The Backlash Against ESG

You may not know it, but there's a political and ideological war raging inside your investment portfolio. Hi, I'm Rob West. In recent years, a tiny but very vocal minority has sought to bully financial institutions into adopting their views of the culture and politics.

But it seems they've gone too far. I'll talk about that with Jerry Boyer 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. Well, economist Jerry Boyer joins us now from his foxhole in the front lines of the great ESG war. Jerry, great to have you with us. Great to be here. Thanks for joining me in the foxhole. Yeah, I'm happy to be with you, Jerry.

Any place, any time. Jerry, we should probably start with a definition of ESG. How would you explain this to folks? It stands for environmental, social, and governance, and it refers to a philosophy of investment. But what it really means is taking political and cultural factors and using them to override the factors that you usually use to decide what to invest in. When you're investing or especially when a pension plan is investing, they're supposed to invest for the good of the people who are in the pension plan, the retirees, which means they look at the kinds of things that help with returns.

You know, buying when it's at a low valuation, for example, or momentum, et cetera. Instead, what this says is, well, there are a bunch of issues we haven't really been able to win quite in the state legislatures or in the Congress or whatever. So what we're going to do is we're going to use the process of voting with these companies, voting for boards of directors and proposals to get them to adopt our political points of view, which we have not been able to get through politics.

Like, for instance, no fossil fuels would be an example. Or another recent example is there've been a number of resolutions that are intended to punish states which are offering protection to the unborn. So activists are using the process of annual meetings and proposals in order to try to get these companies to boycott or punish these states if they protect the unborn. They couldn't win in the legislature, so they're trying to win in the boardroom.

Wow. And as we know, that's a powerful place to win if they can be effective. But there's been a backlash against this ESG movement. Jerry, why is this so important? Well, it's important because the basic premise, and I've looked at thousands of these proposals in the past two years, I've actually been involved with voting almost 40,000 proposals. So I've seen a lot.

And basically the premise is always the same. It's like, well, this might look like politics, but this is really financially important because it's risk management. Because eventually the politics is going to catch up with the fact that we need to completely divest from fossil fuels, or the politics is going to completely catch up with the fact that we need universal reproductive freedom for women, et cetera, et cetera. So hey, company, you better get on board now because inevitably we're going to win politically. So it's risk management. Well, the problem is that when you have a backlash from state treasurers and auditor generals and state attorney general and from Congress people and even from investors, all of a sudden their inevitable victory is not so inevitable. This goes from being something that looks safe to something that actually is dangerous because it's controversial. And once that happens, the whole premise behind the whole thing collapses.

Yeah, that's helpful. Jerry, talk more about that backlash. What's actually happening? What's actually happening is that state treasurers and auditor general and attorney generals are saying, you can't do business with us. If you are like a bank, for instance, if you're saying we're going to fire customers who use fossil fuels, even if they're profitable, we're not going to let you manage our pension assets if you're putting something other than the good of our pensioners ahead of the good of our pensioners. So that backlash is actually costing these companies business. But the bigger thing is over and over again, every one of these resolutions they push always has a phrase, reputational risk. If you don't fall in line, you'll suffer reputational risk. Okay, but the problem is now the reputational risk is in kowtowing too much to one group. And frankly, the reputational risk is getting involved in politics in the first place. Business is a full time job. You don't need a side job as a political activist, Disney or the Bank of America or any of you, or BlackRock, stick to your day job, stick to what your assigned function is. And what's happening is the backlash is people are angry about it.

It's the broad middle, which doesn't pay any attention until they get really upset and then they don't forget. And so now it is controversial and reputationally dangerous for companies to start intruding into politics. Wow. Well, much more to come on ESG with Jerry Boyer just around the corner.

Don't go anywhere. Thanks for joining us today. I'm Rob West, your host. Joining me, Jerry Boyer, economist and good friend of this program. He joins us frequently with his thoughts on the market. And today we're talking about ESG investing. That's environmental, social and governance investing, which has been on an incredible rise as of late. And yet perhaps starting to see some of the cracks in the foundation of this ideology. And Jerry, you were sharing just before the break that perhaps the promise of ESG investing is beginning to crumble as it's become a political hot button, huh?

Yeah, very much. And what happens when something suddenly rises and then begins to pop? That's a bubble.

And this had bubble characteristics, I think, from the beginning, because it was pushed top down, not bottom up. I've talked to hundreds of financial advice, Christian financial advisors. Are any of your clients asking for this?

