Today's version of MoneyWise Live is prerecorded, so our phone lines are not open. English statesman Francis Bacon once wrote, Money is a great servant, but a bad master.
I am Rob West. The sentiment there is that while money itself is neither good nor bad, it's also not neutral. We control it, or it controls us. Today I'll talk about how you can make money a great servant.
Then we have some great calls lined up, but please don't call in today because we're prerecorded. This is MoneyWise Live, biblical wisdom for your financial decisions. And of course, we'll look for wisdom in God's Word that repeatedly warns us not to look to more money as the solution to our problems. In fact, money problems are usually preceded by spiritual problems. We hear a lot that money can't buy happiness, but it's often followed by a joke along the lines of, sure, but it makes misery more comfortable. The truth is that even thinking that money can buy happiness can make matters worse. 1 Timothy 6.10 reads, For the love of money is a root of all sorts of evil, and some by longing for it have wandered away from the faith and pierced themselves with many griefs. Expecting that more money will always make your life better is a recipe for disappointment or worse.
Ron Blue Trust has a great article on this, and we'll put a link to it in today's show notes. It points out that there's a disconnect between what the world says and what the world does. It may tell you that money can't buy happiness, but then it tries to convince you that it can. TV commercials are notorious for conveying the message that buying the latest car, clothes, or gadget will make your life better.
Of course, you need money to buy those things, so what is the commercial really saying? Well, that more money will make your life more enjoyable. But often the reverse is true. More money can actually lead to less joy in your life. The greater your wealth, the greater a burden it puts on your life when things begin to own you instead of the other way around.
How do we know this is true? We can listen to folks who had literally more money than they knew what to do with. John D. Rockefeller, who amassed about 420 billion dollars with his Standard Oil Company, said plainly, I have made many millions, but they have brought me no happiness. Henry Ford founded the Ford Motor Company, and at his death in 1947, he was worth around 200 billion in today's dollars. What did he say about having vast wealth? Quote, I was happier when I was doing a mechanic's job, end quote.
Of course, scripture has its own story. King Solomon, whom the Bible tells us was the richest man who had ever lived, he writes in Ecclesiastes 5 10, he who loves money will not be satisfied with money, nor he who loves wealth with his income. This also is vanity. So those are all people who experienced great wealth, but none of the joy that we expect to come with it. In his book Generous Living, Ron Blue says this is based on two wrong assumptions. First, that more money will give you more freedom and satisfaction. A second, that more money will take away our fear of not having enough. But in reality, more money often just creates new problems. Ron put it like this, quoting now, since there are always unlimited ways to spend limited dollars, it doesn't matter whether you make 20,000 or 200,000 per year, you will always have choices to make. More money simply means more choices. And more choices mean more complexity, more confusion and more time spent mulling over options.
Taken together, all of these things add up to less freedom. Okay, so instead of reducing fear, having more assets can actually increase it. Because the more you have in your home or investment accounts, the more you have to lose. We see that panic every time the stock market takes a dive, as it did this year.
So what's the solution? Well, it's what we say time and time again. The only way to get rid of your financial fears is to acknowledge that it's not your money. When you fully assume your correct role as steward of the resources God entrusts to you, you begin to put your trust in Him, not money. The Lord will always provide for your needs. What He expects in return is that you honor Him with the way you use it. And that includes managing it wisely and being generous to those less fortunate. There's nothing wrong with enjoying God's provision. He wants that for us. But things quickly turn bad when we expect our bank accounts to take away fear and give us peace and security.
Only God can do that. Folks, we're going to pause for a quick break again. We're not here today taking some time off, so don't call in.
But more questions just around the corner. This is MoneyWise Live, biblical wisdom for your financial decisions. I'm Rob West, and we'll be right back. Don't go anywhere. Thanks for joining us today on MoneyWise Live, biblical wisdom for your financial decisions.
