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Investing for Kingdom Impact

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
May 7, 2021 8:03 am

Investing for Kingdom Impact

MoneyWise / Rob West and Steve Moore

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May 7, 2021 8:03 am

Many investors think that finding the “right” companies for their portfolios is the only way to promote Kingdom values—but could we do more? Are there other ways to help the world and its people feel God’s love through our investments? On the next MoneyWise Live, host Rob West will talk with Chad Horning of Praxis Mutual Funds about investing for kingdom impact. Then Rob will take your questions on the financial topics you’d like to discuss. That’s MoneyWise Live, where biblical wisdom meets today’s finances, weekdays at 4pm Eastern/3pm Central on Moody Radio.

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This is Doug Hastings, Vice President of Moody Radio, and we're thankful for support from our listeners and businesses like United Faith Mortgage. Heading into spring, I've been spending a lot of time pondering, analyzing, and debating something extremely important to men, and even many women. And that's whether a new driver would improve my golf game.

I would say I'm somewhere between embarrassing and appalling at golf. But man, do I love it. And all my buddies show up with these epic flash, big maverick birther drivers, and I can't help but feel like they've got this massive advantage on me and my persimmons. It's Ryan, and our faith and family mortgage team, we're proud to have a pretty special advantage ourselves, and one that can be a big deal for you. Our team is an arm of a bigger company who is a direct lender, which means our company uses its own money and makes its own decisions within its own walls. There's no middleman, and this advantage often allows us to get you a better rate, saving monthly and lifelong money on a refinance or new home purchase. We're much better at mortgages than I am at golf. We are United Faith Mortgage. Many investors think that finding the right companies for their portfolios is the only way to promote kingdom values. But could we do more? Are there other ways to help the world and its people feel God's love through our investments?

I am Rob West. Values-driven investing can be a powerful force for making a difference in our world, enabling us to glorify God with the resources he entrusts to us. I'll talk about that with Chad Horning of Praxis Mutual Funds today, then we'll take your calls at 800-525-7000.

This is MoneyWise Live, where the Bible is our best financial advisor. Well, I'm delighted to introduce Chad Horning. For the first time, Chad is president of Praxis Mutual Funds, a leading faith-based family of mutual funds and an underwriter of this program. Chad, welcome to the program. Thanks, Rob. It's great to be here with you today.

Well, we're delighted to have you. And Chad, as you well know, faith-based investing is rapidly becoming a real movement in America. But Praxis Mutual Funds has been around for more than 25 years and has been helping folks do this for quite some time. So just give us a quick history of Praxis.

Sure. Praxis was launched in 1994 as a faith-oriented response to the growing socially responsible investing mutual fund industry. Our parent company, Everance, had long invested money for church-related institutions and their donors, and it was becoming evident that people in the pew wanted to participate with us as well. So we began with just two funds and quickly followed that with an international fund. And from the very beginning, we pursued shareholder advocacy and proxy voting and, of course, portfolio screening.

Yeah. Well, and that's right at the core of faith-based investing, screening out companies that don't align with your faith, screening in companies making a positive impact in the world, and advocating really on behalf of Christian values as shareholders. You manage your funds through a process you call stewardship investing. What are the overriding goals and values?

Sure. Stewardship investing is an approach that we use to try to help investors make a real-world kingdom impact, and we're trying to make a lasting difference, both for individuals, for the community, and for all of creation. And so just quickly, we seek companies that respect the dignity and value of all people, help us build a world at peace and free from violence, demonstrate concern for justice in a global society, exhibit responsible management practices, support and involve communities, and then lastly, practice environmental stewardship. All of these things we try to incorporate into the way that we invest.

I love that. And for many of our listeners, this will be a brand new idea that we could actually have these goals at the same time you're selecting companies and seeking a return on God's money. You know, many faith-based mutual funds, Chad, as you know, focus primarily on screening. What I love at Praxis is that you say, by investing together, we can impact the world. And you do this through a wide range of kingdom impact strategies.