And they all say no or very, very few. So it was top down. And what's happened is now there's a backlash to it. People are saying, I thought you were managing my money for my benefit, but you seem to be managing it for your own legacy or for some political purpose.

And what's happened now is some of the ESG entities like as you sow, which is a clearinghouse, they're now lashing back at the backlash saying, well, these anti ESG politicians, you know, are you are not paying attention to the importance of climate change or whatever. Well, here's the problem. They were always able to say, listen, everybody agrees with us. Everybody wants you to do this. Why are you doing this, corporations?

You better fall in line. Well, it's perfectly clear that not everybody wants this. Once it's an argument, then it's an argument. And you can no longer say fall in line with the consensus because there isn't a consensus. And to me, the best argument then is to say to corporations, don't side with one group. Don't side with the other side with your day job, your God ordained function. You know, as a business is the creation of economic value. We've got politicians to do politics. Yes.

So, Jerry, then what's next? Do you feel like this is going to reverse course and begin to fizzle out? Yes. For a couple of reasons. One, there's a lot of regulatory and legal vulnerability. You and I are in the financial industry. We understand that anything that sounds remotely like a promise eventually gets audited and you're held to it.

So that's kind of a problem. The other thing is that the backlash has largely been, say, in media, like someone will go on Tucker's show and talk about it when it starts to actually get into the boardrooms. I've been attending these annual meetings. A few other people attend. Maybe two or three of us are attending.

What happens when there's 50 or 100 of us attending? People who believe that it's a perfectly good thing if Georgia protects the unborn. And the corporations shouldn't be punishing them for that. When that happens, when we get actually engaged rather than outraged at a distance, well then that really reverses this and the bubble really pops then. Jerry, do you think the average investor can actually make a difference as they begin to vote proxies and perhaps call investor relations?

I mean, what's your experience in that? My experience is that one voice that's speaking up at an annual meeting, taking a point of view that has never been taken before is huge. So if you've got 25 people saying, hey Disney, why aren't you fighting the don't say gay bill? And one person or two people stand up and say, wait a minute, first of all, that's not what the bill does.

Have you read it? Second of all, why are you involved with this? Do you understand that you've got more than half the country on the other side? And do you understand what's at stake here?

And by the way, do you understand what your brand is, Disney? So in a room where there's a hundred people, 99 on one side and one on the other, that one person is the most important person in the room. All it takes is one share to attend an annual meeting and ask a question.

So yes, one person, I've been that one person sometimes and it can make a difference. Yeah, fascinating. Jerry, coming back to ESG for a second, talk about ESG versus faith-based investing because a lot of times, or at least in the early days, folks saw those as synonymous. And obviously, as we've seen here, ESG is entirely different. It really is about a politicalization of these social issues versus the ability to actually have your convictions or your faith reflected in your investment decisions. Yeah, I'd say there's some commonality and some differences. Originally, ESG called itself SRI, socially responsible investing, and BRI modeled itself after that.

BRI was biblically responsible investing. So it was imitating that to some degree. And that's not a deal breaker, but it's something you got to be careful when you're imitating the world to make sure that you're imitating the good stuff.

And so there was an attempt to redeem that. But I would say there's a couple of big differences. One is the philosophies are almost the opposite. In many cases, people who are practicing, say, what you would call a void, they're not going to take the position that a company ought to boycott a pro-life state, for example.

They would go in the opposite direction. The other thing is, and I think this one is to our detriment, I think early on the ESG movement and the SRI movement figured out that divestment wasn't the way to have the most influence. Originally, they said, we're not going to invest in somebody who's a baddie. But at some point they realized, oh, wait a minute, if we're invested, we can go to the annual meeting. We can ask questions and we can start to steer things.

And over a 20 or 30 year period, they really did steer things by being engaged and by being patient and sticking with it. I think that that's happening with Christians now, but largely up until recently, the Christian conversation has largely been about which sin stocks do we kick out of the portfolio. And there is now a transition going on, which I welcome, which is, well, hold on a second. When we kick them out, we lose influence. So let's think about who we kick out and who we don't, maybe not be so quick to do so.