I'm Rob West, your host. Hey, if you checked out the MoneyWise app, we'd love for you to do that, just to go to wherever you download apps and search for MoneyWise biblical finance. It has broadcast archives, our MoneyWise community where you can ask questions, get answers from our coaches, all of our content there in our Learn tab with the best voices, podcasts and article from Christian Finance, and our MoneyWise money management system. There's three systems in one so you can find the way to control spending and set up your budget in a way that fits your personality. Pick the one you want, download transactions automatically, and you can even use our digital envelope system. It's all there in the MoneyWise app. You can download it today.
Again, search for MoneyWise biblical finance. All right, we're going to head back to the phones. By the way, our team is away from the studio today, so don't call in. But we've got some questions that we lined up in advance.
To Columbus, Ohio, we go. Diane, thanks for your patience. Go right ahead. Yes, thank you, Rob.
I actually had another question come up in my mind while I was waiting. But my primary question is, my mom passed away a year ago, and one of the assets that we received was an inherited IRA. And it was deposited directly into Vanguard, and it's the Vanguard 500 Index Admiral CL. I'm just wondering what the best thing is to do with that, what tax consequences there might be.
It's down about $10,000 from when it was deposited in January. Yes. Okay. Based on the SECURE Act, there were some changes with regard to non-spouse beneficiaries of retirement accounts with what's called an inherited IRA.
But essentially, if you inherited that after January of 2020, then that's when the new rules kick in where you're required to withdraw the full balance of an inherited IRA or 401k within 10 years. Have you started taking any withdrawals on that? I have not.
I frankly forgot about it. Okay. Yeah, so I would check.
No problem. I'd check with your CPA. I mean, this is different than a spousal inherited IRA. When it's non-spouse, that's where these new rules kick in, and you certainly want to stay on that schedule that the IRS puts out where it has to be fully withdrawn within 10 years, and that needs to be done so you don't have any penalties on that.
So check with a CPA or tax preparer as to the schedule on when you need to get that out of there, and perhaps you have some catching up to do. With regard to what can remain in there, obviously, I'd leave as much of that in there as you can for the market to recover. You're just in an S&P 500 index.
Given that that's where you were as you wrote it down, I'd probably stay put and ride that back up. I think once you recover your losses, though, Diane, it's probably appropriate to think about how's the best way to position that in light of your age and goals and risk tolerance, just to say, should we get a little bit more conservative or do we want to stay invested given that we know we have this kind of fixed 10-year time horizon where this money is ultimately all going to be pulled out, and as you take it out, you'll pay tax on it as income as you withdraw. All right. Yeah, because most of our assets are in TD Ameritrade. We have some IRAs, SEP for my husband.
Great. So would there be any tax consequence to transfer it to the TD Ameritrade account if I didn't want to keep it in Vanguard, or is it just simpler to keep it in the Vanguard? No, you could certainly transfer it over. You just open an inherited IRA. You're going to need to keep it separate.
You won't want to commingle that with any other IRA assets, but you'd open a new inherited IRA at TD, which would keep everything in one brokerage firm, and then you could just do a transfer over. And then are you managing that money or is somebody else making those decisions for you at TD Ameritrade? I am. Okay. So then you probably just want to bring that if you have a similar strategy, so everything's working together.
And then I think the key is once you get that transferred over in the meantime, go ahead and contact your CPA, or if you don't normally use one, let's start a relationship with the CPA and just exactly what that schedule is for the withdrawal so you can get caught up if you're behind. All right. Thank you. Very good, Diane. Thanks for your call today. We appreciate it.
Corpus Christi, Texas. Hey, Randy, go right ahead, sir. Yes, sir. I've got a question on the new pensions that's going on now with the government. If you take the lump sum, you'll take that penalty.
Do you also take that penalty if you take the annuity with, say, 50-50 lump sum and 50 the annuity, do you still take the hit on that 50% lump sum if you wait till after the first year? Yeah, that is a good question. You know, I don't have clarity on the answer to that, Randy, and so I would hate to weigh in on that without doing a bit more research. What is it you're thinking of doing at this point? I haven't really decided yet. I was wanting to do lump sum, but I had a year to work. Yeah. And it kind of scared me if I wait a year to do the lump sum because I'm going to take a big hit right off the top. Yes. Versus you could take the lump sum now and do better. Is that what they're telling you? Yes, sir. If you do by November 30th, if you retire, you take no hit.
