Getting Rid of a Credit Card

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Episode one drops on January 1st. It's easy to get rid of a credit card. Just cancel it. But is that the best way?

And what if there's a balance? Hi, I'm Rob West. We get a lot of questions about credit cards. One of the most frequently asked is, how do I cancel my card?

Well, the easy way isn't the best way. I'll tell you how to do it today, and then it's on to your calls at 800-525-7000. That's 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial decisions. So you might be tempted to think that you just have to call the credit card company and tell them you want to cancel, but there's a bit more to it than that, especially if you want to minimize the impact on your credit score. I'll get into that in a bit, but first I want to mention that it's always a good idea to cancel a card you don't need, because it reduces the potential for fraud if the card or number is stolen or lost. So when should you cancel a card?

Well, first, when you realize that the card has an annual fee that's more than the benefits you've been receiving, if any. That means if you're paying a $135 annual fee, but you're only getting $100 a year in rewards, obviously you'll be money ahead by canceling the card. You should probably also cancel a card when you're running up and maintaining a balance.

If you can't resist the temptation, it's probably best to cancel it. And as I've told you before, any rewards you might be getting are meaningless if you carry a balance. The interest wipes out any cash back or rewards points for using the card. Now I mentioned that canceling a card will usually impact your credit score, and folks are always asking why that is. First, you have to understand the five factors that make up your credit score. Your payment history is a big one, whether you've paid on time or late, and it makes up 35% of your score.

That's followed by credit utilization, how much you have in outstanding balances versus your total available credit. That's another 30%. Then there's the length of credit, how long you've had each account open.

That's another 15%. New credit counts for another 10%. And finally, your credit mix makes up another 10%. That's whether you have just a card or if you also have a car loan and maybe a mortgage.

Lenders feel that having different kinds of credit makes you a better risk. Keeping those in mind, you begin to see how canceling a card will probably lower your credit score because closing that account can affect three of the five factors making up your score. Your credit utilization, length of credit, and credit mix. Unless the card is completely maxed out, it will mean you have less credit available. It will also reduce the total length of time you've had your accounts open, and it may eliminate one type of credit in your overall mix. All told, canceling a card has the potential to negatively affect 55% of your credit score. So if you want to cancel several cards, it's best to spread that out, canceling maybe one just every six months to lessen the impact. The effect is only temporary, but you don't want to magnify it by canceling several cards all at once. Now, how do you actually cancel a card?

Well, here are the steps. First, redeem any rewards pending on the card. If you just cancel the card, you might not receive them. Then you want to pay off any outstanding balance. Technically, you can cancel with a balance, but you'll still be accruing interest, so paying it off is the real priority. Next, and this one can save a lot of headaches, check your card statements for the last few months to see if you have any automatic charges. For example, maybe you have auto-pay set up for your car insurance, various apps or streaming services, and take this opportunity to cancel any you're no longer using.

If you find any you do want to keep, put them on another account, because if you miss them, it could result in late fees. Now, you're finally ready to call the credit card company to cancel. They have different procedures for this, so ask for specific instructions.

For example, you may have to do it in writing. On the other hand, you may be able to cancel the card entirely online, so check the issuer's website to see if there's an online procedure for canceling. If so, follow the directions carefully to make sure it goes through, then hang on to any confirmation you receive that the account is closed. Now, there's still one more step to make sure the card has actually been canceled. After about 30 days, check your credit reports from each of the three reporting bureaus, Experian, TransUnion, Equifax. You can get them for free at AnnualCreditReport.com.

If you find that a report still indicates the account is open, you can dispute it online. Hey, as we head toward year end, let me encourage you to consider a gift to the ministry. MoneyWise is listener supported, which means we rely on your gifts, and now more than ever here at year end, just head to MoneyWise.org and click Give. We'll be back with your questions just around the corner.

Stick around. Hey, great to have you with us today on MoneyWise Live. I'm Rob West, your host. It's time to take your calls and questions now on anything financial. We'd love to hear from you. The number to call is 800-525-7000. Again, 800-525-7000. We've got some lines open. Let's head to the phones. We're going to begin today in Grand Rapids.

Hi, Alvin. Thanks for calling. Go ahead. Hey, at my credit union, I have an edge checking account. I'm supposed to keep as much as $10,000 in it than if I keep it. I can keep less than that in there, and I get 2.7% of shared interest or something, they say. I was wondering, should I close the checking account and just have a regular checking account and use that $10,000 to invest somewhere where I can get more interest on it?