And by the way, you can't kick out all the sin because sin is everywhere. So there's still opportunity. And I would argue maybe even an obligation to start to speak to these companies about areas where they are varying from the truth. Yeah. Jerry, what about ESG as it relates to the world stage? Because clearly there's been a revolt, as you've said, here in America around the direction of ESG. That's not necessarily going to be the same thing when we look at other nations. Right.

So there's variation. Like Europe is much more into it than we are. But I can tell you that the parts of the world that are too poor to have the luxury to engage in this kind of political posing, you know, the emerging markets, they might say to a black rock, oh, yeah, sure, we'll, we'll, you know, in 100 years, we'll stop using fossil fuels. But in reality, the China's and the India's of the world, the biggest nations and the South America's they understand. And it's interesting, even Canada, which is otherwise politically not super aligned, but an energy producer, these countries are following their interests.

So there's a backlash against ESG going on in Europe, the Brussels, the EU just voted to say, oh, natural gas. That's green now. We used to say it's not green, and you can't invest in it. But it's green. Why are they saying that?

Because it's about to become winter. And they need natural gas. And they don't want to be completely dependent on Imperial Russia to give it to them.

So in the end, these nations do tend to go towards their inherent interest, rather than in political posing. Yeah, Jerry, just 30 seconds left tie a bow on this. Do you think the war is over with ESG?

No, what did Churchill say? It's not the end. It's not the beginning of the end, but it is the end of the beginning. This is the end of the beginning of the battle.

We are now engaged. A couple of things stay engaged, engaged as Christians don't imitate their anger and animosity, persuade and treat them with respect. But do indeed contend for our beliefs. Well said, Jerry. Great to have you with us.

Always a pleasure. Economist Jerry Boyer. He's the author of the maker versus the takers, what Jesus really said about social justice and economics.

And you can read his weekly insights at Christian Post. Your calls are next 800-525-7000. We'll be right back. Great to have you with us today on MoneyWise Live. I'm Rob West, your host, taking your calls and questions today on anything financial as we turn the corner from ESG investing to deal with whatever's on your mind. The number to call 800-525-7000. We've got some lines open today. The number again, 800-525-7000. Let's head to the phones. We'll begin today in Chicago, Illinois. Esther, you'll be our first caller. Go right ahead. Hello.

Thank you so much for taking my call. I wrote this out so I could be clear about it. We are trying to sell our house but having difficulty. We are considering keeping it and renting it out to supplement our income. My husband's parents bought this house for 18,000 several years ago, of course. If we keep the house and sell it in the near future, will we have to pay capital gains on this property?

My understanding is the selling price minus 18,000 equals the capital gain. Is that accurate? Yeah, I'm sorry. Go right ahead. No, that's fine. You can finish your question.

Or can we rent it out for three years without paying capital gains because we lived in it in the last two to five years? Yeah. So who owns the home today? You mentioned his parents. So I just want to clarify that.

Well, his parents passed away several years ago. So you all inherited it? Yes. Okay. And so the deed is in your name now, correct?

Either your husband or you and your husband together? It will be. It's not yet? No. Okay. But the date of death has been how long ago? 2007. Oh, okay. So it's been a while.

Okay. So the new cost basis is as of the date of death. And then any growth from there would normally be subject to capital gains as a long term capital gains rate. However, if you live there, as you said, two out of the last five years, then you qualify for that exemption of up to $250,000 or half a million for a couple. Which means that if you were to move out of it and rent it out for a period of time, as long as you could still qualify for that two out of the last five years, then you'd be okay. I don't think I'd run it right up to the three year mark in case you have difficulty selling it or something like that.

But I think you've probably got a window here of time where you could rent it out, and then you would end up getting that exemption on this home. Okay. Does that make sense? Yes.

Yes, it does. Okay. Now, I would go ahead and get all of that transferred over so that the deed is correct and it acknowledges you all as the owners.

But that new cost basis is the date of death, and the rule for you to be able to qualify for that exemption is two out of the last five years. So I think it sounds like you guys are in the clear. Okay. Very good. So we could do it up to three years, but do it as soon as possible because it might run over. I think that's right.

I mean, you wouldn't want to get into a situation where you're no longer qualified because just like you're experiencing now, it takes longer than you anticipated to sell. Okay. Very good. Thank you so much. Okay, Esther, thanks for listening and calling today. We appreciate it.

800-525-7000 is the number to call. If you have questions today, we'd love to hear from you. Let's see.

We'll stay in Illinois. Christian, thank you for calling. Go right ahead.

