Hi, I'm Rob West. That's a lyric from a popular song of the 1940s, but it accurately describes how many investors feel these days about the market.
Should they stay or should they go? I'll talk about that with Cole Pearson today. Then we have some great questions lined up for you. But don't call in today because we're prerecorded. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well, it's a delight to have Cole Pearson with us today.
He's president of Investment Solutions at One Ascent, which is a family of companies in the faith-based investing space and an underwriter of this program. Cole, great to have you with us. Thanks for having me, Rob. Cole, we get asked a lot, should I get out of the stock market?
That's probably because of fear of recession and, of course, all of the volatility we've experienced as of late. So how do you answer that? Well, Rob, the question, should I get out implies you have to answer another question.
When do I get back in? Right. That's right. So in times like these, there's a great quote to remember. Investing is about time in the market, not timing the market. You know, one of the most powerful tools that can help investors combat fear and emotional decision making, which is certainly one of the things that we see in the marketplace today, is to have a philosophy or maybe some guiding principles that are actually determined ahead of time. That helps you make decisions when fear and emotions take over. So for us that want to sit, we use three overarching principles and I'm happy to share those. They're the first to be values based.
We believe that God created us to be thoughtful stewards. And so as we're stewarding what we believe to be his assets, shouldn't we think about aligning those with companies that bless people instead of causing harm? So that's a guiding principle. Number two is globally diversified. You know, diversification predates the stock market. It's often talked about in modern portfolio theory, but Ecclesiastes 11 two actually says, divide your portion among seven or eight for you know not what calamity may come. So one of our principles to remember is to diversify. The third principle that we use that want to send is long term.
We find that, you know, given time, maintaining that long term perspective is key. We believe that investors who can talk with their advisor, talk with other counselors who choose the right allocation and can stay the course ultimately are the ones who find the most success. There was a study that JP Morgan did a few years ago that actually found that the average investor underperforms a moderate portfolio by three percent per year over 20 years. So to put that into some dollar terms, if you started with one hundred thousand dollars over 20 years, you would have missed out on one hundred and twenty five thousand of growth.
So a difference of 78 percent. And that's largely because the average investor makes below average decisions. Right. You've got a 50 50 chance to get out at the right time and also to get in at the right time. So when you take those two fifty fifty decisions, both of which are a coin flip, you've got a twenty five percent chance of success. You're thinking about when to get out or should I get out.
You also need to think about the long term implications of that and when I get back in. Hope that makes sense. It really does. And I think that's really helpful. And I love those overarching principles because if the purpose of money is to accomplish a set of goals, money being a tool, those goals need to be first informed by our values. Right.
And so I love that you start there. But then you add to this the idea of diversification. But that long time horizon and really thinking long term call is essential to really having the staying power in these difficult times. Right. Absolutely. That's right.
Yeah. So we're going to continue to unpack this just around the corner. The question that is on most folks minds is what about a recession? Are we going to have one? And if most economists think we will, what can we do to recession proof our portfolio?
Cole is going to weigh in on that. What about dollar cost averaging? That's a term we throw around a lot. And we want to unpack that as well so we can talk about what it looks like to be systematic in your investing and what are the benefits of that?
And then what about poor performance? And let's circle back to this idea of values based investing as well, where we can really talk about aligning our values with the capital that we're deploying through our 401ks and our investment portfolios every day. We may not realize as believers that we have an opportunity to align our values with our investments.
Well, there's a whole growing industry around that for Christians to do just that. Cole Pearson's our guest today. Cole is president of investment solutions at One Ascent, a family of companies in the faith based investing space.
And they're also an underwriter of this program. Much more to come just around the corner on whether to stay in the market or go. This is Faith and Finance Live, and we'll be right back. Delighted to have you with us today on Faith and Finance Live. Joining me today, Cole Pearson, president of investment solutions at One Ascent, a family of companies in the faith based investing space and an underwriter of this program. We're talking today about staying in the market or getting out.