You get the full amount. Okay. And why would you wait?
What would be the advantage of that as you think through this? My plan was to work till I was 62. I've got a year or two months.
Yeah. I mean, obviously, you need to look at that and perhaps getting some advice from a financial planner who could help you just crunch those numbers, both from a tax perspective as well as the benefit that you would receive as you pull out of that. I like the lump sum option just because that's going to give you ultimate flexibility. You can take that money and deploy it, invest it in a tax deferred environment and take advantage of some compounded growth at an appropriate risk level for your age and stage of life. But you get access to the money if you need it.
Right. So the principal balance is still available if you needed to dive into it down the road for long term care or some unexpected medical expenses, something unforeseen that required access to that capital. Whereas when you tie it up in the annuity, yes, you're transferring the risk to the insurance company, but you're losing access to the money without penalties and surrender charges. So I think the lump sum is attractive. I realize balancing that retirement date with the benefit of not taking the hit on the lump sum distribution is tricky and that's where I think some planning would really help you.
If you don't have an advisor, Randy, I'd recommend you head to our website MoneyWise.org, click find a CKA and find somebody who you could just pay for their time, a financial planner, not necessarily an investment advisor unless you feel like you also need that service to just really help you think through this and crunch the numbers. And we'll ask the Lord to give you some wisdom as you navigate that as well. Thanks for checking in with us today, sir. Jeff in Ohio, how can we help you?
Yes. My question is, we have five children. My wife and I were getting up in age and we've accumulated some real estate quite a bit.
And then we have about five million dollars. Well, our dilemma, my dilemma is we have a daughter that married this person. And so he said he was a Christian and I had never felt good about it from the beginning. So now he's taken her out of church. Well, she quit going to church due to him.
He drinks and does things that a Christian shouldn't do. So my question is, I really don't want to leave him any money. They have two children and they're not raising them right. And so my question is, I don't want to leave them any money. But what do I do about the other four?
I definitely want to leave them in all that we have. Sure. Yeah. Well, this is a tough one, Jeff.
It can be really challenging. I'm going to take a quick break. If you'll stay right there, I'd love to weigh in on the other side of this break. You're listening to MoneyWise Live with Rob West.
Today's broadcast is prerecorded, and that means we're not taking any calls. But we've got some calls lined up and great information coming your way that we think you'll find helpful. So stick around for more MoneyWise Live after this brief break. We're grateful you've joined us today for MoneyWise Live. This is God's wisdom for your financial decisions.
Applying the truth of God's word, 2350 verses dealing with money and possessions, to the decisions and choices you're making today with God's money as a steward of his resources. We want to help you be found faithful. We want to do that together. Our team is away from the studio today, so don't call in. But we lined up some great questions in advance. So let's get right back to the phones. Let's head to Arkansas. Cynthia, thank you for calling. Go right ahead.
Hi. I was wondering if I should retire full-time now. I'm 63, and by full retirement, it's like 66 and a half. I did take, last year off, I was working in nursing. It was just kind of burnout, and I didn't want to take the COVID vaccine because I had antibodies. But now I'm working part-time in that field. They're taking exemptions now. But I could go back full-time. What is your thoughts about that?
Yeah, very good, Cynthia. Well, there's the financial and then the non-financial side to this equation that we need to consider. So let's start with the financial. So you are essentially fully retired right now. What income are you living off of? I have a 401k and some savings there. I took $30,000 out of my retirement fund for this year.
Okay, very good. And what's the balance in that fund now? It's about $390,000.
$390,000. Okay. And is that the extent of your retirement savings, Cynthia?
Yes. Okay, very good. And what are your monthly expenses, roughly, all in? It's probably around $1,000.
Everything's paid off. Okay, all right, about $1,000 a month. Yeah, so if you take that $390,000 and it were invested conservatively with a focus on capital preservation and income, we would typically say that you could take about a 4% withdrawal each year, or you could take it monthly. And you should be able to maintain the principal balance. So you'd have probably a 30% allocation to stocks. And that would be kind of the growth engine of the portfolio in a period like this, it would drag it down a little bit.