Hello. My question is I've recently acquired an investment property, and it's going to take some money to fix up, and I was wondering—I have about $50,000 in the bank, but I was wondering whether I should use that or whether I should invest that in other things and take out a loan to fix up the property. Yeah.

Very good. So you have an investment property. What do you think the value of that property is?

Right now, I think it's only around $15,000 or $20,000. The value of the property itself? Yes.

It was a foreclosure that I acquired. Okay. But you own the land and the home on top of it?

Yes. Okay. But all of that together, the land and the improvements, even with them needing repairs, you believe are only worth about $15,000? Well, in its current condition, I think it's only worth around $15,000 or $20,000. I paid around $10,500 for it. It's just a three-bedroom, one-bath. Okay.

All right. And you've saved up about $50,000. Talk to me about your plans for this property. Are you trying to fix it up and rent it out? Are you trying to fix it up and sell it?

What are you doing? I'm thinking about renting it out. Okay. And you think it'd take about $50,000 to get it to a place where you could rent it out?

I think it'd take about $20,000 to fix it up. Okay. All right.

And you've saved $50,000. Is that right? Yes. Okay.

Very good. And then what about your personal finances? Are you in good shape, living within your means? You've got money going toward retirement.

You've got an emergency fund, that type of thing? Yes. Okay. Very good.

Yeah. I mean, I like the idea of you paying cash for this. One of the challenges is just being able to – I would prefer if you are taking a note against this that you do it against that property itself. But it sounds like you may be challenged to do that just given the current condition of it anyway. And so I think if you have the ability to take $20,000 out of the $50,000, you've still got your emergency fund personally. You're living within your means. You're saving for the future. I like the idea of you putting the cash into this, especially if you're then in a position after you do those improvements to be able to turn that into an income generator, which would allow you to replenish the money that you've put into it.

And with the interest rates rising, not to mention the condition of this property and that it's not your primary residence, I kind of like you being able to do this and then cash flow it out of your personal finances. So I think that would be my first choice, Christian. Okay. Well, thank you very much. All right. I appreciate it. All the best to you as you get that done. I'm sure there's a lot of work that's going to go into that, but wow, what a great opportunity to own something free and clear that could generate some cash, that could supplement your income. You could use it as an opportunity to give some money away, whatever God has for you.

That's pretty exciting. Hey, we've got some lines open today, 800-525-7000. This is MoneyWise Live, where we apply God's wisdom to your financial decisions. We'll be right back.

Stay with us. Great to have you with us today on MoneyWise. We're thrilled you're here today as we apply God's wisdom to your financial decisions and choices. I'm Rob West, your host. We've got a few lines open. We'd love to hear from you. 800-525-7000. That's 800-525-7000. Let's head right back to the phones. To Chicago we go. Michael, you're next on the program, sir. Go right ahead.

Hi. I purchased a Treasury Direct $10,000 I-Bond August 1st of this year. I'm a little confused what calendar year means. When can I purchase my next one? January 1st? Or do I have to wait 365 days from the first purchase?

Yeah, the calendar year is Jan 1 to December 31. So that's the period by which you can purchase $10,000 worth of the electronic I-Bonds per person. So you'd be able to purchase an additional $10,000 as soon as we get into 2023, January 1st. Great.

And one other question. I heard you mention in the past, I couldn't remember the amount of months for an emergency fund. Yeah, we recommend, and you would see this typically with most financial planners, three to six months worth of expenses. So if you take your total expenses for a month, and then you'd want to have ideally three to six months, and I think where you would err on the side of the three versus the six would come down to just A, your comfort level, and then B, just how secure is your situation? If you're looking at the potential of variable income, for instance, because you are someone who's self-employed or on commission, something like that, you'd probably certainly want to be closer to the six months in that situation. But I think it really comes down to just being able to weather an unexpected storm, a major event you didn't plan on and couldn't have foreseen the loss of an income or an interruption in your income.

Certainly the pandemic caught a lot of people by surprise. An emergency fund is key there. Even a period like this where we just have unusually high inflation and you need to supplement your budget.

But that three to six months worth of expenses, Michael, is the target. Great. Thank you so much. All right. Thanks for your call today. We appreciate it. To Minnesota we go, Julie, you're next on the program. Go ahead.