It's a question that a lot of our listeners have been asking as of late. And just before the break, Cole gave us a really helpful process to think about our investing with three overarching principles, namely being values based, being globally diversified and staying focused on the long term as really the guiding principles so that we don't try to time the market because we know the data says that's a losing proposition. Cole, as we think about investing right now, of course, there's talk of a recession. So first question would be, should investors be concerned about that? And number two, on the heels of that, can anything be done to, in a sense, recession proof your portfolio? Well, recessions are a fact of life. They come and go as part of the rhythm of the capital markets.
And so no portfolio is recession proof, but there are certainly things that you can do to make your portfolio recession friendly, perhaps. And I'd reference back to the principles. Remember Ecclesiastes, diversification is key. So here are some things that you might be thinking through now based on what our team is seeing in the markets. You might ask this of yourself or your advisor if you have one.
One would be, do I have sufficient international exposure? A lot of times as U.S.-based investors, we tend to have what's called home bias. We think about and invest in the things that we know. And so the past decade saw U.S. stocks outperform international by an average of about 6% per year. So that home bias worked well, but things move in cycles, right?
Mean reversion is what's called the law of gravity and investing. So valuation is one of the primary determinants of long-term performance, right? Just like in shopping, what we pay for, the price we buy for today impacts the long-term outcome. So valuation today in international stocks, they're much less expensive than U.S. stocks.
So we need to think about that. Do we have enough exposure there to international stocks? Another would be, am I investing in alternatives or non-traditional assets? That can be things like gold or commodities or hedging strategies, all of which help minimize volatility. You know, one of the biggest risks that we face often as investors is ourselves. And so the fact that we get fearful and make emotional decisions, anything that helps us minimize volatility or smooth out that ride and the experience that we have with our portfolios, those are all things that help us stay invested.
So two things that I would ask again today to think about recession and to make sure you're set up appropriately is, do you have the right international exposure? And are you using alternatives or non-traditional assets to help minimize volatility? Yeah, and that's a key idea, Cole, because often we think about diversity diversification in investing as just stocks and bonds.
And obviously that's important, but we can go beyond that. What types of stocks? You're saying including international, but even going beyond those two asset classes into others is a way to be further diversified, right?
That's right. Those are just tools. Ideally, we like to invest in companies. We like to see those businesses grow and bless people as they grow with their intrinsic business and the way the products and services that they sell. But as investors, we can also use all the tools at our disposal. And so there are other asset classes and things we can do to better protect those portfolios.
Yeah. What are some of the benefits, if we can call them that, of investing in a bear market because of what we refer to often as dollar cost averaging? Well, they provide opportunities, right? They provide entry points for us to put money to work. Again, I mentioned valuation being key.
That's the price at which you buy a stock or a bond or whatever the case may be. So bear markets or recessions, pullbacks in the market, they can provide entry points for investors. So they are a fact of life, right? We can't fear them, but it's important to be prepared in how we respond to them. So being prepared. Number one, we shouldn't invest money that we need for our groceries or next month's expenses. We need to make sure that our investment dollars are set up for the long term.
Mike Tyson said famously one time that everyone has a plan until you get punched in the mouth. And that's what a bear market or recession can feel like. We've certainly experienced that in 2022, but we've got to have a plan so we can use down markets to sell something at a loss. If it benefits our tax situation, we can rebalance our portfolios, take advantage of that misalignment to get back in track with our long term plan. We can evaluate that plan. Is it still the right plan?
Is it still going to get us to our end destination or outcome, whatever goal or outcome that we're looking for? But most importantly, we use the plan to avoid making emotional decisions. So preparation and planning can allow investors to weather the storm and using down markets as a tool, again, to come out on the other side.
Yeah, who wants to buy at the top all the time? So that's a great thought. You know, Cole, fear of performance may be one of the biggest reasons that believers shy away from faith based investing. So how do you convince them that they don't need to worry about that piece of it? Well, I would say that the investors that we serve certainly care about performance.
