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Shareholder Advocacy

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
September 11, 2023 5:15 pm

Shareholder Advocacy

MoneyWise / Rob West and Steve Moore

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September 11, 2023 5:15 pm

Do you sometimes feel you’re spiritually at war with your own investments? How do you take on corporations that engage in ungodly policies and practices? On today's Faith & Finance Live, host Rob West will talk with Chris Meyer about one way to become involved in the companies in your portfolio through shareholder advocacy. Then Rob will answer some questions on various financial topics. 

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Today's Faith and Finance Live is actually not live, so our phone lines are not open. Put on the whole armor of God that you may be able to stand against the schemes of the devil. Ephesians 6, 11.

Hi, I'm Rob West. Do you sometimes feel you're spiritually at war with your own investments? How do you take on corporations that engage in ungodly policies and practices? Well, one way is through something called shareholder advocacy, and we'll talk with Chris Meyer about that today. Then we'll have some great calls lined up, but since we're not live today, please hold your calls until next time. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well, it's always interesting and informative to have Chris Meyer on the program. He's manager of Stewardship, Investing, Advocacy and Research at Praxis Mutual Funds, an underwriter of this program. And Chris, it's great to have you back with us. Thank you, Rob. It's nice to be here. Chris, before we get into the specifics of shareholder advocacy, tell us what brought you to this field and the role faith played in the process.

Sure. The beginning of my journey to shareholder advocacy probably began when I was a teenager. My faith background is Mennonite, and through my faith, I had developed a strong sense of purpose and this purpose became a desire to seek Shalom, which I define as harmonious relationships between God, humans and creation. And I really wanted to make a difference in the world to work towards Shalom. As I grew up, I came to believe that the greatest power for good or for bad seemed to rest in a financial world, and I felt called to make an impact through business or investments, although I wasn't really sure which path I would take. I eventually learned about a career opportunity at Everance Financial, an agency partner of the Mennonite Church and the parent company of Praxis Mutual Funds. The role seemed to fit me well, and it was centered on making a difference through investments, specifically shareholder advocacy. And I found that practice quite intriguing. Plus, it was a faith-based organization that I was already familiar with.

And I guess here I am more than 15 years later. Yeah, that's a helpful backdrop to our conversation today. All right, well, let's dive into shareholder advocacy.

Chris, what exactly is it and how do you all go about doing it there at Praxis? I'll start by mentioning that there are many ways to make an impact through one's investments. A lot of people start with screening or avoidance of certain industries or companies. And that's certainly one way to take a principled stand and say, you know, I don't want to profit from this business activity, which is antithetical to my values.

It's certainly a valid approach. And we do it at Praxis. It also has limited power to change things on the ground. There are additional ways that one can make an impact through their investments that go beyond screening. At Praxis, we use seven different impact strategies to make a difference. And one of them is screening, but another is shareholder advocacy, which is different in that it harnesses the power of ownership to create change. Shareholder advocacy makes use of the rights and privileges of owning stock. It can take many forms, such as writing letters and filing shareholder proposals all the way up to dialogue with company management. And I'd say to us, shareholder advocacy isn't about chastising or embarrassing companies. As investors, we want the companies we're invested in to be profitable on behalf of our clients and shareholders.

We also believe that they can do better to help the world thrive. And I want to mention that we're not alone in this kind of work. Almost all the advocacy we do is in partnership with other investors, most of whom come from the faith community. Well, I love to hear that you're working in partnership with others. And Chris, are you seeing that this shareholder advocacy is really making a difference in the policies and practices of companies you're engaging with?

Certainly. I've been doing this for more than 15 years. And over that time period, I've been a part of a lot of different successes. We're collaboratively able to move things forward at companies and really make a difference. So yes, I've been part of a number of different successes that I'm grateful for. That's exciting. Well, when we come back from this break, we'll continue to talk about shareholder advocacy. What does it look like to prepare for these engagements?

What do they look like and what changes actually taking place? We're talking today with Chris Meyer. He's manager of stewardship, investing advocacy and research at Praxis Mutual Funds and underwriter of this program. This is Faith at Finance Live. And even though we're not here today and can't take your live calls, there's much more ahead on the program.

So please stay tuned. I'm so thankful to have you with us today on Faith and Finance Live. We're talking today about faith-based investing and specifically an aspect of it that is really powerful called shareholder advocacy. It's the opportunity you have as an owner of a stock or a particular company to engage with that company and let them know that, yes, you want them to be profitable, but you also care about their policies and their practices.

