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Investing with Pennies

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
September 3, 2020 8:03 am

Investing with Pennies

MoneyWise / Rob West and Steve Moore

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September 3, 2020 8:03 am

Most people let their spare change pile up until they cash it in for a fee.  But, instead of filling up coffee cans with your pennies, dimes, nickels and quarters, why not put them to work? On the next MoneyWise Live, hosts Rob West and Steve Moore share several investing options that require little or no money to start. Investing with pennies on the next MoneyWise Live at 4pm Eastern/3pm Central on Moody Radio.

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What do you do with your spare change? Most people let it pile up until eventually it ends up in one of those coin eating machines at the grocery store that takes 10%. So is there a better way to cash in on coins?

Well, instead of filling up coffee cans with your pennies, dimes, nickels and quarters, why not put them to work? Financial planner and teacher Rob West shares several investing options that require little or no money to start. Then it's your calls on anything at 800-525-7000.

800-525-7000. I'm Steve Moore, a penny for your thoughts, next on MoneyWise Live. Rob, there was a time when you needed to have a pile of cash before you could really start investing on the stock market.

Thankfully, those days are gone, right? Well, yeah, Steve, the minimum requirements at brokerages have steadily gone down in recent years and now there are many options that allow you to invest with just $100 or less and in some cases, no minimum at all like we'll even talk about today. Yeah, okay.

All right, well, where did we start? Well, with a disclaimer of sorts, the investment options we'll talk about should not necessarily be your first choice. If you have a 401k at work where your employer offers matching contributions, well, that's where I'd like for you to start. If you don't have a 401k, then I would consider opening an IRA, an individual retirement account and some of the options we'll discuss today will actually allow you to do just that. Okay, good. Now that we have that out of the way, what's our first small money investing option?

Yeah, it's one our listeners have heard before. It's called Acorns. Steve, it has a minimum investment of $5 and a monthly fee of just $1. Acorns literally enables you to invest your spare change. You give it your credit or debit card login information securely, of course, and Acorns rounds up every purchase you make to the next dollar. So let's say you buy something for $3.50. Well, Acorns rounds it up to rounds it up to $4 and puts that extra $0.50 directly into your account. Whenever your account reaches $5, well, Acorn invests it for you. But now you began by saying that I could begin with a minimum of $5 and then a monthly fee of $1. That's 20%.

That's a lot though, isn't it? Yeah. So you just have to be careful there and make sure that as you have those smaller amounts, it's going to be a much higher percentage, but you want it to grow quickly. Okay. And again, Acorns, as the name implies, from small seeds grow large investments.

That's what we're hoping for. All right. What's next?

Well, next is one of my favorites, Steve. That's a part of this new fintech movement. It's called Betterment. It has no minimum investments and charges just a quarter of a percentage point per year on your holdings. Betterment is an automated system, essentially a robo advisor that allows you to invest small amounts in index tracking exchange traded funds or what are known as ETFs. Betterment takes some of the guesswork out of investing. You tell it how much risk you're willing to take and answer some questions. It recommends funds or ETFs in a diversified portfolio that matches your risk tolerance. It also offers rollover 401ks and traditional or Roth IRAs.

They have a great website and a phenomenal smartphone app as well. All right, good. That's good to know.

All right. Now, Robinhood is another one of these investing apps that we often hear mentioned. Where does that fit into the overall scheme of things? Yeah. Well, Robinhood is another one that has no minimum investment and doesn't charge commission on stock trades at all from your smartphone.

Hmm. Well, how do they make money then? Yeah, several ways. One is by taking a little from the funds you have on deposit with them. Also, by lending money to you to trade with known as leveraging.

But we would tell you to never borrow to invest in the stock market. I would say that's presuming on the future. Right. OK. All right.

What else? Well, there's Stash with a minimum investment of five dollars and a dollar monthly fee very similar to Acorns. Stash allows you to buy fractional shares of ETFs. That's a great feature because some ETFs have a minimum investment of a thousand dollars.

So much like Acorns, Stash charges you a quarter of a point annually on balances over five thousand dollars. Well, a lot of these names are newer names. What about some of the big guys? Are they setting up something similar to address this competition?

As a matter of fact, yes, many of them are. Charles Schwab has set up some very low cost index funds. They also have their Schwab Intelligent portfolios, which acts a lot like Betterment. The Schwab S&P 500 Fund has a minimum investment of just a dollar. Another Schwab fund tracks the entire Dow Jones Market index and has no minimum investment required.

And one more. Chase has something called You Invest. It has no required minimum investment and gives you unlimited commission free online stock and ETF trades. Great, great information. Here's our phone number, 800-525-7000.