Again, this may be a brand new concept for those listening. So share a bit about what that means and where screening actually fits in that process. Like a lot of funds in this space, as you mentioned, we do screen our portfolios to keep out the kind of companies that many of our customers, our shareholders don't want. So among a longer list, we screen companies out that would be related to industries like alcohol, tobacco, gambling, adult entertainment, abortion, predatory lending, and others. We also seek to avoid companies that fail to take into account their environmental or social impact. And what this ends up doing is having us exclude about 14 percent of the weight of the S&P 500 index.

That's just a large, recognizable index for many people. We adjust our stock holdings using a strategy called optimization to help us replace the kinds of factors that we've lost through our exclusions. But we do this in a way, then, that tries to build up those companies that fit better with those core values that I mentioned at the beginning. I love that. And folks might be surprised to think when you apply these types of screens, as you said, you're only excluding just a small percentage of the S&P based on the criteria you've set up, right?

That's correct. We think we can manage this amount of exclusion using these techniques. We feel like we can still deliver the kind of performance and the path to savings that people expect from us.

I love it. Well, when we come back, we're going to talk about not only screening out, but how you screen in investments that do remarkable things for individuals and communities. And then we'll go on to talk about corporate engagement. We're joined today by Chad Horning.

He's the president of Praxis Mutual Funds. More to come just around the corner. Stay with us. Welcome back to MoneyWise Live. So glad to have you along with us today.

We're talking about faith-based investing, aligning your values with your investment portfolio, a growing segment of the investing landscape that, frankly, is very exciting for believers. My guest today is Chad Horning, president of Praxis Mutual Funds. And Chad, you all have been doing this for 25 years. Even though we're seeing some incredible growth as of late in this space, I'm sure it's pretty encouraging to you and your team what's happening, isn't it?

This has been exciting. We've been, as you mentioned, we've been doing this for over a quarter century. And so some of this is sort of just the way we invest money. It's old hat for us, but we're encouraged by a lot more interest in it these days.

Yeah, well, I certainly am as well. Chad, before the break, we were talking about screening out specific companies that might not align with your Christian values in terms of their primary business activities or even what they do with their corporate profits. You mentioned, which is fascinating, that when your screens are applied to the S&P 500, for example, that typically excludes somewhere around 14% of the S&P 500. But it's not just about screening out certain companies.

There's other aspects to this. And I know you direct funds toward investments that do remarkable things for individuals and communities and still generate a competitive return on investment. Talk about this aspect of your investing. This set of impact strategies is what some people call the embrace part of faith-oriented investing. And we use these opportunities to tilt our investments towards those things that actively reflect God's concern for people and communities and all of creation.

And we do this in a couple of different ways. One is by the inclusion of positive impact bonds in our Praxis Impact Bond Fund. And that's almost a third of the assets there.

I'll talk about that in a second. We have about 1% of each of our funds invested in community development investments. And then lastly, we use environmental, social and governance integration in our funds as well. But let me talk just for a second about impact bonds that we've done over the years. We've lent money to companies, foundations, non-government organizations and multilateral development organizations. And these activities run the range from educational programs in Latin America to sustainable power generation here in the U.S. And we do all of this by earning market rate returns. So we don't feel like we need to compromise our investment goals. That's fascinating because you can have an impact on the equity side, but also on the debt side, which folks may not realize is even possible.

Really an exciting part of the work that you're doing. Now, the third leg of that stool that you talk about, Chad, is corporate engagement. That's now a major part of values based investing.

And Praxis has a long history with this work as well. It's something you call shareholder advocacy coupled with proxy voting. Help our listeners understand what that means. We believe that shareholder advocacy is one of the most effective ways to bring about kingdom oriented change through investing. And it's important to remember that as stock investors, that we're owners in the companies that we invest.

And that ownership comes with rights and responsibilities. So shareholder advocacy, as you mentioned, is one of the things that we spend a lot of time doing, trying to make a positive change at the companies we own. And we often do this in partnership with other like minded institutional investors, often faith oriented ones, with the goal of positively engaging senior management at those companies. Over the years, we've helped achieve real change on problems such as modern slavery, predatory lending and the expansion of renewable energy options. And then proxy voting is a little more obscure for a lot of people, but it allows us to reflect these values and goals through the annual proxy ballot of voting on things like executive compensation, environmental policies and many other things that come in front of investors each year.

