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3 Objectives for Successful Investing

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
October 11, 2023 5:39 pm

3 Objectives for Successful Investing

MoneyWise / Rob West and Steve Moore

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October 11, 2023 5:39 pm

New investing options seem to pop up every day, potentially making things for investors pretty confusing. So, it’s good to know the objectives you should consider when risking your money. On today's Faith & Finance Live, host Rob West will share three objectives for successful investing. Then he'll tackle some financial questions. 

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Well, fall share may be over, but you know, you still have time to partner with Moody Radio in our mission to create Christ-centered programs and share Jesus boldly with the world, if that's what you want. And if you've been impacted by programs like the one that you're listening to, we're guessing you have been. Hey, would you consider giving? You can actually see our impact and learn more at

That's See you there. 20th century humorist Will Rogers once said, I'm not so much interested in the return on my money as I am in the return of my money. Hi, I'm Rob West. It's a funny line, but also something every investor should keep in mind. What are the objectives you should consider when risking your money? I'll give you three of them today, and then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial journey. Well, first off, we should understand the difference between an objective and a goal. You no doubt have some specific goals in mind for your investing, including retirement, education for the kids, or even buying a rental property. A goal is a result you want to achieve in the long run. An objective, on the other hand, is often more detailed and measurable. You might use one or more objectives to reach a goal, and that's certainly the case with investing.

New investing options seem to pop up every day, and it can get pretty confusing. So it's good to know there are only three clear objectives in successful investing. They're safety, income, and growth. Every investing option you choose incorporates a combination of those three objectives, but the more you have of one, the less you'll have of the other two. So for example, if you choose an investment that's 100% safe, or as close to that as possible, you'll get correspondingly less income or growth from that investment. The more growth you get from an investment, the less safe it will be, and so on. All three of these objectives are good, but as an investor, you have to decide the right balance to meet your needs.

So let's look at each one. Safety is first, and it's something investors always want to maximize when possible. In reality, there's no such thing as a completely safe investment, although some things come pretty close. Government-issued bonds are at the very top of the list. Backed by the full faith and credit of the U.S. government, it would take something truly catastrophic for you to lose your money. Almost as safe would be AAA-rated corporate bonds, issued by large, stable companies. They're a great way to preserve your principal while receiving a guaranteed rate of interest. The risks are only a little greater than those of government bonds. Do you see companies like Apple or Amazon going bankrupt anytime soon?

Probably not. There's more safety to be found in what's called the money market. This includes, and each one gets slightly riskier, treasury bills, CDs, commercial paper, or bankers' acceptance slips.

There's something like IOUs from banks. Now, keep in mind that safety is great, but it isn't free. There's something called an opportunity cost. You might be making, say, 5% interest with a CD, but what are you potentially losing by not putting that money into a mutual fund or index fund?

That's the price of safety. You could be giving up much bigger returns. The longer you keep those funds invested in safe securities, the more likely they are to cost you greater earnings elsewhere.

That makes short-term investments like 3- and 6-month CDs the safest of all, but they also yield much less in interest. Okay, our second investing objective is income. Investors interested in income may choose some of the same fixed income securities we just went over, but with an emphasis on a guaranteed stream of income.

To get that, they'll accept a bit more risk. These folks are most often retirees who want a steady monthly income while at the same time keeping up with inflation. They'll choose government and corporate bonds with triple-A ratings, but some may purchase double-A or even triple-B rated bonds, each carrying slightly greater degrees of risk but also generating greater amounts of income. Some income investors willing to take a bit more risk will purchase preferred stock shares or common stocks with a track record of paying good dividends. And that brings us to our third and final investment objective, capital growth.

We might call it delayed gratification. You only get capital growth when you sell the asset. As you might expect, a lot of things fall into our growth category. These include stocks, mutual funds, index funds, and exchange-traded funds, precious metals, and real estate, just to name a handful. These investments are more speculative than those in our safety and income categories, but they also come with the potential for greater gains. And the longer you hold them, the more likely you are to achieve those gains. With greater risk comes the potential for greater reward. Okay, so those are the three objectives of successful investing, safety, income, and growth. Now you just have to decide how much of each you want in your investing choices. All right, your calls are next, 800-525-7000.