Potentially, Alvin. Let's talk about how this money fits with the rest of the assets that you have. This is in your checking account. Is this money you're living off of on a monthly basis or is this really savings?

I'm not living off of it. It's just savings. I have quite a bit over the $10,000, so I try to keep at least $10,000 in there. The first thing I would want you to have is what I would call an emergency fund, which is somewhere between three and six months' worth of expenses. If you're spending $3,000 a month, you'd want somewhere between $9,000 and $18,000 in a liquid savings account that you can get to. How does this relate to your emergency savings? Is that essentially what this is? No.

I have over $5,000 in the savings account for emergency funds and stuff. Okay. All right. This is beyond that? Right.

Okay. What's the total currently in this particular account at the credit union? Which account? Well, you have the $5,000 that you're calling your emergency fund, and then you have a credit union edge account. What's the balance in that? It's about $14,000 in there.

Okay. Do you have any other liquid assets besides the $14,000 and the $5,000? I have $20,000 of assets. I can't think of the financial company, but I have $20,000 in there. It's been in there for some years now, and it's going to grow to about $22,000 or something.

It's real slow. Okay. All right. And this $14,000, are you wanting to keep it liquid where you could get to it if you needed to at any time, or are you willing to lock it up in a CD or something else? That's what I was thinking about doing, where I can get more interest. Just closing the $10,000 out and put it somewhere where I can get more interest.

A couple of options there. If you're looking to get more interest, but you want really ultimate safety, if you're willing to put it in just a high-yield savings account, you could get about 3% right now at Marcus or Capital One 360 or Ally Bank. You would essentially open a high-yield savings account with an online bank. It would be FDIC insured.

You could link it to your checking account. Like I say, with complete liquidity and FDIC insurance right now, you'll get about 3%. If you wanted to lock it up for a year, you'll find CDs that are paying a little better than 4% right now. I'm looking at one right now at 4.15% with a 12-month CD. You could get it up to four, but you wouldn't be able to get to it for a year.

The other option is you could put it in the iBonds that we've been talking about lately. You've got to leave that in for at least a year, but you could get 6.8% with full government backing, so it's very, very safe. Now, you would only get that 6.8 for six months, and then when the six months is up, it will adjust to whatever the new rate is. We'll find out in May, and that's going to be pegged to the CPI, the consumer price index. It's probably coming down, but it's probably not coming down below four, so the mix of the six months at 6.8 and let's say the second six months is at four, four and a half, you're probably going to have an average rate of somewhere in the mid-fives for the year, and then at that point, you could pull it out.

You'd pay a small penalty if you pull it out in less than five years of about three months' worth of interest, but that would be another option as well. So, I'd probably choose between the high-yield savings, which gives you ultimate liquidity at three, the one-year CD at 4.1, or the I-Bonds. Okay. Okay.

Which sounds like the best fit for you, Alvin? I was thinking about the I-Bonds. You can certainly do that. I'm not a computer. I'm kind of computer illiterate.

I don't know. I don't have a computer and stuff to do that. All right. Do you have a friend or a family member that you might be able to do it with their help or at their home? Yeah, maybe my daughter. I have a daughter.

That would be a great option. Yeah, just have her head to treasurydirect.gov to help you set up the account and transfer the funds in, but if at the end of the day, you'd rather just do a one-year CD, like I say, you can still do better than 4%, which is a lot better than you're doing now. So, thank you for calling today.

If you are going to go with the I-Bond, again, treasurydirect.gov, and just to have your daughter help you set that up. Thanks for calling, sir. To Alabama. Hey, Mike. Thanks for calling. Go ahead.

Hey, thanks for taking my call. Yesterday, you were talking about faith-based investing with one of your guests on the show yesterday. I have a 401k. I'm 59 and a half, it'll be 60 this coming weekend. I'm still working at the company that I have a 401k. Can I roll that since I'm 59 and a half, or is it specific to your state and your employer if you're still employed? Yeah, if you're still employed, you're likely not going to be able to move that out of that 401k. So, your options at that point, if you want to move to faith-aligned investments, would be, number one, to see if there are any faith-based investing fund families already on the platform where you have your 401k through your work and just look at and see if they have Eventide or Guidestone or some of the other fund families like Praxis or Timothy Funds, Inspire. You'll find a listing of them on our website at MoneyWise.org. If so, you could begin to move into those fund families right inside that 401k. If not, the only other option would be if your 401k offers something called a brokerage window, which is essentially where they allow you to access the broader market of investments through the brokerage window but keeping the money in the 401k because, like I say, until you separate from the company, you're not able to roll it out. When you do, you could roll it to an IRA and then you've got unlimited investment options at that point. Does that make sense?