I love that, Chad. You mentioned engaging with senior management within these corporations. How receptive are they to these conversations that you're having as you reflect your values? Often we find the management teams are responsive because they understand that we're investors with them. We want those companies to succeed.

We're not protesting them. We want them to succeed. But we'd like to bend their activities and the way that they work towards caring for their many stakeholders. And so often, of course, we choose company management teams that we think we can work with. And so that leads to an easier conversation. Yeah, I love that. Would you mind sharing a story or two about success you've had promoting corporate change that honors God so our listeners can get an understanding of how this works?

Certainly. Praxis, along with other shareholders, has worked with companies like Verizon to increase their work on ending child sexual exploitation online. And through this work, Verizon has expanded its efforts to combat this problem in recent years, including the creation of a digital head of safety role, expanding the email scanning that they do, and improved resources for parents to use so that they understand what their kids are observing online. Secondly, through a recent shareholder resolution and dealing with the pandemic, Praxis and other investors have worked with companies like Kroger and Wal-Mart to encourage them to expand employment policies to include longer paid sick programs for their workers. If nothing else, this pandemic has laid bare the precariousness of life for many in the retail sector, often women and people of color who manage their budgets from paycheck to paycheck. And we understand that just one illness can pitch their families into crises. We believe that both of these efforts exemplify Jesus' teachings to love our neighbor and to stand on the side of the vulnerable. I love that. Well, as we hear today, I mean, there's a real opportunity here to rethink our entire investment strategy around engaging as an owner of an actual company, around avoiding companies that don't align with our faith, and around selecting investments intentionally because they're making a positive difference in the world.

And Chad, for somebody who's hearing this and thinking, this has never been on my radar. I mean, this is just not how I invest. How might you encourage them as they think about where to invest moving forward? What framework would you offer?

Sure. I think one of the best things to do is that many people work with financial advisors. And the next time you meet with your financial advisor, say something like, can you help me integrate my Christian faith into my investment portfolio? And for many advisors, they may not have a quick answer for you, but they will increasingly be hearing about options like our fund. But there are others out there that could fit as well.

And this is not so uncommon. It may be new to your listeners, to some of your listeners, but your financial advisor should be beginning to hear about this out there. Yeah. And Chad, you really believe that we can make a difference as believers. If we were to see scores of Christians to begin to think about investing this way, we could make a real difference in the world?

Of course. When we hear sermons on Sunday, we're encouraged to live our Christian life through the other six days of the week in the way that we interact with our families and coworkers and in our communities. And of course, we think that that could be extended into your financial decisions as well. This is just one way to extend one's Christian faith into a new realm, perhaps that you haven't thought of before.

I love it. Well, Chad, so grateful for you spending some time with us today. We'll look forward to having you back real soon to talk about more positive ways we can glorify God with our investments. Thanks for being here. Thank you. It was my pleasure.

I look forward to the next conversation. That was Chad Hording of Praxis Mutual Funds. You can find more at praxismutualfunds.com. That's P-R-A-X-I-S mutualfunds.com.

Your call is next, 800-525-7000. This is MoneyWise Live, where the Bible is always our best financial advisor. Welcome back to MoneyWise Live, where God's Word intersects with your financial life. What's on your mind today? Do you want to talk about saving or investing? Maybe it's how to increase your giving, or what's the appropriate lifestyle for a Christian? Maybe it's that credit score.

You just can't figure it out. Whatever it is, we'd love to tackle it and bring biblical principles to bear as we do that. Here's the number, 800-525-7000. We've got lines open, 800-525-7000. In just a moment, we're going to talk to Dennis about a gift he made to his sister.

He wants to know if there's any tax ramifications. But first, Adam, are you on the road as we speak, sir? Yes, I am. How are you doing?