So it's not that they shouldn't worry about it. Performance matters, right? That's what we're called to do in our jobs is to be excellent.
So we've got to perform well. When I hear questions or concerns about performance and faith based investing, what I really think people are saying is, what will I miss out on if I can't or if I don't buy, fill in the blank, you know, number of stocks, I'm going to miss out on opportunities. And so really just reframing that every investor has to make some decisions about what they will and won't invest in, right, you've got to have a decision making process to make those decisions, even the S&P 500, which is often viewed as a passive, you know, quote unquote, investment option. There's a predetermined, you know, criteria list.
And there's actually a group of people, many don't know this, there's a group of people who meet regularly to decide who's in and who's out. So all investing requires decision making. Faith based investing is no different. It's just an approach for deciding what we will, and what we won't invest in. But it's an approach that as believers, it allows us to be good stewards of the assets that God has entrusted to our care. So at one extent, the way that we kind of combat this, the way we make those decisions, and ultimately, hopefully lead to good performance is three things. First, we eliminate companies from our universe, whose products or practices are causing harm.
So we take those out, those are the ones that we want to avoid, that helps get our metaphorical haystack smaller. But then we evaluate, we're trying to find companies that are meeting our investment objectives, they need to be great investments. And lastly, we elevate those companies who are making the world a better place. So when we can follow this process, we believe this leads to ultimately investing in companies that are two things. First, they're great investments.
Again, performance matters. Without margin, there is no mission, we need to make money, we need to be excellent at that. But we want to be investing in great businesses, through the products, through the services that they offer, are actually making the world a better place. And so thankfully, faith based investing is a maturing, but also a rapidly growing space within our industry and the performance concerns are becoming fewer and fewer. There are several great funds that I could point you to, that have strong even 10 plus year track records. And those firms and those funds are debunking that performance myth. But what I'm even more excited about than that is that it seems like every month, more managers, more funds are coming out.
That way, investors who desire to align their values, their faith and their wealth, they have options. And so One Ascent is one of those, we're very excited to be a part of this movement to perform well, but also to be faithful stewards with what we're doing and the assets that are entrusted to our care, and excited to partner with organizations like Faith and Finance. Well, we are as well. Unfortunately, we're out of time. We'll have you back real soon. How can folks get more information? Yeah, you can find more information on our website.
OneAscent.com would be the great place to start to learn about value based investing and ways that we can potentially serve you. Awesome. Cole, thanks for stopping by, my friend. It was my pleasure, Rob.
Thanks for having me. That's Cole Pearson with One Ascent, an underwriter of this program. Again, the website, OneAscent.com.
That's OneAscent.com. Hey folks, we're going to pause now for a brief break, but let me remind you, we're out of the studio today. Our team is not here, so don't call in, but much more to come just around the corner on Faith and Finance Live. Stick around. You're listening to Faith and Finance Live.
This program is prerecorded, so we're not available to answer your calls, but you can email us your questions at AskRobatFaithFi.com. Here on Faith and Finance, we want to help you cultivate an eternal perspective of money. That's right, our lives are fleeting.
The Bible calls them a vapor, and yet the eternal, well, it lasts forever. And that's where we want to be, have our sights fixed on the things that are to come. And so we're storing up treasures in heaven as we talk about our heart attitude of giving. You know, as we look to the Scriptures, we see in Psalm 49, let me read what the Psalmist observed. The Psalmist writes, Do not be afraid when a man becomes rich, when the glory of his house is increased. For when he dies, he will carry nothing away. His glory will not descend after him.
Though while he lives, he congratulates himself. And though men praise you, when you do well for yourself, he shall go to the generation of his fathers. You know, we're reminded that we need to develop an eternal perspective of earthly things so that we're motivated to handle them in a way that pleases the Lord, not to build up our dependence of self. We know that is, well, that's foolish. We need to put our dependence squarely in the Lord and see money as a tool to accomplish his purposes. We want to help you do that through the practical decisions and choices you are making each day with God's money. Let's begin today in Maryland. Rosie, you'll be our first caller.