If you'd like to speak with Rob West. Most couples can't talk about money, yet most money books expect them to. But how can you create a budget or pay down debt if you can't even talk about spending or saving with your mate? If you get tense about money or just plain avoid money conversations altogether, Thriving in Love and Money by Shanti and Jeff Feldhahn is for you. And it's yours free when you donate $25 or more to MoneyWiseLive.org. Thriving in love and money for a better relationship, not just a better budget. For 30 years, SoundMind Investing has been helping Christians reach their financial goals with step-by-step guidance for investors at every stage from those just getting started to those getting ready for retirement. Through scriptural principles and practical suggestions, SMI offers financial wisdom for living well.

More information, including a short video webinar on profit and peace of mind, no matter what's happening in the market, is available at SoundMindInvesting.org. It's the Sunday morning service. We're approaching the crucial halfway point.

One person in the congregation is just holding on. Let's take a look inside his subconscious. Captain, we just can't take any more. His memory banks are completely worn out. Attention span is shot. I can only give you half impulse power. But Scotty, we need more power. The sermon lasts for another 20 minutes. I'm sorry, Captain.

I'm doing all I can just to maintain his life support systems. Is the Bible too much for your memory banks? God wants you to understand his word.

That's why he wrote it down. The Bible contains the key to eternal life. So spend time in God's word, and then tell others about the only way, the truth, and the life, Jesus Christ. If the heavy burden of debt is robbing you of freedom and peace of mind, Christian credit counselors can help. We're a nationwide nonprofit credit counseling company. It's a nonprofit credit counseling organization that has helped over 300,000 individuals in the last 27 years get out of credit card debt 80% faster while honoring that debt in full. To learn how Christian credit counselors can help you, visit Christiancreditcounselors.org. That's Christiancreditcounselors.org or call 800-557-1985.

Hey, really super to have you along today. It's MoneyWise Live with Rob West, and we're taking your calls, questions, comments on anything financial. You'll have to make the first move, however, 800-525-7000.

Give us a call right now, 800-525-7000. Now we're talking about investing with your pennies, with your spare change, being able to make small investments. How do you do that?

Where do you do that? I, of course, I got an early start as a very young man. I still have my Indian head penny collection, and I believe they're probably worth a buck, maybe two, but I've had them for a long time. They're Indian head.

They're all 100% copper. Okay. They don't make them like that anymore. They don't make them like that anymore.

And anyway, anything you want to, anything else you want to say? Well, let me just underscore this idea of this move toward financial technology. You know, as we move more and more into the digital age, you know, everybody's got essentially a computer in their hands at all times.

It's called a smartphone. And through these apps that in some cases can get us into trouble, mainly when we're shopping online, perhaps buying things too easily that are not in the budget, they can also be used for good financially speaking. And that's when we take advantage of some of these apps that help us to save. And in particular, I love the idea, Steve, of automating your savings. You know, if you can do something like Acorns with rounding up or you can set up an automatic draft from your checking account after every payday into a stock portfolio or a savings account, you know, you just set it and forget it and you build it right into your budget. I think any time we can automate our savings and our investing, we're going to be much better off because we don't have to think about it.

We don't initiate it. And so that's where many of these options can be very effective, especially for somebody who's younger and just getting started. So be sure to check them out. We'll have a list of all of the different options for low cost investing that we mentioned in the open today in our show notes.

Just go to MoneyWiseLive.org, click on the show, and that will take you to all of our broadcast archives, including the show notes for today's episode. And we'll have links to every one of these organizations. You know, I totally agree with you. I love automated tools like this because generally they're a welcome surprise. You know, you begin the process, you sort of forget about it. And then when you do decide to check in and see how you're doing, you're generally pleasantly surprised. So it's kind of a kind of a fun thing.

That's exactly right. Yeah. So I would take advantage of it.

Okay. Let's take advantage of our callers today. We appreciate you being there and we appreciate you making the effort to give us a call.

800-525-7000. Let's see how many we can get to Scranton, Pennsylvania. Hello, Ruth. What's on your mind? Hi, Ruth. Hello, Ruth. All right. Hi, Ruth. Are you there? Yes, I'm here.

All right. Go right ahead, please. Hello, Ruth. Hello. Yes, ma'am. Can you hear us? Yes, I can hear you. All right.

Please go right ahead. All right. My name is Ruth Setzer and I have some money that's been in a checking account and another one in savings account. And I waited until this month to see what my financial advisor would think of investing it in something. And I had heard something about metals, the silver and the gold, and I suggested that to him, that maybe with things so unsettled with the virus, that silver and gold would be better than anything else.

Yeah. Well, Ruth, I appreciate so much that you've been a diligent saver. You've obviously built up some money that has the potential to be invested. And I think as a steward of God's money, one of the things we should be doing in addition to giving and providing for our families and enjoying what God has given us and living on a balanced budget, we should be thinking about getting a return on God's money as well.

And the very best way to do that, but not just to get the best return possible. I think the really the key needs to be what are your God-given goals and objectives? What are your values as a believer?