Yeah, that's exactly what I was wondering. Thanks for taking my call today. You're welcome. Head to our website MoneyWise.org. You'll see a lot of those fund families listed there. Jot those names down and then call your planned administrator for the 401k and just say, hey, can you help me see if any of these are on the platform?

And if not, maybe you suggest that they add them. Thanks for calling, Mike. We're going to take a quick break when we come back. Another Mike. This one is in Chicago and Beth and perhaps your call.

800-525-7000 is the number and we'll be right back. Stay with us. This is Rob West. You're listening to MoneyWise Live.

So glad you're along with us today. This is the program where we apply the wisdom from God's word to your financial decisions and choices, recognizing that, well, it's not that we just want to enrich ourselves and build bigger barns. The Bible isn't very friendly to that idea. It's that we want to hold God's resources loosely and recognizing our role as stewards live faithfully, that is obedience in the same direction over a long period of time, faithfulness to God's word as we manage his resources.

And in order to do that, the steward needs to know the heart of the master. So you go back to God's word and say, what are the big themes and ideas that we see in scripture? Well, we were created in the image of the ultimate giver, God himself, right? He gave us his son to pay the penalty for our sin through his death on the cross.

So we want to model that. Therefore, we should be givers ourselves, holding what we have loosely, living within God's provision and providing for the needs of our family and for others. Well, together, each day we gather here to try to apply the wisdom from God's word to the practical decisions and choices we're making each day as we try to stay within our means and reduce our debt over time and grow our savings so we can have something for the future and, you know, consider how we might even be generous along the way.

All of these things are addressed in God's word, and we tried to bring practical counsel related to each of them here on the program. We've got two lines open at 800-525-7000. We'd love to hear from you.

Let's head back to the phones to Chicago. We go, Hey, Mike, how can I help you, sir? Hi. Approximately 20 years ago, my daughter was a teenager. I added her to one of my credit cards. I explained to her what I was doing. I did that in order for her credit score to grow because I pay my balances off every month. Anyhow, if I were to remove her at this point, she never received the card, never used it at all. If I were just to remove her, would it affect her credit score?

And if so, for how long, approximately? Yeah, that's a great question, Mike. First of all, it's an effective strategy that you used to help her build credit where she didn't really have access to the card, but she was inheriting your good at credit history as you made those on-time payments every month. Just a word of caution to other folks listening, perhaps thinking about doing the same thing. It works very well as long as you're a disciplined on-time payer. If you have late payments, that negative history will pass on to those authorized users as well. So just be careful there.

But to your question, Mike, yes. When you remove an authorized user, typically, and each account is a little different, but typically that account will be removed from that person's credit reports at the three bureaus, including that history that would no longer play into the algorithm for the credit score. Now, that impact would be minimized if your daughter along the way has been building her own credit for a while. So the more she's contributed to her own credit history, the less impact that one account coming out of the mix will have on her. It's difficult to say how much of an impact because it depends on everything else that's in her credit file, the amount of credit she has, the credit mix, the credit utilization. But it will likely provide some impact to her, but it will be temporary because the most recent information is the most significant. And even though this would have been one of the older accounts with a lot of positive history, again, if she's been building her own credit file along the way, it would likely be minimal. But the actual number of points she would drop and for how long, it just depends on a whole host of other factors. Does that make sense?

Absolutely, yeah. She has been building her own car payments, credit card. She inherited that from me, paying it off every month. So she's been very fortunate. Good. Well, it sounds like you've been modeling some wise financial management, Mike, for a long time. And she's the beneficiary of that.

So delighted to hear that. But yeah, I think you're probably safe to go ahead and make this change. Let her know that that's coming. You know, here's the reality, though, if she's not out looking for credit at this point because she's trying to buy another car or get a mortgage to buy a house, it's probably not going to have a whole lot of implication here just because even if it does temporarily drop, it doesn't really matter apart from, you know, just her seeing that happen. But if nobody's using that score to determine her credit worthiness, then it really doesn't have any bearing on anything. Okay.