But then, you know, in normal periods where the market's headed higher, it would provide some of the returns that would boost the overall performance. But really, the majority of the portfolio, the other 70% would be focused on more stable type fixed income investments, throwing off an income that would help to support that 4% withdrawal rate a year. That would give you about $1,300 a month. I guess the question I would have is, is $1,000 or even $1,300 really enough, even though you can total up the bills you get for that amount? You know, what about the other things you don't get a bill for if you want to take a vacation or, you know, gifts for, you know, family and friends for Christmas and birthdays and, you know, semi-annual insurance payments and clothing and eating out the things that are more discretionary? I would challenge you to go back and really take a hard look at that budget to see if you were to set something aside for those discretionary spending items, whether they happen monthly or they're non-recurring, what truly would you need every month to cover your expenses, you know, over a 12-month period?
Maybe it's closer to $2,000 or more. And then, if that's the case, we'd be pushing up above what I would recommend you pull out of that account, that $390,000. So I think at this point, as you consider that, you know, you need to think about whether you would prefer to go back to work so you can continue to build that up and not have to take Social Security early and also add more to that retirement plan because every year you wait to take Social Security, you're going to build that payment by about 8% a year.
And so every year that goes by, you're going to have a little bit more in that check that's locked in permanently once you take that out. So I think that's the financial side, which is just are you truly ready financially to just rely on your assets for the rest of your life? And granted, if you could do it with the $1,300 a month, obviously at any point you could start taking Social Security and that would be on top of that and you might say, well, I feel pretty good about that. But then there's the non-financial side, which is just considering, you know, if you're retiring from something, what are you retiring to? And what has God called you to? And we realize that our calling doesn't have an expiration date, even though he may redirect us away from paid work to something else, you know, for the next season of life. So it doesn't have to be paid work, but I do think you ought to give some careful thought and prayer to what does God have for you in this next season and how would you spend your time and energy and wisdom, you know, to serve the Lord as you move forward from here? So give me your thoughts on that, both the financial and the non-financial side that I shared.
I don't know if anybody's called me to. I assume they spend a lot of time going to visit my children. Yeah, I understand that.
So I do that because I have six grandchildren. What about on the financial side? Do you feel like you would have greater peace of mind knowing that you continue to work for a few more years here, either because you enjoy it or because it would give you the ability to no longer, you know, pull from that 390, let that recover with the market, even continue to grow before you have to start taking money out of it?
Or are you comfortable if you were to say, you know, I'm only going to take $1,300 a month or somewhere around that amount and wait on Social Security? Well, I could work part time. I don't want to go to the stress of working full time. Well, I think that could be a great option because it gives you obviously you're gifted and skilled in this area of nursing. As you said, you can go back in and still honor your own personal convictions with regard to the vaccine. And it would lessen the amount that you have to pull from that retirement account, which would allow that to continue to build over time, at least maintain its level, and then let the Social Security grow by 8% a year so that when you actually start to take those benefits, you're locking it in at a higher level. I think that might be the best of both worlds.
And then you know that at any point, if you decide you don't even want to go part time because you want to spend more time with the grandkids or God has something else for you at that point, you can always make that decision better. Does that make sense? Yes, it does. Okay. Thank you so much. You're welcome, Cynthia.
Thanks for calling today. All the best to you in this exciting new season of life. We appreciate it. We've got some great questions lining up. James, Kimberly, Valerie, we're coming your way next. We'll be right back.
Stay with us. We're grateful for support from Eventide Investments on the MoneyWise program. Eventide's approach to values-based investing is grounded in the belief that humankind was created in the image of God with intrinsic dignity, value and worth. Eventide calls this investing that makes the world rejoice. More information is available at eventideinvestments.com.
That's eventideinvestments.com. We are grateful for support from SoundMind Investing in the MoneyWise program. For more than 30 years, they've 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 the short video webinar on profit and peace of mind, no matter what's happening in the market, is available at soundmindinvesting.org. Five million people have Alzheimer's.