And where is God taking you? And how is this money, his money as a tool, help you accomplish those objectives? And then out of that will come a plan. And I think for most people, that will include some investments. So we want to make sure that your financial foundation is in place.

Again, spending plan, living on God's provision and not beyond it, that you're giving generously, that you're saving. If you have an emergency fund, great. If you don't, I'd target three to six months expenses in a savings account, not trying to invest that. But once those pieces are in place, once those pieces are in place, and as long as we don't have any credit card debt and we're well on our way to paying off our consumer debt, I would say making systematic investments into longer term investment options is a great thing.

Now, where do you put that? Well, I would say, although I understand what you're getting at when you talk about the metals, and we're certainly seeing a lot of advertisements for them as of late because we're seeing the precious metals increase with the increased volatility uncertainty. But I don't think that's a place for the average investor's core holdings.

We would say that for the metals in particular, gold is typically where most people go. You would probably not want to think about having more than a 5% allocation of your portfolio. And you might say, well, Rob, given the uncertainty, given what could happen in the future with the U.S. economy and the U.S. dollar and oh, what about inflation? Isn't gold a good hedge?

And I would say, yes, it is. But remember, when we look at the long term historical performance of the stock market, I would say a diversified stock and bond portfolio versus the long term performance of the metals, trying to time the market is not going to work in your favor because invariably you're not going to enter on the right date and exit on the right date to maximize the value. And B, it just doesn't perform as well as the stock and bond market. And it has more volatility. So I don't want you to take on unnecessary risk when we would expect you to get not as good long term performance, at least historically speaking. So as much as you might be tempted to say, I'm going to overweight the metals, given everything I see going on around me, I would resist that temptation and I would look toward a more diversified, traditional stock and bond investment strategy that's long term in nature, meaning 10 years plus and with the advice of wise counsel, which you already referenced your financial advisor. So I would say let's focus on getting that emergency fund in place.

But then with the amount you want to invest, let's look toward stocks and bonds as opposed to precious metals. Ruth, we hope that helps you. Thank you very much for calling in today. We wish you the best. Let's see, continuing on down to Orlando. Hello, Roberto, what's on your mind?

Yes, thank you for taking my call. Yes, we have some savings. We have about like $85,000 to $90,000 in savings. We just recently bought a house here in Florida and also we have about $8,000 debt and a car that we bought in 2016. So that's the only debt, no credit card debt. Yeah, I also have about like $13,000 in 401k to the company that I've been contributing and my wife and I were just trying to see if there is a way that we can invest in, you know, but not taking too much risk.

Yeah, well, Roberto, let me ask you a couple of questions. I like where you're headed with this. I'm thrilled to hear you don't have any credit card debt. Your really only debt right now, consumer debt, if you will, is that car loan. You obviously are living within your means because you've been able to put some money aside. Outside of this money you're considering investing, do you have a separate emergency savings or would that be a part of this account as well?

This is a part of this account. Okay, and what would you estimate, and this is going to be just a generality here, but what would you guess your total expenses are over a 30-day period? Well, it's about like $3,000. Okay, about $3,000. So if we wanted three months expenses we'd want $9,000 in savings.

We'd want $18,000 if you went for a full six months expenses. That would be the target for your emergency fund. I'd like for you to move that to a savings account, maybe an online bank like Ally Bank or Marcus or Capital One 360.

You could link it to your checking and that's there for emergencies. Then beyond that, do you have any other short-term savings goals? Are you saving for a car replacement? Do you have a child that's going to go off to college? Anything in the near term or is this money really money that you can look 10 years plus out?

Well, we don't have that much else and this is the only one that we have. Okay, all right, and tell me about the 401k that you had that you said you have a little bit in. Do you know what percent of your pay you're putting into that 401k?

I'm not quite sure to be honest with you. I know that the company, I think they pay like, they contribute like 25 cents per hour or something like that. Okay, well here's what I'd like to do. There's the employer contribution and that's great, take full advantage of that, but then there's the portion that you're putting in and I'd like for you to target 15% of your pay if you can work it into the budget going into that 401k. Most of your investing should be done in these long-term retirement accounts where you get tax deferral which is going to help the money to grow without the taxes being the drag.

Anything beyond though in this existing account that's in checking, anything beyond that $9,000 to $18,000 that you're going to put into savings for your emergency fund certainly could be invested. I would just want to make sure Roberto that you and your wife see this as money that you don't plan to touch within 10 years because if you do I'd rather you not go into the market, but if not then I think you've got a couple of options. If you want to manage it yourself you could go visit our friends at soundmindinvesting.org to get some great ideas there. You could also connect with a certified kingdom advisor there in Orlando and see about having somebody help you manage this money in a stock and bond portfolio, but the key is you want to make sure it's done according to your goals and objectives and with the right long-term time horizon not short-term in nature. So I think you're on the right track.

I'd go one of those two routes and by the way stay on the line. We'll get your information and send you a copy of Austin Pryor's Sound Mind Investing Handbook. I think that'll be a great encouragement to you.

