Retaking ESG Investing

Today's version of MoneyWise Live is pre-recorded, so our phone lines are not open.

David answered God's call and went out to slay Goliath. Do we have a similar calling with our investments? I'm Rob West. Some decidedly ungodly elements have taken over the sphere of corporate engagement with investing. How should Christians respond? I'll talk about that with Robert Netzle today. Then we have some great calls lined up, but we won't be taking your live calls today because we're pre-recorded. This is MoneyWise Live, biblical wisdom for your financial decisions. Well our good friend Robert Netzle is one of our favorite people to talk about investing that glorifies God. Robert's the CEO of Inspire Investing, an underwriter of this program, and Christian investors have been quick to abandon and reject the rapidly growing so-called ESG investing movement because of its worldly ideology. But Robert's here today with a different calling for Christian investors. Robert, great to have you back with us. It is my pleasure, as always.

Thanks for having me, Rob. Robert, I mentioned ESG investing, and perhaps we should start with a definition of ESG. What is it, and why has it been so controversial in the Christian community? The investing world, I think, is one of those places where you do get a soup of letters and jargon. ESG, one of many jargon-filled phrases, stands for environmental, social, and governance, as in corporate governance investing. It's been a movement or trend in the past 10, 20 years that has really taken the investment world by storm. Just a few years ago, I think we tipped over more than 50% of all investment assets in the United States, according to a survey I looked at. We're incorporating some sort of ESG, environmental, social, governance, screening or filter or analysis, and that number has only increased.

All the large firms, the Morgan Stanley's, Merrill Lynch's of the world, BlackRock's of the world, have really embraced this concept. What it means is that instead of looking at just the financial aspect of the returns and financial risk metrics like volatility and so on and so forth, analysts are also looking at the environmental impact of a company, whether they're an oil company or a technology company. There's an environmental impact, good or bad. The social impact, things such as supply chain management, things like labor sourcing, employee benefits and company culture, those sorts of more subjective criterion. And in corporate governance, how is the company being run? How is executive comp related to the compensation for the run of the mill factory worker?

What's the spread there? What kind of policies and procedures do they have in place? So all of these different sort of qualitative metrics that they're coming to look at a company and really finding in research that there is a link between the risk of an investment and some of these ESG metrics. And that's just kind of added momentum to this movement where, you know, if a company is dumping stuff into the river that they shouldn't be, they're probably going to get in trouble for that. And so that's kind of a broad idea of risk that you can see with ESG. But unfortunately, a lot of that ESG is taken from a decidedly progressive liberal viewpoint.

And that's where Christians and conservatives kind of have had an issue with ESG. Robert, you mentioned the massive growth of this space. I saw recently a forecast that by 2025, approximately a third of all global assets under management, and that's not just domestic, are forecast to have this ESG mandate. So why do you think we're seeing this kind of growth trend in this area? Well, it is driven a lot by ideology. And so the United Nations, they've issued guidance and even requirements and some sorts for types of funding and backing.

There's various, you know, shareholder activist groups that have gotten involved. And unfortunately, and this is where the problem gets into that we can talk about, most of that ideology is to support things like LGBT activism, abortion, other issues that conservative Christians would have an issue with. And so that's, to me, you know, the driving force behind ESG in general. Yeah. Well, we'll continue to talk about this after the break. Should Christians stay on the sidelines?

And if not, how can they use ESG investments in a Christ-honoring way? We're talking with Robert Netsley, CEO of Inspire Investing. Much more to come just around the corner. Stay with us. We're so grateful to have you listening to MoneyWise Live.

I'm Rob West, your host. Our team is off today. We're taking some time away from the studio to enjoy with families. So don't call in. But we've got some great questions that we lined up in advance. Let's head right back to the phones. Pat is in Florida. And Pat, how can I help you today? Hi, thank you very much. My husband and I have paid off our mortgage earlier this year.

We have no debt. We ordered our credit reports from all three companies. And I noticed on two of them that they have one of them calls it soft inquiries. And it has five soft inquiries. The other one has three soft or it calls them account review inquiries.