I'm doing great. My question is, I would be greatly interested in trying to invest, but right now my best option is through my Vanguard account to invest in your guest's organization. I was wondering if you guys could pass me the necessary information so I could find it and make it a part of my investment portfolio through Vanguard.

Yeah. Well, Vanguard has obviously a robust lineup of mutual funds, but you're able to hold funds from other companies in your Vanguard portfolio. Although you might find what are called ESG funds from Vanguard, environmental and governance-type funds where they're looking at more secular trends, when you look toward faith-based investing options, options like what Praxis has, mutual funds was just talking about with Chad Horning, that's really going to zero in on both excluding companies, as he said, that don't align with Christian values as well as impact investing, where they're intentionally pursuing those companies making a kingdom impact in the world. And I couldn't tell you right off whether the Praxis fund family is available through Vanguard, but I suspect that it is. So the way you'd learn more, Adam, about the great lineup of funds from Praxis is just to head to their website, praxismutualfunds.com, P-R-A-X-I-S. You can learn more about all of their funds in the lineup. And then once you find the one you'd like to add to your portfolio, you would just contact Vanguard to find out whether that fund family and specifically that fund itself is available.

And you can learn more there. If it wasn't, you could always open a brokerage account elsewhere that would allow you to invest directly. Is that helpful?

I think so. I was just hoping it would be available in the back with Vanguard, where I was just hoping the guests might actually know what I actually have to look for on Vanguard. You know, basically add that to the portfolio. Yeah.

And he's already gone on his way today. But what I would say is you can absolutely call Vanguard. As I said, although Vanguard has their own funds, they allow you to hold funds from other companies, and they have quite an extensive list of fund families that they'll allow you to purchase. And so placing that call to Vanguard to ask about the Praxis mutual fund family would be your next step. And if you want to learn more specifically from Praxis, look at the prospectus, understand how they're performing, what each of the fund's objectives are, you can do that at the Praxis website.

Again, praxismutualfunds.com. I hope that's helpful to you, Adam. You be safe out there on the highway, sir, and we appreciate your call today.

Let's head to Michigan. Dennis, I understand you made a gift to your sister. Is that right?

Yes, sir. How can we help you? Well, I made her a gift of a $35,000 car. She's on disability, and I want to know, does she have to pay any income tax on it? No, there's not income tax on a gift, Dennis. And by the way, incredibly generous of you.

I'm delighted to hear that you came alongside her with a real need, obviously, that she had, and wasn't able to cover, given her limited means. No, there's not going to be any tax ramifications for her. The only implications for you would be that that's considered a gift. So you can give up to $15,000 a year annually, and then beyond that, you would just have to allow that to be applied to the lifetime gift exemption, which right now is north of $11.5 million over your lifetime. So you'd have to give away a lot of money to reach that level.

Keep in mind, that number could be adjusted with policy changes down the road, and it could be reduced dramatically. So you'll just want to let your tax preparer or CPA know that you made this gift, so that can be recognized appropriately from the IRS's standpoint. There won't be any tax due. It's just an acknowledgment that the portion over the annual allowance of $15,000 is going to go against that lifetime allowance that I mentioned.

But for her, nothing on her end as she receives that gift. So again, very generous of you. We appreciate you letting us know that.

What an encouragement that you did that. We appreciate your call today, Dennis. Let's head to Muncie, Indiana. Brandon, you're next on the program. How can we help you, sir?

Yeah, hi, Rob. Longtime listener, first-time caller. Great. Really appreciate your show and your ministry. Thank you.

I may be piggybacking on to what a caller talked about a couple of calls ago. With faith-based investing and having a company sponsored 401K, how would you advise us to get more involved or look at opening or getting or putting money in a fund based upon our biblical beliefs outside of our 401K? Yeah, I love that. And perhaps even in your 401K, Brandon, the good thing is that with the rise in these types of investments, whether that's through the ESG offerings, which are growing significantly, they're across 30 trillion in investments and heading higher, and then kind of the subset of that, which is the faith-based investment, specifically around aligning investments with biblical values, is a growing segment of the investment landscape. And even in just the last several years, we've seen the introduction of some really high-quality fund families and ETFs that deliver stellar performance. They're award-winning in many cases, and yet they're doing just what we talked about. They're excluding certain companies that don't align with Christian values. They're adding others that are intentionally seeking a kingdom impact, and it's really exciting. So where do you go from here?