Stick around. Well, I'm grateful to have you with us today on Faith and Finance Live here on Moody Radio. My name is Rob West. This is the time when we take your calls and questions on anything financial. The number to call with lines open is 800-525-7000. Again, that's 800-525-7000. The calls will begin to build quickly, so if you have a question, you can call us at 800-525-7000. If you have a question, we'd love for you to get in the queue. 800-525-7000.

We're going to begin today in Baltimore, Maryland. Alan, thanks for your call, sir. Go ahead.

Yes, Rob, glad to speak to you. I've got a question. I don't know for sure, but in my neighborhood, different houses are getting solo. The panel on the roof says there's pros and cons.

I don't know how familiar you are with that. What do you think? They talk about how good the electric bill is not bad, but I would say that's not a good idea.

What is your view on that? Yeah, you know, I could go either way, and it really just depends upon your area and how high your electricity rates are combined with how much sunshine you're going to get, both in the form of your locale, so how many days of sun per year on average does your city get? You know, they're in Baltimore, but also your particular home. How much sun do you get, you know, based on where your home is positioned? And then you've just got to crunch the numbers. You know, solar panel investments can go as high as $40,000, and so you'll need to look at kind of what the benefit will be to you in terms of, you know, how much, what percent of your electricity usage will be generated in kilowatts, and then compare the, you know, benefits of that to the, you know, upfront costs after incentives, and I think that's something else to consider as you're crunching those numbers are the tax benefits that you'll get, any rebates.

So, for instance, right now, this year, it expires next year, but this year there is a federal tax credit of 22%, so you'd want to factor that in. There's something called Google Project Sunroof, so Google, if you just go into your search engine and type in Google solar panel, you'll find Google Project Sunroof, and basically it's a free tool that allows you to put in your address of your home, and it will tell you, based on your actual home, how many hours of usable sunlight you'll get per year, and that's based on a day-to-day analysis of weather patterns, and then it'll look at how many square feet you have available for solar panels based on a 3D model of your home, and then you tell it what your electric bill is, it will tell you how much you can generate in terms of kilowatts that can be used for electricity usage, and then it'll help you determine, you know, whether you're buying, leasing, or getting a loan, you know, how long it'll take for this to pay for itself, and I think that's really the exercise you need to go through, because you may find that there's just not enough cost benefit there for you to go through the hassle of putting it in, and not to mention the cost associated with acquiring these panels. Does that make sense? Yeah, that makes sense, because like I said, my wife and my neighbor's not for it, and you know, I listen, I talk to people, and they're all for it, but where I live, they've got a lot of fun, and I think it's worth it, but my wife's not convinced of it, so that's where I'm at now, so I said, well, to keep peace, I said, well, I won't, you know, entertain it, but yeah, I'll just call, see what you, see what your opinions, I know you deal with all this kind of stuff, I'll give you some input. In my perspective, and I appreciate that, Alan, my perspective is, it's not an automatic yes or an automatic no, it really does require, like so many other things, further analysis, just so you know, you know, how much you're getting into, what could you reasonably expect to generate in terms of electricity that can be used for offsetting your current electric bill, and does it make sense? Will it pay over time?

So I'd do some further analysis, I'd take advantage of Google Project Sunroof and see what you can find as you crunch the numbers with the actual cost of installation and acquiring the panels themselves based on who your neighbors have used, and I think it'll become obvious whether it makes sense or not, but I certainly wouldn't do it without looking into it further. God bless you, sir, thanks for being on the program today. To Grand Rapids, Michigan, hi Kristin, go ahead. Hi, David. Oh, Kristin, we're not, we don't have a clear line, let's try one more time. Can you hear me now? I sure can, yes ma'am, go ahead.

Okay, I was kind of in a valley there. No problem. My husband, and I'm going to pull over just so I know I can hear you well, my husband was the senior pastor for 30 years, and he would have been retiring in 2024, and he suddenly passed unexpectedly in July. He did not have a pension per se, because we are a small church, but they were putting a certain amount of money every month for the last probably six years into a 401KD, I believe that's what it's called. 403B.