There's three. My question is, should we freeze all our accounts, all the different credit reports? Should we freeze our accounts with them?

Yeah, well, those are really two separate issues. I mean, the soft inquiries where your credit file is being accessed, either because you are pulling it yourself for informational purposes or a company is accessing it, perhaps a company you already do business with. They check your credit periodically.

You don't initiate that. They're doing it just to determine whether or not to extend you an increase in your limit or something like that. None of those are going to have any bearing on your credit score.

It's only the hard inquiries where you authorize a lender to pull your credit file for the determination of whether or not they want to extend you or will extend you credit and the terms at which they'll do so. So the fact that those soft inquiries are listed there is not of any concern to me. And that's very normal. And it's not affecting you in any way. Now, separate from that is the question of should we freeze our credit files?

And I don't ever think that's a bad thing. I mean, certainly if you've been notified that your accounts have been compromised or you've had identity theft, I think it's a no brainer. Apart from that, it's really just, you know, do you want this extra measure of security whereby if anyone tries to open an account in your name, they would have to have the PIN number for the lender to be able to access the credit file. And if they were doing that fraudulently, they would not have that PIN number and thereby they would be stopped in their tracks. That's added security. What's the downside? Well, the only downside is if you're out seeking credit, you just have this extra level of security where you're going to need to provide that PIN number. I don't think that's too onerous. And there's a real benefit there if for some reason somebody tried to do something in your name fraudulently.

So I'm not concerned about the soft inquiries. And as to the credit freeze, I like it. I think it's great in this day and age where there's so much digital fraud going on and there's no cost to do it with any of the credit bureaus. And so it's fairly easy to set up. Okay.

Well, that sounds great. And I don't think it'd be really necessary for us to check our credit scores since we're all debt free. No, but what would be helpful is just to pull those credit reports. I would do that a couple of times a year just to make sure now the risk is going to get even lower if you freeze the credit accounts, but just to make sure that everything on there is accurate because every now and then there's erroneous information on there and you don't want that to come to roost once you're trying to go out there and borrow some money.

It sounds like you may not ever need to again, but you just want to get those cleaned up if for some reason there's something there that's not accurate. So that would be the reason to continue to monitor those credit files a couple of times a year. But apart from that, it sounds like you all should be good in good shape and I'm delighted to hear that you're debt free. So thanks for checking in with us, Pat. May the Lord bless you in this Christmas season. Let's head to, well, we'll stay in Florida and we'll talk to Mary. Go right ahead. You're on Money Wise Live. Hi, Rob.

Thanks so much for taking my call. Our question is at 86 and 87, is that too old to still invest in the stock market? I love this question. Mary, you're never too old to invest in stocks. I think the key is what is your time horizon and what are your objectives? So tell me about the money you would be investing. Is this money that's kind of extra on the side or is it money that you're actively pulling money out of to live on?

Oh, no, it's extra money. We have one of our children that are buying our home. We moved into a duplex that we do own with one of the kids. And so we have another one of the kids that's buying our nice home and they're paying $4,000 a month.

So what do we do with that? And I just wondered if we have been investing in the market, but I'm wondering, are we getting too old now to be safe with still buying stocks? I think the key is your time horizon because anything we have in the market, we want to make sure for that portion we have at least a 10-year time horizon. And if you're in good health and the Lord tarries, this money could need to last for a couple of decades. So as you think about this money, let's talk for a second just about the rest of your financial life. Do you have an emergency fund that's already in place? And if so, how many months worth of expenses do you have set aside? Oh, well, we have a savings with one company that's built up quite a bit and then we have savings in another company with stats and mutual funds that's built up for quite a bit too.

So I don't think we have to worry about that at all. Okay. And are you doing all this yourself, Mary, or do you have an advisor? Well, we just have a financial advisor that we don't know real well. And then we have one that goes to our church that we feel more comfortable with. And we've just been investing with him.