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Connect with a community of thousands of Christians striving to be faithful stewards, and check out all of the free biblical financial advice at moneywise.org. I'm Miriam Neff with Wise Women Managing Money, and I'm Valerie Neff-Hogan. Money and women are in the news. One financial news source reports that a major asset management group is suffering an outflow of investments. Women are moving their money from this investment firm. The individual overseeing those accounts reported that women are unhappy with our industry.
That's not true for the whole industry, but for some firms. It's important to select a group that meets your particular needs and does not follow a rote formula. Here are two basic questions to ask regarding someone who wishes to advise, perhaps oversee, your finances.
Do they listen well? Are they looking out for your interest or for selling their products? God has entrusted His resources to you.
Manage them and use them well. This feature at wisewomenmanagingmoney.com. Delighted to have you along with us today on Money Wise Live. I'm Rob West, your host. This is where we apply God's truth to your financial decisions.
Here's what we recognize on this program. God owns it all and money is a tool to accomplish God's purposes because you're a steward and so am I. We're money managers for the King of Kings. Here's the other reality is that money issues are hard issues. You know, my experience is that our financial journey is one of the key ways God shapes our spiritual journey and really money issues, the way we handle money, it's a training ground of the heart. It's one of the most tangible visible expressions of what we value and where we've placed our trust. The question is, is there a misalignment between what's really important to us and what money says is important to us?
And if it is, perhaps we need to change the way we're allocating God's resources. Well, we can all get better at that. And so let's do that together. Our phone lines are not open at the moment because we're away from the studio, but we have some great questions that we lined up in advance.
So we're going to go right back to the phones. We did have a caller, Sherry, who called in and wanted to know about a condo sale. She said, my son's condo is for sale. We've not had one offer in three weeks. What can we do?
He is moving because of his job. And clearly, Sherry, I think what your question illustrates is the changes that we've seen in the housing market as of late. That red hot housing market that had 10 plus offers in 24 hours has gone by the wayside largely due to the prospect of recession. But even more importantly, the significant rise we've seen over 400 basis points higher on mortgage interest rates now with a 30 year rate over 7 percent. As a result of that, we've seen a rapid cooling of the housing market, still not a significant decline in housing prices, although they have started to dip.
But really, I think the main effect is just homes on the market longer. So we're back to kind of those those rules, those conventional rules for selling a property that had temporarily been set on hold because people were just in somewhat of a frenzy to buy. So when a home is not selling, whether it's a condo or a single family home, we've got to look at first of all, do we have the right price? Have we been too aggressive at setting the price? And we've essentially priced ourselves out of the market.
We've got to be honest. And that's where a real estate professional can really help you establish that right selling price based on the comparative market analysis and the closed sales in the area that are fairly recent. The second is make sure that we're staging the property. You know, this might seem like a trivial exercise and it's not a home that is too cluttered has too much in the way of your own personal family effects and photos.
You know, homes that have bright colored walls, I mean, things that can be easily rectified by maybe taking a couple of pieces of furniture out and removing, you know, instead of 16 family photos, maybe we have four, you know, things like that, that will help to stage the home and make it a bit more appealing. And then thirdly, what is the marketing strategy? And do you have a professional who really has a proven marketing strategy to get it out there? Not only just putting it on the multiple listing service, but what other marketing opportunities are available?
And who are the real estate professionals that most commonly work in your condo? So that perhaps they could be reached out to they may even have buyers waiting in the wings. So there are things that can be done starting with looking at that price. But unfortunately, I think you're just going to need to be a bit more patient, Sherry, than maybe you would have had to be six months ago. But that's just the nature of this changing real estate market. I'm confident it will sell if it's priced right. And you've got it staged properly and you market it appropriately.
It just might take a little bit longer. Thanks for your call, Sherry. We appreciate it very much. Back to the phones.
Anita in Lafayette, Louisiana. Go right ahead. How can I help you? I have right now about 420 in my 401k and I'm 59. I'll be 60 in January. I'm still working, but my husband is retired. He has a pension and we just built a house.