Well, a couple of things. I mean, in my retirement account, I own some of these fund families right there through my portfolio. And so I would look at your 401K to see if Praxis is there, to see if Eventide is there, to see if Inspire is there. You know, these are some great fund families, among others, that are out there. I'd check with your advisor, and that's one of the reasons we recommend folks connect with a certified kingdom advisor, because these are men and women who are specialists in biblically wise financial advice, and many of them, that includes their investment offerings as well.

So go check out some of these fund families, Eventide funds, Praxis funds, Inspire, and then check with your employer. Welcome back to MoneyWise Live. I'm Rob West. So glad to have you along with us today, taking your calls and questions on anything financial and applying biblical truth to what's going on in your financial life. Give us a call. We've got some lines open. Here's the number, 800-525-7000.

That's 800-525-7000. We've had a couple of questions today related to our opening topic, which was all about faith-based investing, a growing segment of the investment landscape, allowing you to invest your long-term investment dollars inside a retirement plan or even in a taxable account in investments, usually mutual funds or exchange-traded funds, that have a specific stated kingdom or faith-based purpose, where they're excluding companies that are using their corporate profits for things that would not align with biblical values. And at the same time, in many cases, intentionally seeking companies that are going to provide a return but also are making a kingdom impact.

We love sharing the stories of many of these investments and specifically the companies as examples that they're investing in and the difference that they're making in the world, promoting human flourishing and promoting God's kingdom literally around the globe. So I would encourage you, ask your financial professional. If this is something you'd like to know more about, ask your financial professional about faith-based investing. What options do they have available and that you'd like to explore that further. And if you don't have a financial advisor, you can seek one out on our website. Someone who has the Certified Kingdom Advisor designation at MoneyWiseLive.org.

Just click Find a CKA. We're going to go back to the phones in just a moment. We'll be talking about cryptocurrencies, but let me give out the number.

Here it is, 800-525-7000. We look forward to hearing from you. To Sterling, Ohio, Chris, what's on your mind today?

Good afternoon. I have some concerns, questions about cryptocurrency investment. I've got some friends that are doing some investing and realizing some pretty good returns. And it almost falls into the too good to be true category. And I just wanted to find out what your thoughts are on that.

Yeah, I'm not a fan, Chris. I mean, the technology behind cryptocurrency, I think, is here to stay. In many cases, it's a sign of the times in our digital age with instantaneous global transactions, many of which driving anonymity, and then you have kind of the social aspect to it that's driving the rise of many of the more recent cryptocurrencies. But I think as an investment, as a steward of God's money, we just need to stay away.

That's my perspective. I mean, you put it in the too good to be true category. I would certainly put it in the speculative category because, yeah, there's the potential for large gains, but that high volatility means potential for large losses as well. And it begins to tiptoe into the gambling space, I think. I mean, if you look at the volatility, I saw a study recently looking at the annualized volatility of the monthly percent change in the price of Bitcoin in the U.S. over five years with that period ending in 2021 this year. And that volatility was 90 percent compared to the S&P 500, which was about 15 percent, and gold about 13 percent over that same time period. So we're talking about some pretty significant volatility. And I think for that reason alone, I'd stay away from it. But I would add to that, Chris, you know, I generally just say I don't invest in things I don't understand fully.

And I would put this in that category. I think there are some issues with the potential supply of these bitcoins. You know, while we know that, you know, they're going to eventually cap the number of bitcoins, many other crypto currencies have limited supply built into their protocols. But there is nothing to stop an ever growing number of new crypto currencies from being launched and that supply is potentially limitless. It's a poor store of value, you know, because of just the means of exchange we're talking about here. You know, the number of places where one can exchange crypto currencies for real goods and services remains very limited.