Okay. Well, I might look at consolidating all your investments with that one advisor that you have a good relationship with, including this extra 4,000 a month, because what I don't want you doing is having things kind of scattered about where one person's doing one thing and one person's doing another. I'd rather you have a relationship with somebody you trust that you have a good rapport with and everything's in one spot. And then he can deploy an investment strategy that makes sense for you, not taking unnecessary risk, but having enough of a growth component to that portfolio with money, especially that you don't need, where it can grow for the future. So you can give it as an inheritance. You can give it away as appreciated stock to a ministry or charity, whatever the Lord leads.

So I'd consider consolidating everything in one place, but at the end of the day, there is no problem with you investing at 85. In fact, you still may have, depending on the Lord's plans, quite a bit of time left and a lot more to accomplish. We appreciate your calling.

We're going to pause for a brief break. This is MoneyWise Live, biblical wisdom for your financial decisions. Stay with us. We'll be right back. This is SRN News. Thanks for tuning in to MoneyWise Live.

This is biblical wisdom for your financial decisions. I'm Rob West, your host. Our team is not here today. We're taking some time off, so don't call in, but we've lined up some great questions in advance. So let's head right back to the phones.

Cleveland, Ohio. Hi, Tammy. Thank you for your patience. How can I help you? Hi. Go right ahead.

I just have a question. My house, I'm 56 years old and I have a beautiful house God has blessed me with. I still owe $150,000 on it. It's a big house. What are your thoughts on me keeping it or selling it and buying a smaller house? And in today's economy, a small house you usually have to buy and fix up.

It just seems like a lot of work. I love my house. I feel like I've been blessed, but I also owe a mortgage. Sure, sure. Okay, very good.

Yeah. So I think the first question is just, does it fit into your budget? Not only the mortgage that you've got today, but also just the upkeep, you know, the maintenance on it, the expense of, you know, the exterior and maintaining the property. And if you don't need that much space, you know, would you be better off downsizing? We can talk about how you'd go about that in a second. But, you know, talk to me about your budget and how this current home fits into it. I probably bring home maybe $4600 a month and my payment is probably with taxes, insurance and everything probably around $2000. Okay.

Yeah. So that's more than we would want to see. I mean, typically, you know, what I would like to see is no more than 25% of your take home pay going toward your principal interest taxes and insurance, which would be about $1150. So you, you know, obviously, you can choose to spend more, but that's just going to really hamper your ability to do other things, cover your expenses, have margin to save for the future, not to mention the giving that we'd love for you to kind of build in on the front end and, you know, just have the flexibility. So I think because you're spending that percentage upwards of, you know, almost 50%, 45% or more, I think there's an opportunity here for you to kind of right size that. So, you know, you'd have to be willing to let go of a home that it sounds like you really love.

And I certainly heard you say that. But if you did, it could put you in a situation where you've got, you know, a more manageable budget, you've got less going to housing, which just gives you more flexibility. And that's always a good thing because living within your means is so key to really every financial success. Now, you mentioned smaller homes, you think mean, automatically, you're going to need to, you know, put some money into it?

Not necessarily. I think the key is, you know, what square footage do you need? If you're downsizing, you could, in effect, downsize to a brand new home that wouldn't need, you know, anything done, it could be literally, you know, pre construction purchase if you wanted to.

I think the key is, what is your budget? What would allow you to end up with a mortgage payment that is in fact, no more than 25% of your take home pay? And what would that mean in terms of the area you need to look and the size of home you need to look at, and the newness of it in terms of the upkeep and the maintenance? The good news is, because this housing market has been so strong, you should be able to get top dollar coming out of your existing home that would allow you to move into that, you know, smaller home at a lower price, even if you're kind of paying top dollar for that category of house. But I think at the end of the day, you'd want to do a lot of planning to make sure that you are in fact going to be able to get to a place with this smaller home where you're bringing your overall housing category expenses down into a range that's going to give you more flexibility and more margin because if we just make a lateral move and you end up, you know, paying too much or there is more upkeep or you're gonna have to pump a lot into maintenance and renovation, then we really haven't solved the problem.

You've just given up this home that you love. So I think you've got to do your homework. Does that all make sense though?