Go ahead. Yes, my husband and I were told we no longer have to have our federal and state taxes withhold because once you receive Social Security and your pension, you no longer have to pay taxes. I just wonder, was that true? Well, it just depends upon the total amount of income that you have. The minimum income requirements for filing a return would be, if you're over age 65 as a single person, it would be $14,700. If you're both over 65 and you're married filing jointly, it'd be $28,700. So if you are under those income requirements, then technically you do not have to file a return. If you're over them, though, you certainly would. Okay, we're over that amount, so I guess we need to file.
Yes, ma'am. I think that would be the safe bet. And you may not owe anything, but at least you've filed the return and they can't come back to you and say, well, you did owe something, and now there's penalties and interest on top of it.
So always a good idea to just go ahead and file if you're over that number. Is that helpful to you? Yes, it is. Thank you very much.
All right. You're very welcome, Rosie. Thanks for calling today. Back to the phones to Texas. Hi, Jody. Go right ahead.
Hi, Rob. My husband and I are 60 and we're approaching retirement age. I have a condition that makes me disabled, and so I'm not sure how long I'll be able to enjoy retirement before my options for doing things like traveling are gone.
So that being said, we're not wealthy. And so right now we'll probably retire with maybe $200,000 in the bank, but we have managed to at least pay for everything, so we don't owe anything. And then the other thing that concerns me is that I do like to give and I like to, you know, try to follow God's calling where He leads me with providing for whatever He asks me to provide for. So once we retire, I may not have that ability to do that anymore.
So I'm trying to just kind of figure out how do we know when we can go ahead and say enough is enough and, you know, take the leap to retire. Well, I appreciate that background, and I love that you have a heart for giving. I think that's one of the gifts God gives us, and clearly you get a lot of joy in that, and that's the way we were hardwired.
You know, we were created in the image of the ultimate giver, so I like to say we're most like Him when we're giving. And as you think about this season of life, you know, a lot of times the best starting place is just to say what are our expenses going to be in retirement. Most folks will live on somewhere between 70 and 80 percent of their pre-retirement income just because they're no longer saving for retirement.
The kids maybe are off the payroll. As you said, you're out of debt, so now you don't have a mortgage payment or maybe a car payment. You know, you're not driving as much because you're not commuting to work. I mean, there's a whole host of expenses that will change. Maybe drop your life insurance because that's no longer needed in this season of life. So I think the key would be to start with that retirement budget to say what is it actually going to take to fund our lifestyle in this season, and then let's compare that to the known income sources that we have, starting with Social Security whenever the appropriate time is to begin taking Social Security, and then what income stream you might be able to generate from the retirement assets you've built up. So if we were to take that $200,000, you know, usually as a starting point, we would say, okay, a 4 percent withdrawal rate should be able to be maintained so that we never deplete that balance, at least over the long haul. Well, that's $8,000 a year. So I think as a starting point, it would be to say, okay, what around $600 to $700 a month from your $200,000 plus Social Security and whatever other income sources you have be enough to cover your expenses, I think that would at least be a beginning point.
Talk to me about that piece of it. Well, actually, our plan is, or what my plan was, is to go ahead and put us on our retirement budget in the next couple months. Okay. So that even though we're, my husband's still working, we will be living off of what we would consider to be our retirement budget, just to see what our shortfall is every month if we have one. Yes, ma'am. But I feel pretty comfortable that we'll be able to live within our means because my husband and I, we've learned to live pretty simply and we're happy with that.