Would you say less than a year that drop in the score if everything remains the same? Oh, yeah, absolutely. I would. Okay, great. Thank you so much for your help. You're welcome. Thanks for your call, sir.

Eight hundred five to five seven thousand to Orlando. Hi, Beth. How can I help you?

Hi there. I have a question. So my employer for the has always contributed to my 401k every month with our with matching funds. And we've just been told that now they're going to do it just once a year. So like for 2023, they'll match whatever funds we put in, but they won't do it until March of 2024. And I just wanted to know, is that something that is normal for corporations to be doing now?

And then also, should I maybe look into a different way to invest my money? Yeah. What is the matching? Is it dollar for dollar up to a certain percentage? Yes. Okay.

Up to eight percent. Oh, wow. Yeah. No, I mean, as much as I don't like that, I'd rather you get that monthly compounding. And, you know, most plans do that. They provide that matching upon the deposit. As much as I don't love that, it's still a great option because here's the reality. I mean, that's a very generous plan that you would get a dollar for dollar match all the way up to eight percent.

That's significant. That's 100 percent return on your money. And, you know, if you have to wait a year to get it, that's still free money.

You're not going to get anywhere else. So I would hate to miss out on that. So I'd probably absolutely do 100 percent of that eight percent in your plan first, even though it's annual matching. Then perhaps look to a Roth IRA if you can do beyond that. And then maybe for any extra, once you max out the Roth, go back to the 401K.

But that's still worth taking full advantage of, even if they're going to only do that once a year. Okay. Okay. Thank you.

All right. We appreciate your call today. Hey, we've got to take another quick break when we come back. A lot of great questions coming up.

Plus, should we tie it on Social Security? I'll weigh in on that just around the corner. This is MoneyWise Live. I'm Rob West and we're going to take just a brief break, but back with much more just around the corner. Stay with us. We'll be right back. Great to have you with us today on MoneyWise Live. I'm Rob West, your host. We're taking your calls and questions today. Let's head right back to the phones. Cozetta, Kansas City, go right ahead.

Oh, hello. My question is, I have 401K money at an old job and is it a good idea to move it to an investment company? Yes, I think it can make a lot of sense. So you've separated from this company, right Cozetta? That's correct. Yeah. Okay. And do you have an IRA anywhere else or a new 401K?

I do have a new 401K at a new job, but I did not want to roll it over into the new job. So I felt, you know, maybe to the investment company would be a good idea. Yeah.

Do you already have a relationship with an investment advisor or an investment company? I do. Yes. Yeah. Okay.

Very good. Yeah. So I think that makes a lot of sense. It's going to get it out of the 401K, which oftentimes, especially once you separate, might be in additional fees on that. Not to mention, you've got a limited investment universe. And if you can consolidate that where you've already got another relationship and perhaps other investable assets, it's going to not only get it all in one place, so allow a little bit more control, but it's also going to simplify your financial life because now you don't have yet another account with another institution out there. And it's going to give you unlimited access to investment options.

So you can have your advisor, if somebody is managing your other assets for you, have your advisor give oversight to this as well and choosing the investments that are the right fit for you, as opposed to just having the limited options inside that old 401K. Okay. That's perfect.

That's exactly what I was kind of told, and I wanted to confirm it. And that's good. That worked. Okay. Excellent. I'm glad we could help you. Thank you for calling today. God bless you.

Jackson Hole, Wyoming. Hey, Jim. How can I help you, sir?

Hi, Rob. I think I spoke to you about a month ago, but real quickly, at the end of a real estate transaction, I'll be receiving a sizable hundreds of thousands of dollar payment from that. And before I start working on how I'm going to invest that or plan my future going forward, I need to park it someplace. My title and escrow company called me, my realtor, and it's like, where are you going to put it? So I'm sort of looking at where I can park it, maybe earn some interest off of it, certainly going forward, have easy access to it, but then put together my plan from there with financial planner and so forth, Rob. Yeah.

I love that idea, and I think you're exactly right. Other than parking in and earning some interest, you really don't want to do anything with it until you've done that plan so you can make sure that this fits into your bigger plan for ultimately what are you trying to accomplish and how do you best position this and manage it moving forward? I just park it in a high yield online savings account. So I'd probably open an account at Marcus or Ally Bank or Capital One 360.