It does. I forgot to mention too though, I put 18% away of my money. So, I mean, I probably grossed like $104,000 a year, so. Okay. All right.

So yeah, that was a net number. And so you're putting, you know, quite a bit away and that's great. So I think at the end of the day, you just need to decide, you know, you need to take a look at your budget. And first question is, you know, is there anything you're unable to do because your budget is constrained by 40% of your take-home pay, 45% going to housing or are you comfortable? Do you like the home and it's not too much upkeep and it's a good investment and, you know, it fits within your budget and if it does, great, keep it. But if you feel like it's either too much house, too much upkeep or you need to just bring the total going to housing down, then I think, you know, downsizing is a good thing if you've got more than you need and it's certainly something to take a look at. You may want to connect with one of our MoneyWise coaches that can help you think through this, look at your budget and give you some thoughts and counsel. But I think it really comes back to that spending plan, Tammy, and just looking at whether or not you feel like you're in a good spot or if you need to create some more margin to accomplish other goals, then I think that should lead you to seriously consider downsizing. We appreciate your call today. Thanks for checking with us.

Linda is in Central Florida and Linda, go right ahead. Hi, my husband and I just, we filed for bankruptcy in June and it's been discharged now and he's on minimal income because he's on disability and I have minimal income as well. We don't have anything in savings. My question is, bankruptcy, what do, what's the best thing to do to start rebuilding our credit? Yeah, so, you know, as you look at rebuilding your credit after bankruptcy, Linda, number one, I think the first thing to recognize is you just need to manage your expectations about how long it will take for this to come off your credit report. It's going to be 10 years if you file Chapter 7, 7 years for Chapter 13. And so, it's just going to take time.

But it can be done, so don't get discouraged. You'll want to go to annualcreditreport.com, pull your credit reports, make sure everything is accurate and if not, dispute what's there. You'll want to monitor your credit report. Initially, you could see a drop of 200 points but it will begin to improve slowly. Remember, the most recent information impacts you the most.

That which is further back will impact you the least. You want to be an on-time payer with anything you are using. Reduce your credit card use. So, if you still have open accounts, get those balances below 30%. If they're still out there and if you don't have one, you could always get a secured card where you basically put an amount on deposit. They issue you a credit card against it that's secured by what you have on deposit and then you just make an automated, have an automatic charge hit that that's a budgeted expense every month that you just automatically pay off. And that on-time payment every month is going to re-establish you.

You could also look at something called a credit builder loan, which is where the lender holds a certain amount of money in secured savings and then you just make monthly payments and the interest gets paid to yourself that is reported to the credit bureau. So, there are some things you can do. I think you just need to kind of be consistent in re-establishing yourself and as time goes by, this score will start to come up and you'll rebuild your credit. So, you guys have a great opportunity to kind of reset everything and just ask the Lord what he would have you to do moving forward. But we appreciate your call today.

Thanks for checking in with us and all the best to you and your husband in the days ahead. Well, folks, this is MoneyWise Live. By the way, it's a great time of year for you to think about your giving and we would ask that you would consider giving to MoneyWise Media.

You can do that quickly and securely at our website, MoneyWiseLive.org. Just click donate and we are entirely listener supported. So, it would go a long way.

Thank you in advance. We're going to pause for a brief break. We'll be back with much more on money.

We're thankful you've joined us today for MoneyWise Live, biblical wisdom for your financial decisions. Our team is off today. We are pre-recorded because we're taking some time away from the studio which means we're not here to answer your call. So, don't call in but stay with us because we've got some great calls that we lined up in advance. Let's head back to the phones right now. Carol Stream outside of Chicago, Illinois is Chris.

And Chris, go right ahead. My husband and I have a few years before retirement. I mean, we're 62 and 64. We are out of debt for the last three months but we own no real estate and we're renting. We have had real estate in the past but life circumstances with children and such, we don't have anything right now. My question is, should we buy something or continue renting for the rest of our lives?