Hello. I was intrigued by your ESG conversation at the very beginning of the show. I have a question. If we belong to a larger investment group, for instance, a teacher's union or a TRA or like a labor's union that has the large investments they take our money, we don't have much say in how our retirement monies are going. If they invest in ESG, which it seems like they are like Vanguard and some of the larger holders, what do we have? Do we have any say in that or how do we control that?

Is there any control at all? There really isn't with the kind of plan you're describing. I mean, ESG was slower to come to these types of retirement plans in many cases due to the Trump administration putting limits on ESG investing in retirement plans back in 2020. They argued at the time that plan providers should really focus exclusively on investment returns. The Biden administration reversing course on that with a focus from their administration on climate issues and other issues that do fall under the ESG category. And so we're at a place now where it seems like most retirement plans offer ESG. Well, in fact, half of retirement plans on average offer ESG type funds, according to Morningstar. So you will see them in retirement plans. The challenges with the kind of plan you're talking about where it's not self-directed, meaning you're able to pick and choose from the investment choices, you really don't have a say in that.

I think these are slower to be used in that context. But as it becomes more mainstream vis-a-vis what we talked about with Jerry Boyer today, they're being used more frequently. I think the folks lashing out and pushing back against that just because in many cases they're using it to drive a political agenda versus just solving for the best returns is something that has a lot of folks concerned. And it's been a hot button in the news as of late, some op-eds written one by former Vice President Pence.

So we'll have to continue to watch it. But unfortunately, the short answer to your question is you really don't have much control over that other than to express your concern as a participant that you don't want these funds used. That's really good and helpful. How do we find out who's in charge of those investment funds, like say for the union, a trade union, so that we can express our concern about that? Yeah, I would just call the union and ask how you reach out to somebody there. There's a lot of transparency that's required by law with regard to those investments. Each union will be slightly different and a retirement plan.

So I think you just need to contact the plan administrator or the union representative that's over the investments and just continue to ask enough questions to get to the right person so that you can express as a plan participant that you want your values and opinions to be known as someone who's participating in the plan. Okay, great. Thank you so much. You're welcome, Julie. Thanks for calling today. Let's see. South to Florida. Gary, you're next on the program, sir. Go ahead.

Yeah, I just want to know. We have an S Corp. We bought a business quite a while ago, 20 some odd years and we're selling it, but it's hit a loss. The loss of about $16,000. Does that go on my S Corp form for the government as a loss? Or do I even need to care about that?

Yeah, you know, it would. So losses are passed through to shareholders. So with S Corp, S corporations pass through losses and deductions are limited in a given year to the amount of the shareholders actual investment in the corporation. So you can deduct up to a half a million dollars in business losses on your married filing joint tax return. So that would pass through to your own personal Schedule C where you report the income or loss for a business you operated. And I would absolutely, if you don't normally use a tax professional to do your return so that you take full advantage of any losses that you can claim.

Yeah, we do. In fact, that's what I was going to do. But I just want to check with you. Yeah, no, I'm glad you did and happy to take your call. But I think in terms of actually completing the documents, a lot of folks like to go it alone and I'm glad to hear you have a professional that's actually going to be working that out.

But absolutely, you'll be able to deduct those losses and they can walk you through what exactly qualifies for a loss. But thanks for checking in with us, Gary. We appreciate it very much.

Let's see, before we take our next call, we've got to head to a break here in just a moment. Let me take an opportunity to mention that we would be grateful for your support here at MoneyWise Media. We are listener supported as a ministry, which means that we do what we do every day on the air and the MoneyWise app through our volunteer coaches and certified kingdom advisors and all the content that we're bringing to you at MoneyWise.org as a direct result of your support financially of the ministry. So beyond the giving to your local church, we would just ask that you'd prayerfully consider a gift to MoneyWise Media. We're a not-for-profit ministry and you can give quickly and safely online. If you head to our website, MoneyWise.org, just click the Give button. If you consider yourself part of the MoneyWise family, we're thrilled about that. And if you'd prayerfully consider a gift, we'd be grateful.

Again, MoneyWise.org, just click Give. When we come back, some great questions lined up. We'll be in Chicago and Ohio and Tampa, Florida, back to Illinois.

Plus your question, perhaps. We've got a few lines open, 800-525-7000. Stay with us. We'll be right back. Delighted to have you with us today on MoneyWise. We're thrilled you're with us.

800-525-7000 is the number to call. Let's head right back to the phones. Let's see, back to Illinois. Tiffany, you're next on the program.