Great idea. Roberto, stay with us there. We appreciate your phone call today. You're listening to MoneyWise Live. We're taking your calls at 525-7000.

We'll be right back. Do you know if you have enough? Enough money? Enough house? Do you know how much is enough? If not Ron Blue can help with his book, Master Your Money, a step-by-step plan for experiencing financial contentment. Learn how to save, invest, and give wisely, how to create a long-term financial plan, and how to get out of debt.

You'll find it all in Master Your Money by Ron Blue, available when you click the store button at MoneyWiseLive.org. People's 412 says, for the word of God is quick and powerful and sharper than any two-edged sword. Here's Beth Moore with a quick word. We're going to really risk offense when we judge Christ's character, when he delays his judgment. You know what we're saying?

That is offensive. And if we don't get that thing figured out to the degree that we can walk with it and live with it, then the enemy uses it as bait on the trap. And if we stand on that thing long enough, whack, we are going to be held captive by the enemy, even though we're believers. And we got to know that we know that we know that we know that our God is faithful. I'm also going to tell you, we don't necessarily see when we think to ourselves that somebody that hurt us so desperately is doing nothing but getting away with it. That's not God. We really do reap what we sow. When I tell you, that's when we got to fall on our face before God and ask His mercy.

That anything that we have sown of the carnal flesh or of hurtfulness to somebody else that, oh, God, would just pull that thing up by the roots and that He would forgive us and that they would forgive us and that God's mercy would be upon us. But we can't tell from the outside. We can't just assume.

They just got away with that. That's just not how the God system works. May seem to be the way the world system works. It's not the way the God system works.

And we can trust Him on that. We're going to be very easily offended when we judge Christ's character, when He delays His judgment. You've been listening to A Quick Word with Beth Moore.

There are two ways to experience the study of Galatians. You can join Beth for the online experience releasing September 15th at BethMoore.org, or you can join us in January 2021 for the release of the printed workbook edition. The financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst. In Splitting Heirs, 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 Heirs will foster a real appreciation for the precious resources that God has entrusted to you. And it's available when you click the store button at MoneyWiseLive.org.

Hey, we love having you along today. It's MoneyWise Live, and we're taking your calls, questions, comments on any financial topic. Maybe it's, I don't know, maybe it's debt or giving, housing, credit, saving. Maybe it's something a bit more overtly biblical, something having to do with faith, trust, eternity, as it relates to your money, your finances.

The Bible obviously talks about all these areas and many, many more. Give us a call, 800-525-7000. Let's go to Elgin, Illinois. And Ty, what's on your heart today, sir? How can we help you? Hi, can you hear me? Yes, sir. Go right ahead.

Well, I was calling, you just answered one of my questions with your last call. I was talking about investing in the stock market, what's the difference between the S&D, Dow Jones, and the NASDAQ, and how I go about investing in that. Go ahead. Me and my wife have money that we can invest, but we want to invest it wisely. We do have a deferred comp at work that we put a portion of our money in already, but we wanted to invest some of the cash that we have sitting in our bank account. Okay, all right, very good.

Well, a couple of things. You mentioned some terms, S&P 500. You also mentioned the Dow Jones. The S&P 500, or S&P stands for Standard and Poor's, and basically it's a cap weighted index of the 500 largest US publicly traded companies. So think about this as the 500 biggest companies based here in the United States. The Dow Jones Industrial Average, when people say the Dow Jones, that's what they're talking about typically, or they might call it the Dow 30. It's a market index that tracks 30 large publicly owned blue chip companies trading on the New York Stock Exchange and the NASDAQ. And so, again, instead of a pool of 500, this is just 30 companies. And there's various criteria we won't get into as to how those are selected. But I think the bottom line here is that those are indexes, and that can be a great way to invest.

It's very low cost. You can get broad diversification, so you're not trying to pick winners and losers. You're not saying I want to invest a certain amount of shares in this particular company, and then they have a bad quarter or something happens. When you own an index, you're getting a broad cross-section of the market, which can be a very effective way to invest. And as of late, the fees on these index funds, either mutual funds or ETFs, are coming way down. So I think the key tie is anytime you want to invest, you need to make sure it's for the right reasons and with your goals and objectives in mind.

So what I would say to you is the same thing I said to a previous caller. Number one, you want to make sure you're living on a spending plan, and you've got a plan that allows you to take your income and live within that so you're not incurring any debt. You have some margin on a monthly basis.

You want to make sure you're giving regularly. You want to make sure you have an emergency fund in place. I would recommend three to six months expenses in a savings account, not invested. You want to make sure you don't have any credit card debt. If you do, I'd focus on paying that off first because that's going to be a guaranteed return equal to the interest rate on the credit card. And then make sure you're working diligently toward paying off other consumer debt like student loans or car loans. Beyond that, you should be investing first in your retirement account. You mentioned you have a deferred comp, and that's great. You want to make sure you're participating in that deferred compensation plan, which is basically where a portion of your compensation is going to be set aside to be paid at a later date.