Sure. But I guess the part that's harder is it's always the unknown expenses that do come up throughout the rest of your life. And I mean, there's just no way how do you ever know? Yeah, you'd ever have enough. Right. And so answering that question, how much is enough, obviously, is an important exercise, because we want to be able to continue to give generously. We want to be thoughtful about the accumulation that we're doing. But we, as Ron Blue, one of my mentors likes to say, do your giving while you're living so you're knowing where it's going. And we don't want to reserve all of that until death. So if you have the opportunity to say, okay, we believe we have enough. I mean, ultimately, your trust is in the Lord, not in your things. And a lot of times we can get a false sense of security that, well, we've reached a number.
What's your number? And I think ultimately we want to make sure that we're cultivating that dependence on him. So I think as long as you've offset that biggest risk in this season of life, which is long-term care, that could run eight, nine thousand a month or more. If you need nursing home care, take care of that by adding a long-term care insurance policy.
But beyond that, as long as you've got at least six months expenses in savings and you've got your bills covered, I think you're pretty much there. Thanks for your call. We'll talk a bit more off the air, Jody. We'll be right back. Stay with us.
In Illinois, Thomas, thanks for calling. Go ahead. Hey, Rob, how are you doing? I'm doing my question is my wife and I have been very good savers throughout our life and we're really struggling switching from being a saver to a spender. And we're wondering if there's any sort of a resource or percentage that we could utilize for that.
Yeah. So, you know, it'd be great if God's word said we're supposed to live on, you know, sixty two point seven percent of our income. It doesn't. And I think that's by design, Thomas, because it requires us to be on our knees before the Lord saying, Lord, what would you have me to do? What is the right lifestyle? What's the right level of accumulation? Really, you're answering the question, how much is enough?
And that's both for your spending, but also for your long-term savings. So what's the appropriate lifestyle for us as believers? Again, you're asking the Lord that. And I think you're walking down that road, kind of wrestling through that. And that's about a heart posture and ultimately hearing from the Lord and making some decisions about capping, spending and, you know, then creating opportunities to be generous.
And then the same kind of wrestling needs to happen on the accumulation side. Now, because you all are kind of beyond your working years, you have a nest egg. But I think there's an opportunity to say, perhaps we've over accumulated. Maybe we want to do some more giving right now, even some hilarious giving, you know, beyond what we thought we could, because ultimately we're trusting the Lord for our provision.
And we want to accomplish some things that are really on our heart with regard to participating in some of God's activities, either locally at your church or in your community or around the world. And there are some tools that I think could help you explore that. But before I get into that, tell me what it is you and your wife are really wrestling with. Is it the enough question in terms of kind of what is that dollar amount or is there something else that you're sensing that you want to work through? Well, we do give quite a bit each year. We're trying to figure out, you know, like our advisors, like, if you guys keep doing what you're doing, you're going to have a lot of money when you're in your 80s. And so, you know, our question is like, how do we switch over to maybe spending, you know, we give a lot, is spending some, is kind of enjoying the provision, but also giving. So it's, you know, we've, I've heard it's like 3%, because I'm 57, my wife is 54. So we're not at retirement age.
But we're just kind of, you know, at some point, I don't, you know, I guess I don't want to drop dead when I'm 60. And, you know, you haven't had any opportunity to actually enjoy the blessing that God's given us. Yes. And so you're wondering how much is appropriate to spend on yourselves versus give away, and you don't, you don't want to live a lavish lifestyle, but you also want to enjoy what God has provided?
Is that the tension? Yeah, yeah. Yeah, yeah.
Okay. And if you all were to kind of take a step back and just say, let's look at both sides of this equation. Let's talk about some of the things we'd like to do. Maybe we want to travel more, maybe we want to invest in our home, maybe we want to, you know, whatever it is, buy a second, you know, home to enjoy, maybe near family or in a destination setting, or on the giving side.
What are some of those passions that align with the things that are on the heart of God in Scripture? And where do we want to give more? I mean, have you all begun to have conversations on either the spending or the giving side? We haven't really on the spending side, you know, we have set up a DAF account, which is, you know, which we give to and we, you know, we give out of that because it's nice because you put it in the fund, it's like it's not yours, you know, you can't touch that. That's right.