Worst time, but it took three years. But my husband was a contractor, but we have a construction loan at four and a half percent that we have to pay off. And we're trying to decide whether to refinance it or, you know, I thought, but it'll be a high interest rate now, but or to use my 401k. Yeah, I see. What is the balance on that mortgage?
It'll probably be around 265. But we also have to sell the house we're living in, which we have some equity, probably 100,000. But do you know if there's a feature on that construction loan that allows it to be converted to a permanent loan?
There's not because my husband was the contractor and they only allow that if it's a licensed contractor. Got it. Got it.
Yes, ma'am. Okay. You know, I'm not excited about I mean, even if you sell the house and you put a hundred on it and you're looking for one hundred and sixty five thousand dollar mortgage, I'm not excited about you pulling one hundred and sixty five thousand out of that 401k.
Number one, the market is down. I'd love for you to be able to allow that to recover. Number two, that's going to create quite the taxable event.
Even if you're beyond fifty nine and a half and you miss the penalty, you're still going to add all of that to your taxable income in one year, which is going to create a bit of a tax jump in terms of you probably push that portion up even into a higher tax bracket. So as a result of that, I think as long as you've got good cash flow, you know, whether you're content, how long are you planning to continue to work? As long as I'm able. Okay. All right.
So you're in good health and you plan to work perhaps for five plus years? Yes. Okay. And you all do you think you could absorb the mortgage either at two sixty five or one sixty five if you wait till the home sells? What do you mean absorb the mortgage? Meaning I'm sorry.
Do you have enough cash flow to cover the mortgage payment? Oh, yeah. Yeah. So you're fine there.
Yeah. I just don't like the idea of pulling that out of the 401K is as much as I would love for you not to have a mortgage at seven percent. And, you know, maybe you could get it down a little lower with going with a 15 year mortgage if you've got good cash flow between your work and his pension. I'd love for you to leave that 401K alone. Go ahead and lock in that mortgage.
You know, if you need to go ahead and do it, you could do it at the two sixty five. Obviously, the longer you can wait, the better, because if you can wait till you sell your current home, then you're getting a smaller mortgage at one sixty five. Let that 401K recover and continue to grow.
Keep adding to it. And then if you guys have plenty of margin, maybe you accelerate the payoff of that mortgage. You know, one option is you get a 30 year and you pay it like a 15 or you get a 15 and try to make a little extra on the payment each month or at least one extra payment a year. And that's going to help you pay that off a little quicker. But I think you'll be glad that you have the full 401K in place when you retire. And perhaps maybe your goal is to get that mortgage paid off at least by the time you retire.
So that as you're entering that season of life, this mortgage is now gone, which brings your overall lifestyle spending down, which just makes you balance, allows you to balance your budget a bit easier because that biggest expense is now gone. But you don't try to rush it and create this large taxable event and then miss out on the future growth of the 401K. Does that make sense? Yes, sir. But can I have one thing real quick? Sure.
Yeah. What if we split it up into parts each year and parts each year so it wouldn't be as much tax? Just a little take some out of the 401K. Yeah, if you were going to do it, I'd absolutely encourage you to split it up. The only downside is, again, I'd rather you leave it there at least until the market recovers, and that's probably halfway through next year if I were to guess.
So that would be my only concern on that approach. I hope that helps. We appreciate your call. We'll be right back.
This is MoneyWise Live with Rob West. Hey, if you hear a phone number mentioned today, please ignore that number and don't call us, because today's broadcast is prerecorded, and that means we're not taking any calls. But we think the upcoming information will help you and make you a wise steward of what God's given you. So please stay tuned. This is our final segment of a broadcast we previously recorded. Thanks so much for being with us today, and we hope you'll stick around and enjoy the rest of today's program. Let's head to Virginia. Is it Gary?
How can I help you? Yes. I have a CD at a regular bank that will be maturing next Friday, and so I've been checking around to see where I could get the best interest rates. And I went into a credit union yesterday, and they have a 23 months at 3 percent.