Go ahead. Hi, my husband and I sold our home at the beginning of August and it had been paid off. Since then, we moved into a rental that we signed a lease on for the next year. At the end of that year, we'd love to look to purchase a home. We're hoping the market in our area will calm down just a little bit by that point. But we're curious, what would be a good way to invest the money that we made from the sale of our home in the meanwhile during this? It won't be quite a year. We're assuming, you're just guessing that it would be more like 10 months. Do you have any advice for that?

Yeah. There really isn't an investment that I would feel comfortable with that makes sense for that time horizon, Tiffany, because you don't want to take any risk with it. You don't want to have the potential that you get to that point where you're ready to buy that next property.

You identify something that's a perfect fit, fits in the budget, and the money is tied up. You certainly don't want to have unrealized losses that you'd have to realize by selling an investment in order to free up the cash. I think at this point, even though it's not terribly exciting, I'd probably use just a high-yield savings account with one of the online banks. You could go to Marcus or Capital One 360 or Ally Bank. You'd get FDIC insurance up to $250,000.

Right now, they're approaching 2% a year, and that's going to continue to head up with these high-yield savings accounts as the Fed increases and raises interest rates. I think that would probably be the best option. How much money are we talking about?

It's right about $110,000. Okay. Yeah. I think that's probably your best option. If you could wait a year, you could put $10,000 each into iBonds.

We've been talking about those. They're paying 9.6%, but you would have to wait 12 months, so $20,000 if you and your husband each put in $10,000 in electronic bonds this year. $20,000 of that would be a liquid for a full 12 months.

I think the high-yield savings would probably be the best option. Okay. Okay. Thank you so much. I appreciate it. All right, Tiffany. Thanks for your call today.

All the best in looking for that next home. To Hiram, Ohio, Bill, you're next on the program, sir. Go ahead. Hey, thank you for taking my call.

Yes, sir. I've been listening to all this hide-and-least rumors about them wanting to get rid of our monetary money system and go to some kind of worldwide whatever. Is that true?

No, no. There's nothing true about that, Bill. The only thing that perhaps you may have been hearing about was that there was an executive order signed by the Biden administration earlier this year to explore what's called a CBDC, a central bank digital currency.

There's not been anything initiated behind that. They're just exploring a Federal Reserve-issued digital currency that could be available alongside or eventually replace the dollar. But that would not be any kind of world currency. U.S. is not going anywhere anytime soon with regard to its world reserve status just because we are the strongest in the world.

There's really no second that's comparable from that standpoint. And that's why the dollar has been really strengthening despite the prospect of recession and in the midst of the inflation because all of the money around the world has been rushing into the U.S. dollar as a currency. So there's nothing that is going to change that and take it away from the U.S. to more of a world currency that's anywhere near on the horizon. Well, I sure appreciate the information. Okay, Bill. We appreciate it. Thanks so much.

Let's see. Chicago, Sharon, how can I help you? Go right ahead.

Yes, hi. Thank you so much for all that you do. It's so nice to listen to you and to try to figure out our lives financially.

Oh, I appreciate that. I had a follow-up question about the interest rates being raised. Since it's inevitable that that is going to raise interest rates again by 75 or even 100 basis points, I had quite a good amount of money that's sitting in a savings account that's not earning any interest. So I wanted to move it to one of the online banks you suggested. But before I do, I'm wondering if that rate is going to increase then accordingly when they do raise the rates and if I should just wait a few more months to do this instead.

No, there's no benefit in waiting, Sharon. As long as you're in a high-yield savings account, that savings account is going to just automatically adjust as rates continue to head up. If you were looking to buy a CD, that would be where you may want to hold off or buy a short-term duration CD because then you're locking yourself in for a period of time and you wouldn't be able to take advantage of the higher rates until that CD matured and you could roll it over into another one. But with the high-yield savings accounts through the online banks, for instance, Marcus, one of the ones that I like a lot, is paying today 1.9% with full FDIC insurance. And as the Fed raises rates, it won't be a direct correlation, but as rates continue to head higher, that annual percentage yield will head higher with it.

It's been doing it all along and it will continue to go. So there's really no reason for you to hold off on moving that money in. That's great. And I will take $10,000 of that first and put it into an I-BOND.

Yeah, very good. Yes, your treasury. May he also open up an I-BOND or is that just one per family?