Taxes are deferred, and this is going to be a retirement vehicle, so you want to be participating in that. With anything you have beyond that, I would say a great way to get started would be one of these robo-advisors we talked about. You could look at Betterment or Schwab Intelligent Portfolios. Through a question and answer process, they're going to figure out exactly where you're at, what your risk tolerance is, and then build a very low-cost diversified portfolio. You can also check out soundmindinvesting.org.

That would be another great resource. That's soundmindinvesting, one word, dot o-r-g. Ty, we're going to have to let you go. We're out of time, but we appreciate your call. Thanks.

800-525-7000. More MoneyWise after this. Investing is more than just returns.

It's an expression of who you are and what you value. Does the way you invest your money reflect your identity as a Christian? At Eventide, we design investments for performance and a better world, so you can invest with a confidence to reach your financial goals while remaining true to your Christian values and commitments. We call this investing that makes the world rejoice. More is available at investeventide.com.

That's investeventide.com. Thank you from the bottom of my heart. I couldn't have had the procedure I needed without CHM's help sharing the bills. That letter from a member displays Christian Healthcare Ministries' purpose to glorify God and serve His people. CHM is the original non-insurance, voluntary health cost-sharing ministry, enabling its members to share the cost of each other's medical bills. Call 800-791-6225 or visit chministries.org.

Hi, my name is Lyle and I'm a Worship and Media Arts major at the Moody Bible Institute. The Moody Radio Verse of the Week is found in Psalm 127, verses one through two. Unless the Lord builds the house, those who build it labor in vain. Unless the Lord watches over the city, the watchman stays awake in vain. It is in vain that you rise up early and go late to rest, for He gives to His beloved's sleep. And that is Psalm 127, verses one through two, the Moody Radio Verse of the Week. That's todayintheword.org. And click the store button at MoneyWiseLive.org. Growth in the U.S. services sector, where most Americans work, slowed in August, but that was after a big rebound in July, indicating that lingering problems stemming from the coronavirus pandemic persist.

The Institute for Supply Management reports its index of activity in the sector, showing a reading of 56.9 percent. Stocks fell sharply on Wall Street today. The Dow dropped 807 points.

The Nasdaq off 598. And this is SRN News. John 13 35 reminds us by this, All men will know that you are my disciples, if you have love for one another. A good verse for this day, a good verse for any day, obviously. Continuing on, Sunrise, Florida. Hello, Jason. Thanks for your patience. Hi.

Good afternoon. I have a quick question. It's about the credit.

I'm still building my credit. It's around 651. And then I see some reports, some reports about hospitals. They put it in collections. But I think some of those reports is not that accurate.

Like I don't recognize it. So what is the best way to view those collections? Yeah, that's a great question. You know, you'd be amazed at the percentage of credit reports that have inaccurate information. And it's for that reason that the Fair Credit Reporting Act offers a provision whereby you can challenge that negative information that's inaccurate. And it has to be either verified within 30 days by the credit bureau or deleted. And they'll have to provide proof of that verification. It could be that this particular account was sold to a collection agency. And that's the name you're seeing that you don't recognize. But it is, in fact, something that's owed. But it's still worth you challenging it, because if you don't recognize it, it could be inaccurate.

So where do you go from here? Well, the starting point, Jason, is to request a copy of your credit report from each of the three bureaus. So go out to TransUnion.com, go out to Equifax.com, and go out to Experian.com. When you want to request those, though, you'll probably want to do that through AnnualCreditReport.com, yet another website.

But that's a place where you can request all three at no cost. AnnualCreditReport.com. Now, once you have those reports from each of the three bureaus, then you can go through them and mark any accounts that you don't recognize, that you don't think are yours. And by going to each bureau's website, they'll give you the instructions on how you can challenge that negative information. Once you do that, again, they'll either have to verify it or delete it.

And, you know, you'll find that they're very responsive. This is a process that they have set up. And if it is, in fact, yours, then you'll want to contact each of those creditors and talk about either getting on a payment plan or sending a payment plan or settling that account in full.

And if you do that, you'll want to make sure you get the settlement amount in writing, and then you get confirmation that they have received your payment and that there's a zero balance so you can make sure that that's updated on the report appropriately. Does all that make sense? It does. Okay. Well, that's where I think you need to go from here. And I think as you get these accounts cleaned up and as they become further and further in the past, if they are yours, your score will automatically improve.

Just be an on-time payer, keep your debt levels low, and you'll see that 651 up above 700 in no time. And good for you, Jason, for keeping an eye on these accounts. Well done, my friend. Let's continue on.