And so I think, you know, it ends up being a pretty poor store of value. And then obviously, as is inherent with these, it's unregulated and unbacked. So it's a construct of the private sector. There's no official oversight or regulation means they're wide open to be exploited by criminals as a means to scam investors.

And there's obviously a lot of cyber crimes that have been conducted with these. So I think because of all of these reasons, you just need to stay away again as it relates to this being an investment and recognize that, you know, we'll keep a watchful eye and see what place this finds moving forward in our economy as a means of exchange, but not as an investment. Does that make sense?

Yeah, it does. I appreciate it very much. Thank you. OK, Chris, we appreciate you listening and thanks for your call today.

To Wellington, Florida, not far from where I grew up. Noima, how can we help you? Hi. Hi.

How are you? I do have we have three three single homes. We have mortgages on them, small mortgages. These houses that were built up in 2004 and they are rented throughout all these years. And then now I'm thinking to sell one of the houses and should should be a good idea to to pay pay towards the mortgages and the others, too. Or should I keep the money liquid when to wait for the cycle to go down to buy another property near where I live now to downsize? Actually, because those three properties are important. Lucy and I live in Wellington.

What do you have? Yeah, very good. Well, I love the idea of you taking advantage of the incredibly high real estate market that we are seeing nationally, but certainly I think even more concentrated. It's just off the charts there in South Florida where you are taking that and, you know, selling one of those properties, arguably getting top dollar and using that to pay down debt. So, I mean, I think that generally just makes a lot of sense because it's going to put you in a stronger financial position moving forward. And it's going to reduce the amount you have to service the debt on a monthly basis, which means you should have more margin or cash flow.

So I'm completely on board with that. But right there at the end, you mentioned something about buying an additional home. Was that be another investment property or are you needing to buy a home that would be your primary residence?

Yeah, I was saying in case which would be the best idea to pay off the mortgages on the other two properties or to keep it liquid to buy, later on closer, you know, down here in Wellington, a smaller house because we want to downsize from the one we have right now. Okay. Yeah. Do you have some equity in the home you're living in now? Yeah, it is paid off.

Okay. Even your primary residence? My primary residence is paid off. The other three, those ones, they have mortgages, small mortgages, and one of them I want to sell it.

Yeah. So as long as you have an emergency fund of at least six months, especially given the business that you're in and perhaps even some reserves beyond that, if you're looking to downsize your current property, that shouldn't be a problem. Even with the real estate prices higher, you're going to get top dollar going out of your own residence that you could then plow right into that next property that's smaller for you to live in. So I think as long as you've got that emergency fund, I would absolutely liquidate that third property and use it to reduce the debt on the other two. Again, that's going to put you in a real strong financial position, and we want to be pursuing a life of being debt-free over time, and you're absolutely doing that.

So take advantage of this hot real estate market and reduce your debt levels. We appreciate your call, Moima. We've got some lines open. We'd love to hear from you.

Here's the number, 800-525-7000. What's going on in your financial life? Give us a call.

We'll be right back. Welcome back to MoneyWise Live. Have you checked out the MoneyWise app yet? We'd love for you to do that. You can take this program with you on the go.

Perhaps listen on the treadmill or at work or as you're driving around in the car using your Bluetooth, whatever it might be. All of our episodes and a number of other podcasts in the area of biblical finance you'll find in the Discover tab of the MoneyWise app. You'll also find our community where you can post a question or a comment. You'll hear from others in the MoneyWise community weighing in on your question or issue. We'll also have our MoneyWise coaches in there periodically responding to your questions. We also have our digital envelope system where you can track your spending and make sure you are staying on budget every month as you manage God's resources. All of that's available in the MoneyWise app.

You'll find it in your app store. Just search for MoneyWise biblical finance and you can download it today. Phone lines open 800-525-7000. In just a moment we're going to be talking about pensions, where to tithe when you're at a home church.

