with this situation in terms of the debt meeting to be paid back and knowing that you have to maintain the expenses. Certainly this could be a situation where this could give you know that just bump in monthly income that's really good to get to you, get you to balance that budget which is obviously the key so I would do your homework on know who to go with and compare all the costs but at the end of the day. If this is the decision to go with. I think in your situation. It it could make some sense 10 we wish you the best with that.
Thank you very much like continuing Trenton, Georgia hi Joseph, what you question for Rob West. I got I have a 401(k) but I took out $3000 and rolled over into an individual IRA and then I opened up the individual account and put like $30 a week and it is up and I was wondering talking out: Sony and Walmart like that, but I was trying to really make this money grow and I will wondering options trading options will be the way to go.
Yeah, you know, Joseph.
I certainly there's nothing wrong with options at their face value, but they really are. It's an investing strategy that, in my view should be reserved for those folks.
Really, I would put in a professional trading capacity. It's not for the average investor just because it creates a lot more volatility. It increases the risk and often times when you look at it over long period of time by a novice investor.
It doesn't increase the returns and so trying to kind of take a shortcut so to speak, and you know pickup in a more return by increasing the risk. I just think, is not going to be the best way to go for you. I'd rather see you just take a tried-and-true approach by just continuing to invest systematically into the broad market with a well diversified strategy, but somebody whose ego doesn't have the experience I think is necessary when you get into an options category. You really are just increasing the risk substantially and I don't think in the end, when you look back and evaluate how you did for that increase risk.
I just don't think it's can work in your favor.
So as much as I hear you and you want to try to find a way to get a little bit better return on your money. I think just based on the research I've seen in watching this happen time and time again, it's not going to be the very very best way for you to go side I'd stick with your more traditional approach Joseph and we want to recommend to you.
Like we did to a previous caller that you are at your convenience. Check out sound mind, and.org. You select the kind of guy who wants to know what you're doing where you're heading you're interested in in your dollars and your investments and is lots of great information there. A specifically oriented to guys like you. So check it out.
Sound mind and.org time for one more make us Colorado hi Betty, what you question today and how can we help three IRA account and each one tied to a life all in, got my name on them for my rate my retirement, my benefit that one, which I am tired. But I'm not going that I can't, and when I have been made will get the bike insurance and I want him to keep up on the IRA and then I crank it.
Same thing but I got it all in my name. How do I go about getting it to the kids without access to just go spend it yeah and I guess the only thing I'm I'm unclear on is this something that's often referred to as alert, which is basically a permanent life insurance plan that simulates the tax-free traits of a Roth IRA is is that if you heard that term before, and I have okay yeah I'm a little confused when you say IRA attached to life insurance because there there is IRAs, individual retirement accounts and they can only be opened in your name and you can have more than one but you there's a max obviously what you can put in every year and it has to be only up to the amount of earned income. You have until you reach that And then there's life insurance and there's term life insurance and whole life insurance which the whole life has the inch. The death benefit attached to Aurora savings account. And often there's investments underneath it.
So the IRA would be able to have beneficiaries where you would be able to say how you want any number of IRAs or many you have. You want them passed at your death, and that would pass outside of probate based on the beneficiary designation and then there's life insurance which has an owner and then it has a beneficiary where you designate where the death benefit goes when the person is dies that it's attached to their life. And then the question would be is there an investment inside that life insurance policy. And that's where the whole life comes in so apart from that, I'm a little unclear exactly what you have. I think you probably be in the best position to contact a certified kingdom advisor who can just look over what you have because it sounds like it's a little bit complex. You can find one your area moneywise live.org Betty and we do appreciate your call and trust you. Have a great remainder of your day. Thank you very much and to all of our listeners have a great remainder of your day. Drive safely moneywise live is a partnership between Moody radio and moneywise media tell a friend then join us again tomorrow