They're paying about 3% right now. It's FDIC insured, fully liquid, and you can even link it up electronically to your checking account. And that way, once the proceeds hit the account, you could just then ACH transfer it over to this high yield savings. You'd know it would be safe. You'd earn a decent interest rate on it, and it's fully liquid and protected.

So whenever you're ready to deploy it, you could easily transfer it out. Yeah. So that was Marcus and Ally.

What were those three sort of ran by me real quickly? Yeah, Marcus at marcus.com, M-A-R-C-U-S, Ally Bank, or Capital One 360. Any one of those have great customer service, no fees whatsoever, and they're paying the best interest rates around for a savings account anywhere. So when I contact them, for example, I've got my checking account is with Wells Fargo. I've got some stuff with Wells Fargo's advisors and TIAA. Those are separate issues. But when I contact these guys, then that's where I'm going to wire transfer those proceeds.

You are. Now, the only thing I might mention is if you're with Wells Fargo Advisors, you can ask them what they have available because they may be able to get just something similar or even a little better in a money market. So you could just wire it into an existing account that you have, tell them you want to leave it in cash. You want to earn a good interest rate, but then you wouldn't have to open yet another financial account, which means another set of tax documents at the end of the year and another account to keep on top of. If you've already got a relationship with a financial institution, they should be able to offer you whatever you want that would offer competitive interest rates.

Okay, so maybe I'll visit with them first and kind of see what's going on. Again, that would be in a high-yield savings account, you're saying, but you said money market account. Yeah, they would probably use a money market typically, but I would be comfortable with that, especially given that there's not going to be there that much time and then you're not, again, creating a lot of complexity by opening other accounts. So I'd probably start with them first, see what they have available. If it's really important you have FDIC insurance and a banking product and they can't do that for you, then you can opt for one of these three that I mentioned.

But I think if it's just a temporary solution, keeping it in the same institution that it's probably going to be in ultimately anyway, but in a money market fund would probably make some sense and you can still earn some good interest on it. So I would use one of those two options, Jim. We appreciate your call today, sir. To Northwest Illinois. Hi, Linda. Go right ahead.

Hi, Northwest Indiana. I need some of your sage advice. I am on a very fixed income.

I am unable actually to earn any more because I will lose the Medicaid that goes along with my Medicare, which I need to, pardon me, help pay for my medical costs and my medication. So I am in need of another vehicle. I had someone who was kind enough to step up and say that they would help me.

However, at the last moment they changed their mind. And in the process of doing this, I learned I have a zero credit score. So I am asking for your thoughts on what I can do to try and gain in that somewhere along the way.

How can I build my credit score? I'm 66 years old. Yeah. How quickly do you need this other vehicle, Linda? Well, my car has 300,000 miles on it. Wow.

And the service station refused to change oil because they said it was leaking from all of the seals. So I pray every time I go out. Yeah, I understand. So far so good. Yeah. Well, I mean, there are ways to build your credit.

It's not going to be quick. I would start by pulling a copy of your credit report at annualcreditreport.com for each of the three bureaus just to see what's on there. I mean, one of the ways you can do it is to open what's called a secured credit card where you'd put a little bit of money on deposit and they'd issue a credit card against it. They have no risk because they can always take the amount you have on deposit if you don't pay. And then you could put a recurring charge on there every month, something that's budgeted. It could just be, you know, five or $10 a month and then pay it off. And that's going to be reported as an on-time payment every month, which will help you build credit. But again, if you have no credit, that's not going to be a quick fix. Obviously, the more cash you can put together, the easier it will be to get a car because you have to finance less. Apart from that, I would ask around at your church to see if anyone is thinking about selling a car.

You could certainly ask if that person would be willing to accept payments with a written agreement that the title won't be turned over to you until the entire amount is paid. But I'd stay far from used car lots and finance companies that will offer to give you a loan with no credit history because they'll give you a really high interest rate. Let's talk more off the air. We'll be right back.

Stay with us. Thanks for joining us today on MoneyWise Live. I'm Rob West, taking your calls and questions today on anything financial at 800-525-7000.

That's 800-525-7000. We had a caller recently, somebody who didn't want to be on the air, but asked a great question about tithing related to Social Security. She basically wanted to know, should we be tithing off of our Social Security and our retirement?