We'll also even talk about how Social Security in some cases gets reduced, especially if you are working beyond a certain threshold before full retirement age. But first, let's head to Taylorsville, Illinois. Lauren, thanks for calling today. How can we help you?

Hi, thank you for taking my call. So I have about $2,500 in my savings account and I am wondering if it would be wise to take like $1,000 out and invest it somewhere. And if so, how should I go about investing that? It's a great question, Lauren. I love that you're thinking about this. Do you mind me asking what your age is? I'm 23 and I don't have any debt and I'm living with my parents right now. Excellent, yeah. So you're able to save some money. Are you working? I have a part-time job right now and I'm in the process and the application process of a full-time job.

Okay, excellent. You know, I love the fact that you've saved this money up, especially while you're still living at home before you move out on your own. I wouldn't be too quick to invest it, although it's going to be high on the list.

Prior to doing that, I just want to make sure you establish some good rhythm, starting with giving systematically. Let's just build that discipline in right up front so that out of every check you could start with a tenth, a tithe, you know, right off the top every time you earn money and I would allocate that or send that to your local church. Beyond that, we want to make sure you're living on a spending plan, that you've got a plan for your money and you're tracking the flow of money in and out.

The MoneyWise app would help with that and if you stay on the line when we're done, we'll make sure we get you a free pro subscription so you can download the information from your banks or credit cards as you track that. And then you want to make sure you have a good reserve or emergency fund, Lauren. I generally recommend three to six months expenses just for the unexpected, you know, your car. All of a sudden you need new tires and we need to plan for certain things that actually would put tires in that category.

But let's say, you know, unexpectedly the transmission went out or, you know, something like that. That's where the reserve or the emergency fund comes in. And so I would total up what you think. And I realize your expenses are pretty low right now. But the total of your expenses times six is probably what you want to keep liquid in that savings account. And I'd use an online savings account where you're getting a little bit of interest as well.

And you can link it electronically to your checking. Once you get beyond the emergency fund, the only other thing I would want you to think about before you start investing some of this reserve that you put away is are there any known expenses you've got coming up that are going to be somewhat costly? Because any money we start to invest, we want at least a 10 year time horizon on it. And so if, you know, six months from now or a year from now, you're going to want to move out on your own and you're going to need first, last and security and some deposits on utilities and, you know, things like that.

You know, that's where I'd want you to have a real good understanding of what those costs are going to be. And if you have surplus every month that you're adding to this 23 or 2500, you can factor that in as well based on how long it's going to be down the road before some of these major expenses hit, like you trying to move out on your own. So once you factor that in, then starting to invest would be a great idea. When you get a full time job, if you have access to a retirement plan at work, especially where there's some matching, I'd start there. A lot of times they'll match you dollar for dollar if you have a 401k up to, let's say, 3% of your income.

We'll take advantage of that first because that's free money. You're not going to get 100% return on your money anywhere else. If that's not available in this job you're looking for, then the next best option for you would be a Roth IRA, R-O-T-H, a Roth. And you could open that at Charles Schwab or Vanguard, or if you'd rather use kind of one of the online solutions. I'll mention another one called Betterment.

These would all allow you to use what's called a robo-advisor, where you'd answer a series of questions, and they would build essentially using an algorithm, a very properly diversified, very low cost portfolio of investments using something called an exchange traded fund, where you'd own various indexes that cover the gamut of the stock market, both stocks and bonds, primarily stocks, but domestic here in the US companies, international companies, small companies, large companies, you'd own them all. And so you'd capture the broad moves of the market as you make systematic contributions into that Roth IRA. So that would kind of be my pecking order. Let's get the spending plan in place. Let's start giving if you're not already. Let's make sure you have six months of expenses. Let's factor in any other upcoming expenses like a move out of mom and dad's house.

And then we either go into the matching of the 401k if you have it, or start putting in a monthly amount into a Roth IRA at Charles Schwab Intelligent Portfolios or Betterment. I threw a lot at you there though, Lauren. Did you follow that? Yes, sir. Thank you. Awesome. Well, don't hesitate to go back and listen to this program in the MoneyWise app or at MoneyWiseLive.org.