And you want them to help the world thrive, not get involved in lots of political activities that don't have anything to do with their primary business. We're talking today about shareholder advocacy and the opportunity you have. My guest today is Chris Meyer. He's the manager of stewardship, investing advocacy and research at Praxis Mutual Funds and underwriter of this program. They're engaged in all kinds of shareholder advocacy. Chris, before the break, you were saying that you work in partnership in your advocacy efforts with many other investors, especially the faith community. So would you talk a bit more about how you work with others and specifically what role does that play in the issues you pursue and even the success you're able to experience?

Yeah, great questions. And I'll start by saying that the reason we work with others is because when we do so, we dramatically increase both the breadth and the depth of what we can accomplish. Companies are also more likely to take us seriously when we join together in coalition and kind of approach them collectively. We partner with many other faith-based institutional investors primarily. They might be pension funds, endowments, church agencies, or they may otherwise manage money on behalf of church members. And they represent many different denominations and each of them have their own unique perspective and priorities. What we do is we collaborate with others where we have common ground and interest and capacity.

So both interested in the same topics and have the ability to be able to do the work. For instance, at Praxis, we join with faith-based investors to engage companies on human rights and child labor issues. Others might prioritize advocacy with, say, pharmaceutical companies on the affordability of critical medications. We don't work on that issue, but we do appreciate their effort. So some investors work on issues that we don't and vice versa. And we lead on some of the engagements we pursue and we're active partners on others while others lead. None of us can do everything. So issue and company prioritization are necessary.

Yeah, that's really helpful. And it sounds like there's a lot of moving pieces here. So maybe take us behind the scenes for a moment. What kind of preparation goes into an engagement like you're describing?

Yeah, it's a lot of preparation. So once we go through prioritizing the issues we want to work on as an organization, as Praxis, and then we collectively do that with others, we have a good idea of the topics and the companies that we plan to engage. So we tend to form teams with our investor partners and determine our leadership structure. And we set goals for what we hope to accomplish. We organize in-person and virtual education and strategy sessions to familiarize ourselves with the relevant information and be able to speak intelligently and, I'd say, with purpose when we engage companies. We often will bring in outside expertise to help us learn more.

I'll give an example. So I'd mentioned that we work on human rights and child labor issues. Two companies that we engage are Target and Walmart. And it's not that Target and Walmart are bad. It's that they have a huge footprint in the retail sector. And they have supply chains that stretch around the world. They have significant impact both with what they do themselves and because their actions influence other retailers.

There's kind of a ripple effect. So it kind of makes sense to prioritize some of those companies. And what we seek with them are robust human rights policies that protect the most vulnerable people, which are then, we want to see, cascaded down throughout the company's supply chains and enforced. So prior to engaging them in dialogue, we're sure to examine their latest publications and reports. And we keep informed about the latest news and trends in the industry. We will also, for instance, hear from human rights experts and NGOs about forced and child labor situations throughout global supply chains. And all this preparation is necessary, I think, to gain an understanding of the issues and to be taken seriously by the company.

Wow, that's powerful. I mean, I can really see what you were talking about in the earlier segment around why you went into this work related to just the real power through the capital markets of change that can be affected in really dealing with these important issues of our time, like slave labor and so many other issues. Now, Chris, if company dialogues are central to real change, talk about what these engagements look like and what makes an effective conversation or dialogue with a company. And in my experience, getting to a point of meaningful dialogue with company management is kind of the pinnacle of shareholder advocacy, as in it's the best way to make an impact when you have that kind of meaningful dialogue. A new engagement with the company often begins with an investor letter outlining our concerns and requesting dialogue. And we might initially deal with investor relations and maybe their corporate counsel, but hopefully we end up communicating with the most important people to the issue at hand. So we try and meet with the decision makers who oversee our area of concern.

And typically that's vice presidents at that level and some of their staff. And usually one way or another, we get to the dialogue stage. Our conversations are typically in person or via video conference, and they usually last one or two hours.

Occasionally they can be longer. And over time we look to establish strong, trusting relationships. Once companies understand that we have a vested interest in their future success and that we're also bringing forward relevant concerns that are pertinent to the company, the conversations can really reach a new level.