Chicago, Illinois, WMBI. Dolores, what's your question today? Yes. I had some breaks, a service done at a Buick dealership, and I guess they gave me like a $30 rebate, and it came now in the form of a debit card. And then it names all these places that I can use this, retail merchants and entertainment and dining. Would I be just better off using this up at my GM dealership when I have another service done?

Well, you certainly could. I think you just need to see where it's eligible for use. So is it limited to those brands that are on the back of that card, or is it more like a Visa or American Express gift card where it's just loaded with cash and you can essentially use it anywhere those credit cards are accepted? If so, then you have unlimited options in terms of how you spend that money. If it's limited, then you just need to make sure you use it for preferably a budgeted item with one of those vendors that it's approved for. So I love the idea of you hanging on to it and using it next time you need to get service.

Just don't forget about it. You'd be surprised at how many billions of dollars are sitting on unused gift cards right now because they're in a drawer somewhere and people forget. So I would say I'd probably err on the side of using it sooner rather than later so you actually can use it to your benefit. But if you can, try to use it for a budgeted item.

I think the first step though is to figure out what options you have and then make your plans as to how you want to spend it. Good question, Dolores. Thank you very much.

If it's for a Chick-fil-A, go ahead use it there. We're fans of their waffle fries and there you go. Thanks, Dolores. Indiana, Kathy, thanks for holding so long. What can we do for you? My husband went to heaven unexpectedly on Christmas of 2019 and so of course things changed up rapidly with financial issues.

My daughter went to heaven in February. She's an adult and therefore I now have her two children who are in college. So in the midst of everything, I discovered that we have an annuity which I was aware that he was taking the annuity. So with the changes in the finances as far as social security, as far as his pension only being a percentage, and with myself not being able to be active at my job due to the COVID environment, I had to go ahead and sign to start taking some of this annuity payment. I discovered later that with an annuity, it's a lifetime amount per month but nevertheless they also have huge fees that I wasn't really aware of. So what the annuity is set up for is X amount of dollars per month for the rest of my life. It's a variable and then my heirs would receive whatever was still left at my death.

But what my question would be, would I be wiser to go ahead and take those monies out of that annuity, invest them elsewhere to where perhaps they could make larger amounts and be charged lesser amounts? Yeah, yeah. Well, you're going to have to see, well, let me back up, Kathy, I'm so sorry to hear about this challenging year that you've had. I'm grateful for the hope of heaven and knowing you will be reunited with your loved ones when we meet Jesus face to face. But I know you've been through a lot and not the least of which is navigating all of these financial questions and decisions that you've had to make, especially in the midst of the pandemic.

Especially in the midst of the COVID-19 pandemic. I do think you need some wise counsel here, Kathy, to look specifically at what you have. These annuity contracts vary significantly in terms of not only the fees and the expenses, but what your options are. Now that you have annuitized, you have less options in terms of where this money can be moved. And so they're going to want to look at the fine print on that and understand specifically what options you have. You know, normally with an annuity, you would be able to roll it from one annuity to another one time in a one year period. And so there are plenty of options these days where the annuities offer low costs, low commissions, where the fees are much less.

And so they're not all created equal by any means. But I think it all needs to be done in light of your overall goals and objectives. What do you need in the way of income versus what you have coming in and what investment strategies are going to be the best fit for that, given what you have today and what you're trying to accomplish in the future. And that's obviously more complicated than we'd be able to get to here in just a couple of minutes on the radio. But I think this is a great time, Kathy.

It's not too soon. It's been enough time that has passed for you to look at and make some decisions moving forward related to your finances and how you're managing God's money. So I'd encourage you to connect with a certified kingdom advisor there in Indiana who can look at everything you've got, give you some wise counsel, evaluate this policy and look at your whole financial life. Do that at our website, MoneyWiseLive.org.

Just click, find a CKA. If you have other questions along the way, give us a call back and we'll be right back after this. Your family and your money are two very important subjects. That's why in this month's MoneyWise e-magazine, we're giving your family tips and tools to grow closer to God, closer together and closer to true financial freedom. Get practical advice to strengthen financial communication in your marriage, infuse more budget-friendly family activities into your week and a lot more. Your free MoneyWise e-magazine subscription is waiting for you at MoneyWise.org slash sign up.

Hi, I'm Barry McGuire. I'm here to help you understand how urgent and how fun it is to share your faith at every opportunity through the eyes of a layman. If you think the world's going crazy now, just wait. It may be about to get way crazier. There's a lot more going on than what we're hearing in our scripted news reports with agendas that have nothing to do with curing a virus or solving racial tensions. To the contrary, both are excuses to permeate America with fear and confusion. But God has not given us a spirit of fear, but of power and of love and a sound mind. If you're caught up in the fear of this world, you're not caught up in the mind of God.

God's peace comes from knowing he has everything under control and his timing is perfect. Huge numbers of people are coming to the Lord because of the fear and confusion. And you have this moment to use those same forces to lead your unsaved friends to the Lord. There is nothing more exciting than knowing God is using you to move people closer to him.