It'll be up later today. And if you stay on the line, we'll get you a subscription in the MoneyWise app so you can begin tracking your budget there. We appreciate your call.

Hey, let's head to Northwest Indiana. DJ, how can we help you today? Well, I'd like to get advice. I'm a retiree in the season of my life and to make it as short as I can. Some of the things that you have been advising, been there, done that. However, I am single, senior citizen, retired, and it's my desire to be a better steward in this season as if God is helping to start all over concerning investment. However, I made a decision to get in a place where I thought I could be taken care of and a senior citizen place that is really over my head.

And for a variety of reasons is a much more complicated story. But in essence, I would just like whatever advice you could give me. Basically, I am under good ministry teaching and I invested what I felt led into the kingdom.

And I know God doesn't forget my labor of love. Yes. And DJ, what specifically is your struggle right now? Is it just managing your finances day to day, month to month, or is there a specific issue you have a question on?

Well, yes, sir. At the beginning of the year, last year, I had went back to work to supplement my pension because I had retired early. And according to their calculations, I had made over the amount I was supposed to make. So they discontinued my Social Security until August. And so that caused a snowball effect over all my debt. And I don't have any help, of course, other than the Lord. And so I've just been living my faith. Yes. Well, he is your provider, DJ, and I appreciate that you acknowledge that and you want to be found faithful in managing his money. And I'm confident he'll provide for you.

Let's try to get you some help here. So you I realize you earned over that eighteen thousand nine hundred and sixty that you can make prior to full retirement age. So they reduced your benefits dollar for every two dollars earned over that amount. You will eventually get that money back when your benefits are withheld because of earnings. Your monthly benefit increases when you get to full retirement age to take into account those months which the benefits were withheld. So that will be returned to you.

I think the question is, based on the income you have right now, the pension and whatever Social Security is coming to you, which it sounds like it'll be increased in August. Are you able to cover your expenses right now or do you have a shortfall? No, sir, I have a great shortfall.

I left a bad situation and I look like I jumped out of the fire into the frying pan. I find the other way around. Yeah, I do. Do you have credit card debt or what is the real issue here that you're not able to cover? Medical. No, not credit card. No, medical and housing.

I left a rental property that was not up to code into a senior citizen complex where I am in independent living. Yes, sir. Okay, so here's what I'd like to do because it sounds like there's just a lot of moving pieces here in terms of what are you receiving now? What will you be receiving when these benefits increase? How can we get you from where we are today to where you need to go? Working with those medical providers to see if they can perhaps delay the payments on these until you have a little bit more.

Figuring out do you need to stay where you are or perhaps find other housing that's less expensive. So I want to get you with one of our Money Wise coaches. I'm going to put you on hold and ask Amy, my producer, today to get your information. We're going to connect you directly with one of the coaches that can be a real help to you to get into all these numbers and give you some counsel that I think will be a blessing to you. As you move forward. So we appreciate your call. Let me just encourage you. God is with you. And as you already acknowledged, He is your provider.

He will never abdicate that responsibility to anyone else. So you trust the Lord as you have been. Let's try to make wise decisions moving forward and we'll get you some Godly counsel to walk with you and sort all of this out. And I'll look forward to the day, DJ, you call me back and you give the praise report as to how God worked in this situation. We appreciate your call. Matthew in the Twin Cities, you stay on the line.

As soon as the program's over, I'll talk to you about your house church and what you can do about your tithe. That's going to do it for us today. I want to say thank you for checking in with us. Money Wise Live is a partnership between Moody Radio and Money Wise Media.

Let me say thank you to my amazing team today. Amy Rios, producing Dan Anderson Engineering. Clara Segar answering phones today.

Jim Henry providing research. Folks, always a privilege to hear your stories, to encourage you, to celebrate with you what God is doing in your life financially. Come back and join us tomorrow, will you? We'll be here applying God's truth to your finances. Bye-bye.
Whisper: medium.en / 2023-11-20 13:12:58 / 2023-11-20 13:30:06 / 17

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