Yeah, that's helpful. So what is the end game, Chris? How do you know you've been successful in making meaningful change in support of Kingdom Values in these engagements?

Yeah, I think starting at the beginning, having a sense of goals and ways to measure success are key steps in the advocacy process. And it's important to envision what the end of a dialogue might look like. Corporate engagements can often last many years, but can lose their meaning if they become routine and static with no clear end. We don't want to be disregarded by the company as some kind of nuisance. In that case, they might stall without making any real changes.

And alternatively, sometimes this happens. If the company greatly values our insight and seeks many more conversations and increasing amounts of time, we can become their free consultants, which we also don't want to do. We're investors. So there is a few common scenarios for ending a dialogue at the worst end. A company won't meet with us or clearly dismisses us. In that case, it's not really worth pursuing a dialogue and we might cease investment with the company.

In the best case scenario, all our goals are met or exceeded, and we kind of move to just a monitoring process for a time just to make sure they're following through on their commitments. Well, Chris, that is incredible. I love the work that you're doing, and I'm delighted you got a chance to shed some light on it today. Thanks for stopping by. We appreciate it. Thanks a lot.

Thanks for having me on the show. That was Chris Meyer at Praxis Mutual Funds. You can learn more at praxismutualfunds.com.

That's praxis, P-R-A-X-I-S, mutualfunds.com. All right, we're going to head to a break, so don't go anywhere. Still a lot more to come, even though we're away from the studio today and you shouldn't call in, we have some great questions that you're really going to enjoy as we continue to apply God's wisdom to your financial decisions. We'll be right back.

So thankful to have you with us today on Faith and Finance Live. Hey, our team is away from the studio today, so don't call in, but we lined up some great questions in advance. We'll get to those in just a moment. But first, let's tackle an email. These come in to us all the time at askrobatfaithfi.com.

We'd love for you to send one along if you want your question read on the air. This one comes to us from Wanda. Wanda writes, When I give to some ministries, I receive free gifts. The retail price of those gifts is taken out of my donation. I don't need the gifts and don't want that money reduced from my donation. What should I do?

And Wanda, it's a great question. It's wonderful that you don't want to be compensated in any material way for your giving. Oftentimes, when you make a gift, especially online, you'll be able to either opt in or opt out of that gift. Obviously, if that's made available to you, you can go ahead and choose not to receive the gift, and then you'll get the contribution statement for the full amount. If that's not available or maybe you're giving over the phone, just ask the ministry if they wouldn't mind holding that gift for somebody else. And then you can go ahead and make your gift, not receive anything in exchange, and they'll be able to give you a contribution statement reflecting the full amount.

If that's not possible, that's just an automatic process, well, then you can give as unto the Lord and maybe re-gift that item back to God's kingdom to passing it on to somebody else who can use it. But at the end of the day, I'm grateful for your generous heart, and we certainly want to be active givers, but we want to do that wisely, whether it has to do with a gift we're receiving or just giving in an efficient way, perhaps using something like a donor-advised fund. But thanks for writing to us today, Wanda. We very much appreciate it. All right, let's head to the phones. We're going to begin today in Texas. Carlos, thank you for calling, sir.

Go right ahead. My question is this. I just moved from New York, and I used to work for the school district over there, and I have a pension from there, and I moved to Texas, which I still do in the same type of work for the school. Here is a TRS, they call, and they told me that I cannot collect Social Security and TRS at the same time. Yeah, that's typically true with the teacher's retirement system, and it gets terribly complicated, unfortunately, and so you need to talk to the Social Security Administration so they can look at your particular record and see, given that you've got two different states that you've taught in, it will come down to how many years you paid into the Social Security system. Oftentimes, depending upon the state, you will not pay into Social Security because they'll have an independent pension, and so if you did, you have to get to those 30 years that are really critical of having paid into Social Security.

There's a couple of provisions that come into place. There's one that's called the Windfall Elimination Provision, and this allows your benefits to be reduced. If you've worked less than 30 years, you will have a reduction in your Social Security benefits, and then there's what's called the Government Pension Offset, and that is if you're entitled to Social Security benefits as a survivor or spouse and have a TRS pension where you did not pay into Social Security, it will reduce that survivor's benefit, but the key is whether or not you paid into Social Security, and if you did not, then you would only qualify for the TRS, the teacher's retirement system, and not get any Social Security benefits. So you need to do a little bit of digging and due diligence just to figure out how many years are on your Social Security record currently, and what could you do to get to a place where you have Social Security benefits that you're entitled to. What you may find is that really the teacher's retirement system is the only thing you'll be eligible, depending upon how Social Security has been handled to this point in terms of your working life. So unfortunately, it's very complicated, and you're going to have to get specific information, especially given your situation where you had two different states' retirement systems going on, but the Social Security administration can help you navigate all of that.