It's for charity. So yeah, I mean, we, I guess we kind of, we're looking for help for both. But, you know, honestly, from my side, it's really kind of like, you know, we want to be able to enjoy some of that now.
And, you know, we're just kind of trying to, we don't know how to do that. Yeah, yeah. Well, is there one of you that's kind of more inclined to hold it a little tighter, be a little bit more modest in your spending, have some maybe guilt or concern just about overspending? Is there one of you that maybe is more inclined in that direction? No.
Did you say no? No, we're both very, yeah, we're both, we're both very, we're both very, you know, we live a very humble, you know, humble existence, I guess. Yeah. We're not big spenders. Sure. Well, I guess here's my approach is I would probably work on the giving side first. And I'd probably answer the question, how much do we want to keep? And then once you've solved that equation, if you will, and that's not a one time thing, that's going to be an ongoing, you know, conversation, something that you'll explore through your prayer life, but also in conversation with one another, then whatever you all land on around what's left in terms of both the spending in terms of lifestyle and on the net worth side, the accumulation side, then you're kind of free to say, okay, what do we want to do with this? And let's just enjoy it and build relationships and, you know, be involved in some of the things that we're really excited about that maybe we haven't done because we've had our heads down kind of accumulating and building and raising our family and all the things that we've been doing. But now it's time to enjoy some of the fruit of our labor. But because you've wrestled with the how much is enough and establish the how much are we going to give away first, now you're kind of free to live within the rest. A couple of tools that what I think I think would be helpful in having you all explore that one is through an organization called Generous Giving. Have you ever heard of that?
I, you know, we listen to your show on Moody, so I think we've heard of that. Well, so generousgiving.org is the website and I would look at what's called the Journey of Generosity. It's a 24 hour experience.
You can either do it live or virtual. And you will in a community with a small group of other people, again, either online or in person, just explore the scriptures and hear some great teaching through a facilitated conversation of, you know, maybe eight to 12 other people just begin to unpack what's on God's heart with regard to generosity. I would submit to you, Thomas, it's the most powerful generosity experience I've ever experienced in my life. And I think it could be really helpful to you to give you a vision for what's possible. The second tool that I think would be helpful is what's called a giving strategy through the National Christian Foundation, ncfgiving.com.
And they could walk you through a process to align your passions and your resources with the themes and scripture and actually create a giving strategy that's very practical and tangible. And I think the combination of what we call the jog event, the Journey of Generosity, and that giving strategy or the giving plan through ncf, I think would really answer these questions such that you all could have a, you know, a real clear focus on what you want to do on the giving side. So then you're freed up to say, Okay, now, with whatever is left, let's have some fun. And what do we want to do? And we want to invest in our home or buy that other home or travel more, I mean, whatever that is. And I think at that point, you would be freed up to do that.
Because you've already answered the how much is enough question with regard to your giving. So let's do this. You stay on the line. I've got to take a quick break, but I want to make sure you're connected with those next steps.
And then we'll take it from there. Well, folks, before we head to this break, let me remind you, if you haven't checked out faithfi.com, that's faithfi.com, I'd love for you to do that. You'll find the best content in biblical finance there for you to grow in your understanding of managing money God's way, you'll find our community and the money management system.
It's all there at faithfi.com. Now, again, a reminder, we're not here today, but more of your questions that we lined up after the break. This is our final segment of a faith and finance live program that we previously recorded.
Thanks so much for being with us today, and we hope you'll stick around and enjoy the rest of the program. Have you ever thought about the fact that your worldview informs your choices? We talk a lot about that in every area of your life. That's certainly true in this area of finance.