My husband says, no, I think we should. So they, I guess, want me to step in the middle and provide some counsel. You know, whenever it comes to the tithe, there's not a right or wrong answer. It's not about checking a box.

And I'm not saying, by the way, to our caller that they were implying that it is. But it's ultimately about our hearts, right? God wants our hearts, not our money. He doesn't need our money.

He owns it all. But how should we think about this? And what about Social Security? Well, here's the reality. Although it may be possible to distinguish between the after-tithe amount you contributed to your personal retirement savings and the increase from your yet-to-be-tithed investment gains, it would be much more difficult to do that with the math on Social Security. And besides, unless you've been self-employed during your entire working years, it wasn't just you who contributed to your Social Security. Remember, half of that came from your employer. So here's the reality.

I understand these are legitimate questions asked by good-hearted people. My thoughts on this is we don't try to drill down to try to estimate how much is considered increase versus return of capital. You know, in the farming economy of the biblical times, they didn't subtract the amount of the wheat they planted in computing the tithe. They tithed on the whole amount.

So I think here's the reality. I would just say whatever I receive is a gracious gift from God, no matter what I invested. And then just realize this is an act of worship and trust, and I just give as God provides. But yes, you can make the case with retirement assets and with Social Security that a portion of that essentially has already been tithed on. And so, you know, you could try to go through that exercise and determine a percentage to say, well, I'm going to treat X as a return of capital that's already been tithed on if I was tithing on a gross basis, and Y as, you know, my increase and then tithe accordingly.

But at the end of the day, I think you just need to pray about it, ask the Lord for some direction here, come to an agreement as husband and wife and then move forward from there. So, caller, thank you for posing that question today. It's a good one. All right, to St. Louis we go. And Steve, you're next on the program, sir. Go ahead.

Thank you for taking my call. Mine has to do with my 401k. My wife and I are both retired on a fixed income and we have a local investment company and they charge a little over 1% annually for managing our 401k and investing in it.

And now with the potential instability of the stock market and I see because of inflation probably all these CD rates going up and you had just mentioned to a caller a few, you know, a few calls back about the fairly high just regular savings accounts, would it be better to save the 1% from the investment company, pull that money and put it in to CDs, annuities, savings, you know, high paying savings? Yeah, I don't think so, Steve. What is your age for you and your wife? I'm 66. Okay. And you all have retired or you're about to?

Yeah, we are retired. Okay. And are you living off of the money in the 401k or is that just continuing to grow?

Continuing to grow. We take out a small amount monthly, but pretty much discontinuing the growth. Okay.

Yeah. And so you already did roll this out and you're paying the 1% or you're just still contemplating this? No, they've been managing our account for the last few years and it's over 1%. So I figure that 1% plus, you know, you can get CDs for four and a half and you've mentioned three and a half on the savings, sounds like that. And what do you have combined in investable assets roughly? Just right around a million.

Okay. And how much is it down since you started investing? This past year was the worst. You know, they made money previous years. This past year we took a hit and I'm kind of afraid of this upcoming year. You know, you hear people talk about doom and gloom, but you never know. Sure.

Yeah. Here's my take on it is, you know, you guys, I mean, it's 65 and 66. I mean, if the Lord tarries and you're in good health, your life expectancy is at least another 20 years or so.

It could be 30 years. So you need this money to last a long time. You know, we are in a volatile market right now. We're coming off of a dozen years of a raging bull market. And yeah, we're, you know, this year has been tough. Next year could be tough if we hit a recession. Could we retest the October lows? Absolutely.

The jury's kind of out on that. We won't know, but eventually we'll get through that. I mean, longer term and I mean, you know, longer, really long term, we've got some challenges, I think, you know, just with the national debt and some of the other kind of issues we have going on. But at the bottom line is we're still the strongest economy in the world versus anybody else who's close and we will get through this. The market will recover well ahead of this economy, probably at least six months once we see that we know the full extent of the recession. If it's going to happen, we know that the Fed is done raising rates. There's trillions of dollars on the sideline of this market that will come rushing back in.