Have you reached out to them by chance to schedule a meeting or have a phone call? Not yet, because I don't have the age yet to retire, and I was thinking because I put two or five years in New York, and this is my first year in Texas, and also I was thinking to get the pension early over there because I'm going to be turning 55. I know they're going to give me a penalty, and they're going to give me only the 75, so I was thinking to take advantage of the pension that I have there just to take advantage. I don't know if I should do that.

Yeah, this gets fairly complicated. It's going to come down to, Carlos, what options you have and what you plan to do from here in terms of any additional work. Are you planning to fully retire, or are you just planning to retire from teaching and go get another job elsewhere? I'm planning to fully retire, and the estimate that I have from the job that I have in New York, the pension, is like $3,000. Whatever I build in here, that's a different story.

Yeah, okay. Well, here's what I'm going to recommend because unfortunately I'm not going to be able to give you direction on where to go from here just given all of the moving parts that you have. I would schedule a meeting with the Social Security Administration, either over the phone or in person, just to get them to pull up your current work record and explain to you what options you have based on your work record to this point.

Because what you may find is if you can continue to work and pay into Social Security in the future, you may be able to get to the point where you can at least get a reduced benefit, especially given that the majority of your working life was in another state. Beyond that, I'd probably connect with an advisor. You could find a certified Kingdom advisor there in Texas on our website, faithfi.com. Just click Find a CKA.

And what they can do is look at the various options you have with regard to collecting your teacher's retirement early, compare that to your monthly budget needs, your plans for the future, and help you determine the right timing on that so that you have enough to cover your expenses, but you're not doing it too early and limiting your future earning potential with regard to these retirement options that you have. So I think you need to do a little bit of due diligence first with SSA.gov and then next with a certified Kingdom advisor. Again, our website is faithfi.com. That's faithfi.com.

Just click Find a CKA. Carlos, thanks for your call, sir. All the best to you. We'll be right back on Faith and Finance. Stay with us. Thanks so much for joining us today on Faith and Finance Live. I'm Rob West, your host. Hey, our team is away from the studio today. We're not here, but we've got some great questions that we lined up in advance.

I know you'll enjoy those a little later in our broadcast. Folks, have you checked out recently our website at faithfi.com? If not, I'd encourage you to do that. You'll find our community there where you can post questions and comments, hear from others that are on the stewardship journey as well. You can also access our content and check out the Faithfi app.

It's at faithfi.com. Before we head back to the phones, let's talk about being rich. What does it mean to be rich?

And does that make life easier? Well, it depends on whether you're looking at this question from a worldly perspective or through a biblical worldview, which we talk a lot about here. You know, when we examine this idea of being rich, we first have to say, well, what does the Bible say about it? In Luke 12, 15, Jesus warns against greed. Here's what he says, a man's life does not consist in the abundance of his possessions. Then Jesus goes on to tell a parable about a rich man who builds bigger and bigger barns to store his crops and his possessions. The man is pretty satisfied and says to himself, and this is in verse 19, he says, you have plenty of good things laid up for many years.

Take life easy, eat, drink, and be married. But God says to him, you fool, this very night your life will be demanded from you. Then who will get what you have prepared for yourself? Jesus finishes the story by warning us.

This comes from God's word. He says, this is how it will be with anyone who stores up things for himself, but is not rich toward God. You know, the rich man in the parable has a godless worldview. His desire is just to be rich, to accumulate things so he can take life easy. Obviously that doesn't work out for him. According to Jesus, the godly perspective is better.

Why? Well, because it has eternal value. It takes the focus off human desires and looks to God instead. Jesus says we're to be rich toward God instead of rich toward ourselves. But what does rich toward God look like?

Well, I love what author and pastor John Piper says when he explains it this way. Being rich toward God doesn't mean to enrich God. I think it means to count God as your riches.

If you're looking about for where to be rich, focus on God. He is your great reward. He is your riches. Handle your money.

Listen to this. Handle your money in such a way as to show that God and not money is your treasure. Wanting to be rich is a natural desire, without doubt.