Join us at igniteamerica.com. By now, most churches have canceled their Sunday services. People are retreating into their homes and other than the long lines in the supermarkets, the streets are quiet. How are you handling it all? Hi, I'm Bernie Diamond from christianityworks.com. Call me crazy, but while everyone else is retreating into a shell of self interest and self protection, I think that you and I have a huge opportunity. What the world needs right now is for God's people to stand up, to step out with a quiet, calm confidence and share the hope that we have in Jesus Christ. Because let me tell you, when the people you know see the confidence you have, the assurance that you have, the peace that you have in your heart, they're going to want to know where that comes from.

So while the rest of the world is panicking, be Christ to them, love them, encourage them, lead them, tell them about this Jesus who died and rose again for them. Many people are experiencing financial challenges such as credit card debt, downsizing, dead end jobs and depleted savings. In fact, 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 Dayton shows that the Bible is a veritable blueprint for managing your finances, and you'll discover the profound impact it has on your relationship with God. Your money counts is available when you click the store button at money wise live.org. Hey, our website is money wise live.org. You'll find links to a number of free resources, personal finance tools, budget templates, archives of past radio programs, an easy way to find a CKA, a certified kingdom advisor in your area, and a way to connect with a budget coach at no charge. Again, it's money wise live.org.

And it's also how you can give quickly and easily and generously when you click the donate tab right at the top of the page, money wise live.org. Ohio, let's see, am I correct? No, it's not Ohio. It's Missouri St. Louis to be specific.

And Joyce, what's in your mind? Yes, I want to find out about the return. This has to do with insurance. I have an insurance that has a return of premiums.

And I just wonder if there's anything I need to know in terms of any tricks that's played with that, because it's going to be due in about two years. Okay. Okay.

I can ask today. Sure. Yeah. I mean, basically, what you're talking about is a life insurance policy with a return of premium rider, which essentially allows term life insurance policyholders to recover the premiums paid over the life of the policy if you don't die during the stated term. And so obviously, it's an additional cost that you've been paying that's factored in. And because of that, paying that more expensive policy than a basic term life insurance policy, you're going to get this return of premium at the end. And no, I mean, other than just being familiar with the policy language and reading the prospectus and so forth, so you understand exactly what the terms are, this should work exactly the way it was stated. If you have that rider on there, and you'll get back the premium, which they, by the way, been investing all of this time, and that's how they're able to do that.

So that's a good thing. And I would just make sure you understand what are the provisions related to how you receive this return of premiums when the policy is in fact reached its term. The other thing I would mention to you, Joyce, is make sure you have a plan to get a replacement policy in place if you have an ongoing need for life insurance, so that when this policy is no longer in force, and the return of premium has taken place, you've got another policy to replace it. And at that point, I would probably look at just a basic term policy, make sure you get enough coverage, so you've offset the risk that's there. And there's something that fits into your budget as well.

Does that make sense? Yes, but I'm 72 now, and so insurance is very expensive at this age. So I'm thinking that I'm paying out of getting any kind of insurance that I could afford.

And I just wondered if you had any other suggestions. I'm thinking about more maybe investments and things like that. Well, I would be thinking the same thing, Joyce, I would ask, Do you have a need for insurance? Because remember, insurance is to offset a risk that exists for a dependent or a spouse where there would be a loss of income if one spouse passed away, or there would be a major additional financial expense as a result of someone's passing. And so therefore the the insurance life insurance offsets that. But if you don't have that, because you've been saving and your income, retirement income sources are in place, or you're not married, whatever it might be, then there's really not a need for insurance there. Because you've got other assets that are going to provide for you. And if something happened to you, there's nobody depending upon you to go out every day and earn an income. So I think at that point, we then pivot to additional giving, additional savings opportunities, so you can continue to build your assets.

So that in this season of life, let's say you had a major medical need, long term care, or something like that, that you've got the assets to cover that, as opposed to spending money on insurance premiums for a death benefit that you don't really need. Joyce, we hope that helps you as you begin this search. Thank you very much for your call today.

Now we go to Ohio and it's Jackie, what's on your mind today, Jackie? Hi there, thanks for taking my call. I retired from my 45 year nursing career just a couple months ago, and I had a 403 with Fidelity through the hospital. And the advisor from Fidelity had me roll it over to an IRA that's a managed portfolio defensive in nature. And it carries a 1.38% management fee. And I haven't had it long enough to really understand it all, but I didn't know, is that high for a fee? Or I had done some online reading about how that kind of eats away at your funds. And I've heard you talk a lot about the robo-advisor through Charles Schwab, so I was wondering if that would be a better thing to do. Yeah, Jackie, if you don't mind me asking, how much did you have in this 403b? I had $275,000.

Okay, all right, very good. And the Fidelity advisor you're working with, was this just somebody that was assigned to you when you moved it over out of the 403b? Or is this an advisor that you interviewed and selected? That you're going to be working with moving forward?