Hi, I'm Rob West. This is faith and finance live. You know, your behavior follows your beliefs. And so we need to be rooted in a biblical worldview as we look at the world through the lens of scripture and then apply that to the financial decisions and choices we're making. Well, in this area of finance, what we find is that the why matters more than the how. We need to start with our values in terms of ordering our financial lives, building our spending plans, deciding how much to save and accumulate for the future. That needs to be a conversation with the Lord. That needs to be something that we make a matter of prayer, because money issues are hard issues. You know, when we talk about making course corrections in your financial life on this program, yes, we're talking about the symptomatic everyday decisions of handling money, but at the core of every one of those decisions is really a value. You know, your belief system that's informing the why. But so often we take our cues from the world and we fail to look at what's most important to us as Christians and how can we allow that to inform how we use this tool called money, which is a means to an end to accomplish God's purposes.
Think about that today as you think about how you're handling God's money. All right, now let's head back to the phones. To Kansas. Hey, Carol, thanks for calling. Go ahead. Hi, Rob.
I really enjoy your program and your advice is spot on. We currently own two homes. The first one is the home that we lived in for 30 years. It was our residence and due to disability reasons, we had to buy the second home, which is a one level home.
We are currently renting out the first home and we are wondering if we decide to sell that, if we are going to have to pay capital gains on that. Yeah. Did you live there two out of the last five years, Carol? No. No. Okay.
All right. So yeah, that would be the test that gets applied to determine whether or not you have to pay capital gains or whether you get to enjoy the exemption, which for a married couple would be a half a million dollars in gains before you start paying capital gains on the sale. So if you can't meet that test, then it would be a long term capital gains and the tax rate for most people, because it's based on your income, would be a long term capital gain rate of 15 percent.
This year, if your income is between as a married couple, 89, if it's less than 89,000, it's 0 percent if you're married filing jointly. But if it's 89,000 to 550,000, then it would be 15 percent. And that would be based on the profit.
So that's the selling price minus your basis, which is your purchase price plus any improvements. Is that helpful? Wow.
So even though we lived there for 30 years, we're going to have to pay tax on that. Yeah. So your income is more than 89,000. Is that correct? It is. Okay.
Yeah. And so then you'd have to determine your cost basis on that and then look at what improvements you put in it, things that improve the value of the home that stayed with it. And then you're going to subtract that basis from the selling price and that gain, you'll pay a 15 capital gain tax on that. And the only way around that would be to do what's called the 1031 exchange, where you'd roll that profit, the proceeds of the sale into another similar property.
And then you could kind of kick that can down the road, if you will. But if you're going to pull it out and not reinvest it in another piece of real estate, then the only other way to miss out on that capital gain would be if you want to do any giving, charitable giving, from the sale of this. I would donate a percentage of this property to a donor advised fund prior to the sale so that that portion would be excluded from any capital gains tax.
And then you could give that portion straight to the ministry or charity. Okay. That doesn't seem fair, because if we just sold it in order to buy the new property, we wouldn't have had to pay the capital gains, correct? That's correct. Yeah. As long as you could meet that test of having lived in it for two out of the last five years, then you're right.
You would be able to exclude a half a million dollars in gains from any capital gains tax. Okay. Yeah.
So I'm sorry. I hate to be the bearer of bad news there, but the good news is whenever you have a profit, you know, you're going to get to keep 85 percent of that. But do consider, if you want to do any giving, this option of a donor advised fund. My friends at the National Christian Foundation can help with that ncfgiving.com. Thanks for your call, Carol.
To Texas. Hey, David, thanks for calling, sir. Go ahead. Yeah, I'm calling because I'm trying to, I'm wrestling with the thought of doing like hard money loans. And I know the Bible, you know, I know what the Bible says regarding lending with usury and stuff like that. What are your thoughts on that? Yeah. So you would be doing the lending at high interest rates?
Is that right? Yes, sir. Yeah, I have. I've done real estate investing and I've had to do it on my end. I've had to borrow money that way. I knew the risk and I was willing to take them. And I'm just wondering what your thoughts on that are.