Yeah. Well, I heard in your voice your excitement around the fact that you were debt-free. So, how does the idea of taking on a mortgage at this point feel to you? Is that something that gives you pause or would you be okay with that as long as it fit into your budget?

I'd be okay. I mean, either we're paying rent or paying mortgage. And rent can increase. The mortgage hopefully would stay at a constant rate.

Yeah, that's right. And rental prices have been elevated but it's also a red-hot housing market right now, unfortunately, which means that you're going to be not able to benefit from that on a sale that you could then roll into a purchase. You're just going to have to enter at these kind of sky-high prices which isn't necessarily a bad thing if you plan to stay there. I mean, normally, we'd say make sure you're going to stay put three to five years.

I'd say probably five to seven at a minimum. And if this is kind of where you're going to be for your retirement, if the Lord tarries and you're in good health, this could be a 20, 30-year home. So it sounds like you could be in a great spot. I think the key would just be, Chris, what do you have saved up that you could put toward a down payment? And can we find something that fits the general location and what your needs are and lifestyle in a price range that your budget can support? And the answer to that is as long as you have the down payment, probably yes, just given that you're currently paying rent and we all know what's going on with rental prices these days. So if you were to think about this in terms of what you'd need to spend to find something comparable, would you be able to put a 20 percent down payment and would the mortgage payment be something that's sustainable in your current budget? Have you looked at all that? We have. I know, of course, this is very high real estate market here in the Chicago area.

It's very expensive. And if it weren't for the fact that my husband's also in the ministry besides his business, we would probably move. But the ministry is first and foremost in our life. So, you know, once he's done with business retirement, I mean, ministry continues. And you expect to stay there in the Chicago area even beyond him reaching the end of his business? Yes.

Okay. Well, have you spent some time looking at real estate prices in terms of what you would need to spend for something comparable? We have. And I think we can get something for, you know, three, four hundred dollars less than what we're paying rent. And do you have a down payment? We don't. We have about 10,000 in savings right now.

Not near enough. Yeah. So I think that's the challenge is that the last thing I'd want you to do is to kind of stretch to get into something, although you said if you're going to save three or four hundred a month, that's good. But then you'd kind of be going in without really any equity. And given that real estate prices are at a premium right now, you know, essentially what you have in equity, if we saw a cooling in the housing market because we were bumping up against a recession, you know, you could find yourself upside down now as long as you don't plan to sell it.

That's OK. But it's still not a great place to be. And you're going to have private mortgage insurance on top of that, which is going to make it a bit more expensive because that's an added expense on top of the mortgage and taxes and insurance that doesn't benefit you at all. So, you know, my preference would be you continue to rent and save. I realize money is probably fairly tight.

You don't have a whole lot of margin. So if you're going to save a 20 percent down payment, we're probably talking quite a bit of runway between now and then. So, you know, I'm just a little leery of encouraging you to jump into a major purchase like this at this point without a whole lot to put toward the down payment, especially if that's currently your emergency fund. So I'd probably say let's continue to rent and then let's see what happens in the next 12 to 24 months with the economy, the housing market before you guys make a move. I don't think this is the time to get in unless you can do it without a much larger down payment than you have now.

Yeah, we are thinking within no sooner than 12 months. Okay. Yeah, I think we just kind of push the pause button, continue to monitor the situation and the key will be keep your lifestyle as lean as you can so you can save as much as you can and we'll reevaluate down the road. Listen, all the best to you and your husband and for your great ministry work there in Chicago. We appreciate your call today. Indianapolis, Indiana.

Hi, Angela. How can I help you? Hi, I am in the process. I have a rental property. I used to live in the house and because of death in the family and other things that happened, I had to move back home with my mom to help take care of her. So I'm renting the house out, but the house is in dire need of windows. And so I was thinking about getting a home equity loan to cover that.

What are your thoughts on that? Yeah, I mean, I like the home equity loan better than the home equity line of credit just because it's got a fixed interest rate. Interest rates are still very low right now. I think the key is if it's a needed repair, it's obviously going to improve the value of this asset that you should be able to get back at least the lion's share of down the road when you sell it.