But if we're going to become mature believers in Christ, operating from a biblical worldview, then we need to leave natural desires behind. And as Piper says, we must learn to handle our money in such a way to show that God, not money, is our true treasure. So, what does it look like to be rich toward God? Well, let me offer these suggestions.

By the way, if you have a financial question or comment today, you'd like to get in on the conversation, 800-525-7000 is the number to call. All right, the steps to be rich toward God. Well, these aren't definitive, but just a few ideas. Number one, of course, be generous. We need to give to God's kingdom as he leads us. Find ways to serve others with your time, talents, and your treasure. Being generous is key. Number two, handle your money with integrity. Be honest in all your dealings. Pay your obligations on time. If you have children and grandchildren, teach them biblical financial principles day in and day out.

You should be talking about them regularly. Three, keep your priorities straight. Money is not the goal, Godly character is. Remember, God has always been about our hearts and the way we work out our financial decisions on a daily basis. Well, it's one of the key ways God shapes us spiritually as we trust in him and lean on him for those decisions. Approach it from that perspective and see what God does in your hearts. And then finally, be grateful for your blessings. Our God is a good Father and he's given us so much, including the eternal benefits of salvation in Jesus Christ. You see, when we give up being rich toward ourselves and become rich toward God, well, we receive God's encouragement, his love, wisdom, and understanding. In Colossians 2, Paul prays that God's people may be encouraged in heart and united in love so that they may have the full riches of complete understanding in order that they may know the mystery of God, namely Christ, in whom are hidden all the treasures of wisdom and knowledge. You know, that should be our prayer today, that we would reap the spiritual benefits of being rich toward God.

Now, think about that today. Think about this admonition that we see in Scripture and think about the fact that, you know, oftentimes in the name of the American dream, we can attempt to redeem greed, and that's certainly not an area we want to be caught up in. We want to be rich toward God, valuing God over everything and seeing money not as an end, but a means to an end, a tool to accomplish God's purposes in our lives. And when we do that, well, it changes everything. It changes our perspective. And my experience is that when we get this area of our lives right and put it under the Lordship of Christ, our finances, it has a ripple effect into every other area of our life.

Today, submit to God's ownership and authority in your life, the fact that He is your provider, and see what that does is that changes your heart posture as you think about managing God's money. All right, let's head to Washington. Craig, you're next on the program, sir. Go ahead. Well, Rob, I sure appreciate your show, and you know, we judge things by their fruits, and I really appreciate the spirit of your program, and I have confidence calling you. So thank you for your program. Absolutely, Craig.

So, Rob, just a real quick background here. My wife, we're in our early 50s, and looking at some mortgage, I think it's insurance or protection, I'm not real sure. And quite honestly, we're farther in debt than we wish we were. We owe about $250,000 on our house. It's worth about maybe twice that much. And don't have a lot of saveback, and I've actually had some challenges in the last couple years. It might cut my life shorter.

We believe that it had a miracle, and for sure healing, and we praise God for that. We also want to be real about the rest of our life. And again, we're a single-income family, and our children are out of the house, and I just want to be mindful of my wife as much as I possibly can about if something would happen to me. So I got a letter from our mortgage company. It's our local bank that is offering mortgage protection insurance of the amount of the loan. And just want to know how you feel about that. It's for $225,000 basically, and it's about $25 a month.

I think it can be cheaper if you do it annually, but I left that paper at home. I wasn't expecting to get through, so I'd like your comments on that, Rob. Excellent, Craig. I appreciate that background.

Delighted to hear of your testimony of God's faithfulness and healing in your family. I'm not a fan of mortgage protection insurance. The cons of mortgage protection insurance significantly outweigh the pros. It's expensive, so it's inferior to a term life policy because it's more expensive for the coverage you get, and the death benefit continually decreases in value. So with a term life policy, you're going to set the amount of coverage, often far more than is just needed to pay off your mortgage because at a minimum, you need 10 to 12 times the income you're trying to replace at your death to provide for your loved one. And then we might add on top of that things like paying off the mortgage or other debts, funding a college education, things like that. But you choose how long you want that in effect. The other thing is that the payoff on the policy isn't guaranteed. So if you pay off the mortgage before you die, you have nothing to show for paying your premiums all those years.