And I think we'll make up everything you gave back and perhaps even lost this year on an unrealized basis and we'll move to higher ground. So I wouldn't get out now because you'd lock in those losses and make them realized. And I think the key moving forward is, yes, these rates are attractive. But one of the reasons they're attractive is because the Fed funds rate is so high because we have sky high inflation. So even at three or four percent, you're still losing purchasing power. So I think you're better off having a portfolio managed at one percent where, you know, they've got a mix of stocks and bonds and fixed income instruments and, you know, where you can have some growth. And yes, you're taking the risk that goes with it. And yes, there are periods like we're in right now and could continue into next year where it can be tough. But you're not looking at it as a quarter or a year or even five years. You're looking at it over the next 10 or 20 or 30 years. And I think in order to overcome the effects of inflation and give you all the ability to protect this, but grow it modestly so you can pull a small income from it and have something to give away to ministry or inheritance.

I think that's probably the best option. Now, if you all said, listen, as the stewards, we're just not comfortable taking risk with this. The Lord has given us this. We've got a significant sum of money. We'd rather just know that it's safe and protected and we're happy taking three or four percent a year. Well, you certainly can do that. And, you know, there's nothing wrong with that. Again, if you would be more comfortable knowing that you're just hanging on to what you've got, even if it's declining slightly with purchasing power because inflation is higher than the rate you're getting, then that would be perfectly appropriate.

I would just say, you know, for the average person who's trying to pull a little bit out each year and grow it, I still think this managed approach is the right one if you look at it over the long haul as opposed to a particular period of time that's been unusually volatile. Does that make sense? It absolutely does. I appreciate that input from you and answers my question. Thank you.

Good. And I would also say, Steve, that that one percent as a fee is not out of line at all for a million dollar portfolio. So, you know, that you're paying a very appropriate amount. So I just want you to know that that is very normal and customary. Hey, thanks for calling today. God bless you, sir. To Aurora, Illinois. Hi, Jim.

How can I help you? Hi, I'm receiving a death benefit through my father's estate from Prudential. And they told me I have to roll it over into an inherited IRA and I don't have an inherited IRA. I just have a regular traditional IRA. Is it possible just to do it into the traditional IRA?

It is. Yeah, you can absolutely roll over the inherited assets to another traditional IRA. You're just going to need to work with your CPA. And I would have this conversation before you do it with regard to the tax implications of all of this in terms of who you're inheriting this from and whether or not it creates any complexities by commingling these assets, you know, with regard to how it's pulled out to satisfy the IRA IRS's requirements on distributions of the inherited assets versus the traditional IRA and, you know, how they need to handle that. So that would be the only reason not to combine them. You absolutely can combine them because they're they're both tax deferred. But it really does come down to the distribution requirements and understanding which assets are inherited assets and which ones aren't.

And that's where I think from a just a simplicity standpoint, it can make sense to keep them separate unless your CPA says no, you're fine just to combine them. But I'd have that conversation ahead of time. OK, thank you very much. OK, Jim, thanks for calling today.

Quickly to West Palm Beach. Lucas, you'll be our final caller. Go ahead.

Hey, thank you so much for taking my call. My company does not provide a 401K and I have about four thousand in a Roth IRA and I got about ten thousand dollars to invest. Just some of your wisdom on where to put that ten thousand dollars.

Yeah. So how are you looking at this money? What's the time horizon on it?

I'm currently thirty four. I you know, I know the requirement for the Roth IRA is up to six thousand a year. I can only give up to six thousand a year, but I do have ten thousand. I don't know if I should just contribute to the Roth IRA up to the six thousand or should I just park it somewhere else? Yeah, that's my question. So and this is over and above your emergency fund or anything else you need on a shorter term basis?

Yes, I have. I have an emergency fund, three to six months. I'm covered there. I'm good with that. I just. Yeah. It's an extra ten thousand dollars. Yeah.

Good. So as long as this is long term money, I like the Roth IRA a lot, especially if your company doesn't offer a 401K. So I'd go ahead and fund for twenty twenty two, put the full six thousand in, and then you could turn around in the new year and put in another sixty five hundred because that Roth IRA contribution limits going up in twenty twenty three by five hundred dollars, which would allow you to get that full amount working for you. And it's going to grow for, let's say, the next 30 years on a tax deferred basis, which is great.

So I think in terms of, you know, you thinking about saving for the long term until you have a 401K, the Roth is about the best option that you've got. So I take full advantage of it. Lucas, I appreciate your call today. God bless you, my friend. That's going to do it for us today, folks. So thankful for Dan Anderson, Jim Henry, Gabby T. And we're grateful for our call screening team as well. Moneywise Live is a partnership between Moody Radio and MoneyWise Media. We'll see you tomorrow. Bye bye.