He worked with me through the hospital over the years, so he kind of knew me. And this thing actually has grown in two months to $290,000. Yeah, which is great. The market's been doing very well in the last several weeks, so I'm not surprised to hear that.

We've just hit a new high on most of the indexes. You know, the bottom line is that 1.38% fee that you quoted there on nearly $300,000 is not out of line. The key would be, is that kind of all in? Is that kind of built into these funds, and then he's charging a fee on top of that? Or is that really the total fees?

And you should be able to ask that question. Just say, I want a total accounting of what I'm going to pay over a 12-month period, all in, for the investments that I have, your fee, and any kind of built-in fees for these investments or funds or ETFs, so you understand exactly what you're paying. And then the only other consideration would just be, do you feel like you have a good working relationship? Are you happy with kind of the communication and how often you're meeting? Is there some larger financial planning that's being done here to make sure that your needs are covered?

For instance, do you need a long-term care insurance policy so you've got that covered for your future? And is the investment mix the right mix for you moving forward? So as long as you feel like you have a good rapport and there's a good fit there, then that's great.

And I don't think that, you know, roughly 1.4% fee is out of line, assuming that's the true cost or the expenses you're paying all in. So I'd ask that question and then decide whether this is the best relationship for you moving forward. If you'd like to interview a few others, you could connect with us a couple of Certified Kingdom Advisors there in Ohio, just to have a couple of other individuals to compare against the relationship you have now.

And you could find those at MoneyWiseLive.org. But it sounds like you're on the right track. Yeah, and you've done very well, Jackie. Thank you very much. And we hope you have a great remainder of, well, I was going to say this weekend, I guess we're, I'm one day ahead of ourselves, but thank you very much. Indianapolis.

Hello, Mac. What's on your mind? Well, I'm 60, and I have a retirement plan with an ex-employer, and I went into full-time ministry. So I did that for 13 years and just kind of felt like the Lord closed that door for now. But I started building the house, so I borrowed the money to build the house, which I didn't need.

And I'm thinking about buying a truck, and I didn't know if I just pay my house loan off and buy a truck outright or use that money to buy a truck. And the employer that I'm kind of working with right now has a 401k, but they pay a percentage, and I think I have to be there five years to be able to keep the full amount. So I just kind of wondered if I ought to be putting money in something else, or I really feel like I'm going to be called back out into the ministry. So I don't know if I'll be there another five years. Yeah, yeah.

Well, a lot of moving parts there. Let's deal with the retirement investment first. I would just make sure you understand that. You're probably referring to a vesting schedule where you have to be there a certain number of years to be able to get 100% access to the funds you have. So you're fully vested.

And you'd want to understand that before you get into it. Because if in fact, you don't plan to be there that long, and there is a vesting schedule before you would have access to these funds, you may decide you need to go elsewhere. And so you could fund an IRA or if you have some income that you're receiving outside of this employer, and you have the ability to open a SEP IRA or an individual K, you could do that where you don't have to worry about the vesting. So I'd just make sure you understand exactly what those provisions are. And you're right, if you don't plan to be there, and they have a vesting schedule, then I would probably not go that route and invest outside of that plan.

Now, with regard to the other kind of moving pieces, what's the main question you're wondering there? Should you buy the car with cash or something else? Well, the money that I borrowed that I could pay back to have my mortgage paid off is like at 3.99%. And I haven't really checked to see what I would get if I went to buy a used vehicle or a fairly new one. If I just use that money to pay for the vehicle and then not pay the mortgage off or? Yeah, you know, I don't like putting a car against a home loan, because here's what's going to happen, even though the interest rate is low, you're going to end up stringing that out, not over five years, like we typically would with a car or three years, but over 20 or 30 years, which means that even though you have that lower interest rate, you're going to end up paying more over the life. So I'd rather see you take that money and put it back against the house and then borrow perhaps at a slightly higher interest rate.

But where it's tied and collateralized, not to the home, but to the vehicle itself, work that into your budget and get that paid off somewhere in the next three to five years before that thing has fully depreciated. So that would be the way I would go there. We appreciate your call today, Mac. Lord bless you and all these decisions you're making moving forward. God bless you, Mac. Thank you very much.

Roger, thank you so much for being here. Very much. Rob, you know, every day, particularly if you turn on the news, you know, every day seems to be fraught these days with uncertainty and fighting and arguing and news headlines. And yet the markets are doing so well. Does that mystify you a little bit?

Well, a little bit, but it is a leading indicator. And the bottom line is with the Fed support and the strength of the consumer and the U.S. businesses, there's a lot of good reason to think that this economy is going to rebound very quickly. Thanks, Rob. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thanks so much for tuning in.
Whisper: medium.en / 2024-03-18 00:25:57 / 2024-03-18 00:46:52 / 21

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