So I was wondering, what do you think about putting money into a credit union as a CD? I like that a lot. Yeah, I mean, if you're really... Do you? Oh, okay.
I do. Yeah, if you're just looking for yield right now, you could go to bankrate.com and look at the banks, probably the online banks that offer the very best interest rates. You could certainly look to a credit union as well, especially locally. A lot of them will have special offers or incentives to invest in their CDs and earn your business. If you want something specifically that aligns with your Christian values, I would look at the Christian Community Credit Union.
If you go to mycccu.com slash moneywise, you can learn about the Christian Community Credit Union. They have a very attractive CD right now, and the good news is that you'll be working with an organization who shares your values. And if that's important to you, that could be a great option as well. But I think this is a great time where, because of what's happening with the Federal Reserve and the raising of the interest rates, we're finally seeing some more attractive yields out there. It's bad news if we have debt, because those variable rates are going up. It's good news if we've got money to invest for the shorter term and we want to take very little risk, we can actually get some more attractive yields right now. And that's certainly helpful in the midst of what's happening here with inflation.
Does that make sense? In the credit union, are they insured just like the regular banks are? That's right, yes. It's slightly different. Instead of the FDIC, you're going to get a different particular backing that's specific to the credit unions, but it operates the same way and is backed by the full faith and credit of the United States government. Okay, so now the one that you suggested, I'm familiar with it.
Give me that name again. Yes, ma'am. It's the Christian Community Credit Union, and you'll find them at mycccu.com. Okay, but I assume all that will have to be done online, right? You could call them and do it over the phone.
They're not going to have a local brick and mortar branch near you, but you would need to do it over the phone and through the mail if you were not comfortable doing it online. Oh, okay. Okay. All right.
Well, that's what I needed to know. Very good. Well, thank you for calling. God bless you.
Let's head to Mississippi. Hi, Eileen. How can I help you? Yes, I enjoy your show so much. I learn a lot. I just don't retain it as much as I wish I had, but I know you were talking many times in the last several months about the bond, the Treasury bond. Yes, ma'am.
And I'm not sure that I'm understanding, you know, how the fluctuation has been happening or whatever, but is it now no longer the 9% or whatever? Oh, I see. Yeah, so you're talking about specifically the I bonds, the inflation bonds? The I bonds, yes. Yes, ma'am. Very good.
Yeah. So these bonds have a component to them that adjusts with inflation. It's pegged to the consumer price index. And because of what's going on with inflation right now, they've been paying very attractive rates far beyond anything we've seen in a long, long time. And they're very safe because they're backed by the U.S. government. So there's almost zero risk there in terms of the yield on those that you're asking about, I mean, yeah, until October the 31st, the yield was at nine point sixty two percent because that adjusts every six months.
And it happens to take place in November and May each year. We had an adjustment based on the current CPI and that nine point sixty two is now down to six point eight percent, but still very attractive. I mean, to be able to get six point eight percent for the next six months and then whatever it adjusts to for the six months beyond that is very good, given the fact that it's ultimately safe. You can only put it up to ten thousand per person per calendar year and you would lock in that six point eight percent for the next six months and then you'd get after that six months whatever it adjusts to next May. And that's going to depend on the consumer price index.
You purchase them at Treasury Direct dot gov. And I think it's a great option for you. You've got to leave the money in for a year. So that would be a part of this, that you wouldn't be able to take it out until after 12 months. Thanks for your call today to Alabama.
Jacqueline, how can I help you? Yes. We have about 85 percent of our money in the total bond market with Vanguard and 15 percent in the 500 index. The total bond is down about, I don't know, 16 percent. The long term bonds are down 35 percent. Now, I know I need to put more into stocks or something, but I thought, is it really stocks I want, you know, up to 60, 40 thing or do I really want to put it into long term bond because it's down 35 percent?
Yeah, and I think this always comes down to what is the purpose of this money. So give me just a quick rundown of your ages and the amount that we're talking about in this portfolio. Okay. Seventy one and we don't need the money. And did you ask the amount? Yeah. Roughly what's in the investable assets?