So I think for those reasons, I would pass and just get a straight term life policy, Craig, that's going to give you a lot more coverage and a lot less money. I hope that helps you. Thanks so much for your call today. Well, folks, we're going to head to a 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. 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. Money management is often complex and confusing. Mixed messages from the world and seemingly endless choices lead to indecision and frustration. But here's the reality, folks. There's only five things we can do with money. We can live on it.

We can give it away. We can owe it for debt and taxes and grow it for the future. And the good news is that timeless wisdom from God's Word offers principles and practical help so we can make financial decisions with confidence and peace of mind and ultimately pursue God's heart as we seek first the kingdom of God so that we love God and not money.

We don't allow money to compete with God for his rightful place of first position in our lives. We want to help you do that on this program every day, and we're so thankful you've joined us today on Faith and Finance Live. I'm Rob West, your host. Let's head back to the phones now to Michigan. Hi, Tommy. Go right ahead, sir.

Hi. Thank you for taking my call. My question is, I'm invested in 401K and as I talk to the people in 401K, they told me that right now where I got it, they did not manage it. So I'm trying to find out which way should I go? Should I let them manage? Because I have a slice idea.

Well, I'm kind of new at this, so I'm trying to find out which way is the best way to go. Yeah, very good. It's a great question, Tommy. How much do you have in there currently in that 401K? About 30-some right now. About 30,000?

Alright. You know, they're not going to manage it, and an advisor is probably not going to want to take that on just because typically they're going to require you have at least 75,000, maybe even over 100 or more before they'd want to manage it. Inside the 401K, there's what's called a limited investment universe, which just simply means if you were to open a brokerage account and put 30,000 in it at Fidelity or Schwab or one of the others, you could invest basically in any stock bond, mutual fund, exchange traded fund, you name it, you could invest in it. Inside though, a 401K, you've got a menu of choices that's much smaller. And that's good in some ways because it makes it a little more simple in terms of actually picking those investment options. So I would do a couple of things. Number one is you could reach out to the plant administrator and ask for someone from the plant administrator to help you understand the investment options that are there and help you select, they're going to make you do it, but help you select the right investments for you based on your age, your time horizon between now and retirement, your what they call risk tolerance, how much risk you're willing to take to achieve a desired return on the investments, they can help talk you through that.

There is kind of, you know, one more option that's a more, you know, kind of do it yourself, set it and forget it option. And it's called either a lifecycle fund, or a target date fund, and pretty much every 401k will have it. And basically what it is, and you can call and ask them about this is you give them your expected retirement date, let's say that's, you know, 2030.

Okay, we're in 2023. That's seven years down the road that may or may not be yours, but I'm just using this as an example. And you would pick the 2030 target date fund. And what that does is it automatically builds the portfolio based on a seven year time horizon. And every year that goes by as you get closer and closer to retirement, it's going to get more conservative meaning it's going to use more bonds and fixed income type investments and less stocks.

Until you actually get to retirement, you won't be completely out of stocks, because even once you reach retirement, you still need this money to last decades if the Lord tarries and you're in good health. But at least you're going to know that you're not taking an unnecessary, you know, or ineffective amount of risk based on your age and goals. And so that that would be a way to kind of put it in there. And then you wouldn't even really have to think about it from that point forward. Does all that make sense, though?

Yes, yeah, they talk about, they did talk to me about that. Okay, okay. That's probably the easiest way to go for you, given the amount of money you have in there. And what you're looking to do, I think, you know, just using that target date fund is probably the right move for you. You could obviously connect with an advisor and pay them a fee just to look over the investments and help you construct something a little more tailored to what you're looking for.

But the the target date fund is certainly a much simpler option. So hopefully that gives you some ideas as you think about where you go from here. We appreciate you checking with us, sir. God bless you.

To Tennessee. Hi, Vicki. Thanks for calling. Go ahead. Hey, thank you for taking my call. I'm first time caller.

I'll try to give you the scenario quickly so you can give me some direction. I have a house that I sold. I lived in it for 10 years. I moved out of it in 2020.

Didn't rent it. My son lived in it for that period of time. But I sold it and walked away with 300 2000.

I have did my tide of 30. And then I had 50,000 mortgage paid that off. And the rest of the 100,000 I used to do some additions to my house. I have 200,000 100,000 I've got 60 in stocks with my broker 20 and a CD and 10 and an iPod. And then the other 100,000 is laying in my savings account. I have two options.