And if it's going to cause damage to the home by you not doing the repair, obviously that's important because that will deteriorate the value of the home over time. The key is always when we're borrowing, is it for an asset that's appreciating? Yes.

Do you have unity with your spouse? I mean, you'd have to answer that. And ultimately, is this something that you have a guaranteed way to repay, meaning do you have it in your budget so that you can support the debt service on a monthly basis?

Have you looked at all of that and do you believe that you've got the margin to be able to cover it? Well, yes. First of all, I'm single. And then I just found out Friday that my student loan has been, I work for the government, so my student loan has been cleared off. So that's like $38,000 that I don't have to worry about paying back.

So I'm excited about that. Sure. So yeah, I think I can do that. OK. Then I think that is probably the loan to do. I mean, the only other thing would just be, can you stagger this and do it over time and pay out of cash or savings? But if you don't have that ability, the home equity loan is probably the one. Just make sure you count the costs, build that into your plan. Let's try to get it paid off just as quick as you can.

But I would be in support of what I'm hearing you ask about. Angela, we appreciate your call today. Let's head to the opposite end of the country, Southern California. Hi, Gloria. What can I do for you? Hi.

Thank you for taking my call. OK, I'm 58. Don't plan to retire until 10 years. My husband is planning to retire in five years. I'm making payments, extra payments on the house every other month. And we're hoping to pay it in five years. We have two card notes and a credit card of $3,000. But my main concern is our savings for retirement.

We don't have enough. Between my husband and I, we have $200,000, a little more, $200,000 401. And I have almost $40,000 in savings.

Yeah, very good. So when your husband retires, assuming you can stay on this track and let's say the house is paid off at that point, have you run a retirement budget to look at what you would need on a monthly basis without the mortgage payment and compared that to the income sources you have? No, I haven't done that. I'm hoping to pay it before pay off. It's like $95,000 and pay that before he retires, at least the last year when he retired. OK, well, I like the idea that we'd pay that off because that would be the largest expense we could take out of the equation to get your lifestyle down as low as possible. I think the question is just what is your budget going to look like when you get to that point?

Five years from now, the house is gone in terms of a payment. You've got your emergency fund fully funded. What other expenses are going to come off if he's commuting less or any number of things. Let's work that budget up and then compare that to the income sources you'll have. Your continued work, if he's reached full retirement age and he's going to begin taking Social Security, let's see what gap you have on a monthly basis that this retirement account needs to make up. The challenge is if that $200,000, let's say it's $250,000 by then, the question would be that typically we would only want you to pull off about $10,000 a year.

And I don't know whether that's going to do what you need in terms of giving you the money you need. So the options there are to try to save more which means perhaps trimming your lifestyle so you can put more toward long-term savings right now or he works a little bit longer or he retires from his current job and finds additional part-time work to supplement so that you can wait and take Social Security later or he could bring in some additional income. But I like the idea of you all trying to sync up the house payoff between now and retirement. I don't think you're going to get huge returns in the stock market anytime soon in the next few years given what we've seen in the last decade.

So I like the idea of paying off the mortgage in five years. I think the question is just how can you save more and is there a need for him to continue to work or work part-time after he retires. Those are the things to consider but it starts with that budget. What is your budget going to look like?

Compare that to the known income sources you'll have in retirement. Call us back if you have further questions. We appreciate it. Before we wrap up today, let me take an opportunity to invite you to be a financial supporter of MoneyWise Media. We are entirely listener supported and your gift would go a long way toward helping us finish the year strong and prepare for our ministry activities next year. If you count yourself among our MoneyWise family, we would invite you to give. You can do that quickly and easily on our website. Just head to MoneyWiseLive.org and click the donate button. That's MoneyWiseLive.org and click donate. You can give there online securely and quickly or you can find our mailing address or phone number if you prefer to give that way. Thanks in advance for your gift before December 31st.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. I want to say thank you to my team today, Deb Solomon, Dan Anderson, Gabby T. and Jim Henry. Thank you for being here as well. Come back and join us next time. We'll see you then. May God bless you. Bye-bye.