Yeah, I'm not a big fan of it. I can just tell you, I wouldn't do it myself just because I, you know, I know the challenge that creates. I know that the folks who are getting into these, although you're giving them an option, perhaps they wouldn't have to borrow. Otherwise, we know it's not in their best interest to do it. It's just going to perpetuate a cycle that's going to result in them staying, I think, in a really difficult financial position. And in many cases, the data would tell us they're going to default on that. And, you know, you're going to have to foreclose.
But even if they can perform, we're still, you know, at these high interest rates, I think placing a hardship on these folks. So I realize it's a normal course of business. People do it every day. I just would tell somebody who's asking me whether they should do it to stay far away.
And as a believer, I would have trouble making those types of loans myself. Okay. All right.
I appreciate your advice. Absolutely, David. Thanks for your call today, sir. God bless you. Hey, a quick email before we head back to the phones on our final moments of the broadcast today. By the way, if you have an email you'd like to send along to us to be read on the air, a question, send it to askrob at faithfi.com.
That's askrob at faithfi.com. Isaac writes, My friend and I are both 62. She travels more than I do. We went to a free seminar.
Their red flag number one goes up. We went to a free seminar where they sold all kinds of prepaid transportation options for medical emergencies that aren't covered by most health insurance. She bought lifetime coverage.
How would I know if this is something I need to do? Well, Isaac, specialty insurance plans like this tend to be expensive and come with a lot of fine print that may exclude the circumstances you think will be covered. So in my view, and obviously I don't know the specifics of this particular policy that was being offered, you're better off putting that money in your emergency fund, especially if there's no guarantee that you'll ever use it. So take the same amount you would be paying as a premium and just start socking that away. Maybe set up an automatic transfer to your savings account every month specifically for this purpose. And that way you have the control over the money and it's there if you need it for that or for something else.
So perhaps consider that as you think about this. Isaac, thanks for writing to us. To North Carolina. Hey, Alan, thanks for calling, sir. Go ahead.
Yes, sir. The reason why I was calling, I was explaining to the gentleman, I'm 70% disabled from the military. And in addition to that, I'm basically living on a fixed income and I'm 73 years old.
Most of my life I've spent in ministry, so I don't have a whole lot of investments or anything of that nature for retirement. And my father died in 2004 and there is a trust set up and they're all four of my siblings. We all live in different states and we're trying to get through the last part of this and we have to have some help to figure out what to do. And I looked up to try to find a certified kingdom advisor in my state, in this area, and they said there wasn't anyone available. So I'm kind of left in the quagmire here to figure out what to do. Well, a couple of things.
I mean, yeah, I do think you need to get an advisor to step in here, Alan, and give you some wise counsel. The CK doesn't have to be necessarily in your area, especially these days. Many of them will work remotely with clients all across the country. And you can visit individually with a CK or even the family meeting with folks in different states, all connecting together using a web conference. So I would take that approach to find one that's nearest you perhaps, but you could extend that search out as far as you need to to find someone.
There's plenty of them in North Carolina. And get everybody together just to look at all the pieces and parts of this. You may need an estate attorney as well, depending on what the questions are related to the handling of the trust in your dad's estate plus your own financial situation. So I would go back to what you were doing, but just extend that search out and see if you can find one that's a good fit for you, maybe interview two or three, and then just plan on connecting remotely. And I think that will serve you just fine. Head to our website, faithfi.com, and click Find a CKA. And after you visit with that person, if you have further questions on any of it, feel free to give us a call back. God bless you, Alan. Thanks for being with us today.
Well, we're about out of time today. We gather for Faith and Finance Live because we recognize we all have a high calling. We're money managers for the King of Kings, which means we're to be found faithful as we manage God's resources, applying the wisdom of God's word to every area of our lives, and that includes our finances. So thanks for being here today. Thanks for calling and for writing and for your emails. We love to do what we do and serving you to be wise stewards of God's money. I want to say thanks to my team today, Clara, Deb, Amy, and Jim. Couldn't do it without them. Faith and Finance Live is a partnership between FaithFi and Moody Radio. We'll see you next time. God bless you. Bye-bye.
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