No, no, one per person per calendar year. It's $10,000 each in electronic bonds. So yeah, treasurydirect.gov, you've got to hold it for a year and the rate 9.62 is only good through November. It'll adjust based on CPI, the consumer price index, so we don't know what it'll be just based on the reading we got yesterday from August. I don't think inflation is going anywhere anytime soon, so those rates will continue to be attractive. Unfortunately, you can only put in $10,000 per person per year, but you could do 10 this year and then January 1, you could do another 10 apiece, each of you.

So that'll be a great option, but I think for the rest of that money that you need secure and liquid, that's where that high-yield savings account can be really helpful. Do you think it makes sense to wait a little longer until the Fed finishes raising rates in terms of the treasury bond? No, in terms of the I-BOND or the savings account? The I-BOND. No, no.

There's really no benefit. In fact, I think the next adjustment on that yield for the I-BOND is down because I think we're going to start to see inflation. It already has. We had a tick-up yesterday, but it's been heading down from the high-water mark in June. So I think it will continue to head down as the Fed raises rates. Their primary objective in raising these rates is to slow the economy, which is going to cause inflation to drop, not immediately back to the 2% target, but it will come down. And as inflation comes down, which is measured by the consumer price index, the yield on that I-BOND will come down as well. So you might as well get in, start taking advantage of it because when it adjusts in November, I don't think it's going to be higher.

I think it's going to be lower. Well, thank you so much for clarifying that. I really appreciate it.

Okay. Happy to do it, Sharon. Thanks for your call.

Let's see, to Birmingham, Alabama, where I went to college. Matt, how can I help you? Hi, good afternoon. Thank you for taking my call.

Sure. My mother-in-law, who will be 80 shortly soon, and her brother built a beach, what we call a beach house. It's actually on the Air Coastal Waterway. They put about a quarter million in it, and now it's probably worth eight to a million. It's bleeding her dry. She's on fixed income, and she really would like to get rid of it, but they don't want to sell it because of capital gains, long-term capital gains. The brother would like to keep it. She wants it for whatever could be gotten out of it for an inheritance for her four kids. So the question is, he has a bunch of Coca-Cola stock that he could give her equivalent to half the price of the house, and then she could quick deed it over to her. If they did that, is it legal, and what are the tax ramifications? Yeah, I'm not sure.

I'm totally following you. I understand they own it jointly. She's got quite a bit of capital gains. If she held it and then passed it on as an inheritance, then they'd have a step-up in basis for the cost basis of the property. But given the situation that it seems like she doesn't have the resources to continue to keep up with it, if he were to quitclaim his portion back over to her, the cost basis doesn't change.

It's just the change in ownership. Her portion of that would be subject to her capital gains exemption if she's lived there two out of the last five years, up to $250,000 in gains for at least her portion on a pro-rata basis for the ownership. But I don't think there's anything that can be accomplished with the stock that you're talking about versus a quick claim deed.

I don't know that that really helps anything. Well, it costs about $25,000 a year, and she can't afford it anymore. So he wants to keep the house, but she wants to walk away from it without selling it, per se.

Yeah. And so he doesn't have the means to buy it from her? No, he does have the stock, but not cash. Right, but he could liquidate the stock and purchase it if he doesn't have enough to buy it outright. He could get a mortgage on it, and then perhaps she could pay him rent, depending upon where she's going to go, if she's going to have expense somewhere else anyway.

But he would have to be able to qualify on his own merits. However, he comes up with the money to buy the property, whatever portion is a down payment versus a mortgage, whether he liquidates stocks or pulls that out of savings. He'd have to have the ability to do that on his own, and then he could allow his mom to live there and perhaps in a sense rent it back to her at a cost that she could afford. Otherwise, I don't see any way around her selling it if she just doesn't have the ability to keep up with it.

Eventually, it's going to be foreclosed on if she can't maintain it. Oh, no. Well, could he get for the stock?

Yeah, I think I'm losing you there on that, just in terms of where the stock comes in and how that helps the situation. So let's do this. Let's take this question offline because I'm out of time today, and maybe I can get a little bit more in the weeds with you and try to understand what you're trying to accomplish there. We appreciate your call, Matt.

You hang on the line. Folks, that's going to do it for us. It's been a joy to be along with you this afternoon to hear your calls and your questions, also your kind remarks about the program. Again, if you'd like to be a supporter of the ministry, just head to our website, MoneyWise.org.

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