What would you suggest to do this 100,000? And second, what is the exclusion is a 250,000 you can sell a house for and not pay capital gains? Yeah, very good. Well, thank you for that question.

Vicki and that great summary of your situation. Let's start with the capital gains question. You will not have any capital gains. Are you single or married? Single.

Okay, great. So if your if your gain was less than 250,000, not your selling price, but your gain, so the the selling price minus the original purchase price, minus any improvements to the property. If the gain was more than 250, you'd have capital gains, but if it was less than 250,000, you would not. Did you have more than 250,000 in profit? Well, I picked it up at 52,000 as a repo I have receipts of 160, maybe 1000. And I don't I know about additions, but I don't have it for another 60 70,000. But with receipts for the renovation, I have 130 or 40 50,000.

I can't tell you I'm the car. Sure. And how much did you sell it for?

It's sold for 390. But I walked away with 300 and 2000 after the commission and everything. Okay. Yeah.

So I mean, you would be able to subtract the commissions and expenses, you'd be able to subtract the improvements that improve the value of the property, not maintenance and, you know, things that didn't add value to the property, but things that you can document that added value to the property, you can you can take that off of the selling price, and the original purchase price. So it sounds like when you do that, and you could talk to a CPA about the you know, all of this just to have a definitive answer, but it sounds like once you subtract all those things, you're going to be under 250,000 in profit, wouldn't you agree? Yes. Okay.

Yeah. So that means you're not gonna have any capital gains tax on this. So 100% of the proceeds are available for you to use now, to your question about how to handle the 100,000. Do you have an emergency fund of liquid funds?

You know, currently, separate from this 100,000? No, I don't. But I don't owe anything. The house I'm living in is paid off my car. So but no, I do not have any.

Okay. And what do you think your expenses are per month, roughly? I got 10,000 set aside. Okay, what are your expenses over a month's time, roughly? Well, I have no mortgages, I'd say expenses, maybe $600 a month, maybe I don't know.

Okay. Yeah, I mean, let's say it's double that 1200. I mean, if you had somewhere between six and 12,000 in liquid savings, that would give you upwards of a year's worth of expenses available.

So that means everything beyond that is available to be put to work. Do you have this 100,000? Or let's say we were to take 10,000 out of it for emergency savings. Do you have that earmarked for anything? You're going to purchase another property? Do you need a new car?

Anything that's specific that it's No, I just think eventually I have to put a new air conditioning set. But I have a separate 10,000, not this 100,000. Okay, very good.

So that 100 is all able to be put to work, it sounds like. What are your income sources currently? Just Social Security?

I get 2600 a month in Social Security. Okay. All right. But that's obviously far more than you need based on your limited expenses, right? Is that right?

All right, I think we lost you. So I think what I would do from here, Vicki, given that you've got your emergency fund shored up, given that you're debt free, your expenses are modest, you've got plenty of income coming in with Social Security, and it sounds like you got quite a bit of surplus, I'd connect with an advisor to build a portfolio very conservative, you don't have to take any more risk than is necessary. But I'd connect with an advisor to be able to talk about how to manage this moving forward. And you can find a certified kingdom advisor on our website at faithfi.com. Click Find a CKA.

I'd interview two or three and find the one that's the best fit. Quickly to Texas, Lissette, I've got just about 30 seconds. I understand you have a testimony.

Give us that really quickly. I wanted to tell you that since I've been tithing, I've been faithful and I have a lot of trouble with my husband, unfortunately, too. But since I explained and told him what the blessing starts receiving, he's been faithful for a few years and he has received as much from God as we can. Happy sire. That's incredible.

Well, hey, you stay on the line. I want to talk a little bit more about this, but thank you for finishing this program for us on a really positive note. God is faithful and we should give generously and there's incredible joy and satisfaction and peace of mind that comes with that. I'm so encouraged when we hear those testimonies of God's faithfulness and your application of his principles over a long period of time and for us to hear how that bears fruit in your life. What an encouragement to everyone listening today.

Well, folks, that's going to do it for us. We're so thankful you're along with us today. Faith and Finance Live is a partnership between Moody Radio and FaithFi. I want to say thank you to my team, Amy, Dan and Jim. Thank you for being here as well. Come back to join us next time for another edition of Faith and Finance Live. God bless you.
Whisper: medium.en / 2023-10-07 11:54:15 / 2023-10-07 12:10:34 / 16

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