Maybe 900,000. Okay. Very good. And you're not drawing an income from that?
No, we don't need the money. Very good. And how does that 900,000 break down roughly into the total bond fund versus the stock index? Eighty five, 15. And I know we should be 60, 40. I can do that, but I'm thinking, do I want to do that when the long term bond is down 35 percent and the stock market isn't down that much? And I had read where long term bond should be the first thing to come back. But who knows?
You know more than maybe what I read. So is there some percentage that should be in that long term bond? Yeah, I would be overweighting toward the shorter term durations right now. The question is whether you want to sell out of that long term bond position in exchange for the shorter durations. And I think those will recover.
It is going to take a little while. But in order to see that come back, I'd probably stick with the majority of what you have right there. I'd probably be more like 50-50 in your bond allocation toward the shorter term duration bonds, which clearly are not down as much. And we're seeing some pretty attractive yields as rates continue to head higher. Those will continue to lose some value. But there is an opportunity and they will come back, especially as we get on top of inflation and we see the Fed take their foot off the gas pedal. I also think stocks are pretty attractive right now. The good news is you all are in a pretty good spot where you don't need the money. And so you've got time on your side. You know if the Lord tarries and you're in good health, actuarially speaking, there's a pretty good chance you'll live into your 90s. And if that's the case, then you could have 20 years or more where this money can continue to grow.
And there's never been a 20 year period in the history of the country where stocks were down. So you will recover. And I think that's the key. Ultimately, once it recovers, moving probably more toward a 70-30 split with a little bit more toward the shorter term duration bonds is ultimately where you want to go. But I would probably let it recover before you make some pretty large scale changes. So you're saying right now, though, it'd be good to move some of the total bond market money into short term?
I would start to move some of it toward the short term and then perhaps boost the stock allocation so you can participate in that recovery as well. Do you all have an advisor or do you make all these decisions yourself? We make them ourselves and I think we've done OK. It's just we've just always been big savers and kept it pretty conservative. Well, and that's you've been rewarded for that over time. This is just an unusual period right now where because of inflation, we've just had this very quick run up in interest rates, which has just caused this bear market in the bond and stock market that we're experiencing right now.
And I think you've probably seen the worst of it already. And at this point, it's just a waiting game for it to come back. So I think you could either stay where you are now and let it recover and then look to make some allocation changes or perhaps just start right now to move a portion of the large allocation you have in the long term bonds more to the short term and then perhaps boost your stock position somewhere between where it is now at 15 up to as much as 30 percent just to position yourself for that recovery. So I would be comfortable with either of those. But I think the key is you don't want to get out and move to cash. I think you want to stay in this, given where you guys are at, the fact that you're living modestly, you've been diligent savers, you don't need the money at least based on what you know today.
And so you've got time on your side, which is always a good thing. Yeah. You know, I don't have any long term money. I don't have long term bonds.
I only have the total bond market, which is five to seven year. Oh, OK. All right. Very good. Yeah. So then I would probably stick with what you have now.
I know it's down quite a bit, but it will recover. And so now is not the time to sell out. I thought you had some long term bonds in there. You just say don't put it in the long term bonds.
No, I would not. I'd rather you stay right where you're at if you if your longer term durations are five to seven years and just give it time to let it come back. And it will over time. OK. Well, you're a total blessing. I thank God so much for you. And thanks for the advice today. All right. God bless you. We appreciate you calling today. But, folks, that's going to do it for us today. We've covered a lot of ground and taken a lot of questions as we apply God's wisdom to the financial situations you're dealing with.
You know, at the end of the day, when we recognize that God owns it all and we're stewards of those resources, we live within our means, set long term goals and give generously, then we put ourselves in a position to experience God's best. Hey, let me mention, if you'd like to support this work, we are listener supported. You can do that on our website at MoneyWise.org. Just click donate.
MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thank you to Jim, Amy, Deb and Hans. Thank you to Dan as well. We appreciate you being along with us today. God bless you. We'll see you next time. Bye bye.
Whisper: medium.en / 2022-11-27 01:14:12 / 2022-11-27 01:32:27 / 18