403, thank you. And so they have sent me some email communication saying that they would like to give me some money that they would have given him as a gift. I don't know what that dollar amount is, but they said that they really don't know the best way to do that without me being penalized. And I'm not smart when it comes to this stuff at all, so I'm calling you.

Yes, so well first of all I'm so sorry to hear about your husband's passing and I'm so thankful that they want to support you in this way and that's a real blessing, obviously. So what they're talking about here is essentially making a love offering, it sounds like to you, which you would have to report as taxable income on your tax return, and then the 403B could be rolled over to an IRA and managed by an advisor and potentially you could draw some income from that. What are your income sources now? I have a part-time job, I have not went back to my full-time job, but the church is paying me his salary for the rest of the year. Okay, and when that goes away, what will be the shortfall, if any, between your monthly expenses and what you'll be generating with the work that you're doing? Yeah, it would be a couple thousand dollars shy, I would definitely have to use about $150,000 in the money market. Okay, and how much is in the 403B? I'm going to say $100,000, not a whole lot. Alright, and then how much are they wanting to give you just as a cash gift?

They have not given me a number, but one of the elders that I spoke to had made a very light statement about maybe $20,000 to $30,000. Okay, alright. Yeah, that's helpful. I think the thing I want to do is get you set up on a track that is sustainable for the long term. You know, with $250,000, let's say that became your emergency fund plus the other savings that you have.

With $250,000, the $150,000 plus let's say another $100,000 from the 403B, that would generate about $10,000 a year. At the most, I'd only want you to pull $1,000 a month. So it sounds like we are going to be short there. Let's do this. I'm going to have one of our certified Christian financial counselors call you to work through your budget and help you make some of these decisions.

And then if needed, they could get a certified kingdom advisor involved. We're going to pay for that. Stay on the line. We'll talk a bit more off the air. We'll be right back. Thanks for joining us today on Faith and Finance Live. I had a chance to talk to Kristin off the air there for a moment. You know, as we think about managing God's money, oftentimes we can see the path forward.

Other times we can't. You know, here she is in a position where she and her husband were in full-time ministry. You know, we're all in full-time ministry in sorts, but he was a vocational pastor. She's obviously serving alongside him.

He passes away unexpectedly. He's got a 401k. His church wants to bless her with additional giving beyond that. She's got plenty of liquidity, but just needing some help and putting it all together.

And what are the sources of income and how do we manage it? And that can be overwhelming, especially in a time of difficulty and grief. And so just so thankful that we can have somebody come alongside her, help her kind of put those pieces together and figure out that path forward. But at the end of the day, what we know is that God is our provider.

He's trustworthy. He will never abdicate that responsibility to anyone or anywhere, anyone or anything else. But it's often our part that is to step in and provide assistance when we see needs around us. You know, we can be the hands and feet of Jesus being used by the Lord to bless somebody in a time of need. It requires, though, that we're in a position financially of strength to be able to do that, and that we're listening to the Holy Spirit for that prompting and leading when we need to step in. This is clearly one of those situations with Christian's situation. And we're so thankful for a church that understands that and is wanting to support her in this next season of life. And we're grateful that we can play a small part in that here at Faith and Finance Live. Kristen, thank you for your call today. Let's head back to the phones to Madison, Ohio. Denise, go right ahead.

Yeah, I just had a question. My husband retired early. He retired at 59 and a half. And right after he retired, they told us to put everything into a 401K and then keep a couple of years out to live off of. But then the stock market went down and we lost quite a bit of money. So I'm challenged because everybody says, and I know you say to keep it in there, but I just don't know how much to keep losing because I feel at our age 60s now, I don't know if we should put it somewhere safe because I don't know how fast it's going to rebound.

Yeah, well, it's a great question, Denise, and I can certainly understand your concern and why you've called. When you said you put it in the stock market, I think the first question is, what is the right allocation? What is the right portfolio for you, given you and your husband, your season of life, your need for income and your age and risk tolerance? And when we say take the long view and stay invested, that's true. Whenever we're investing, we need to take the long view.

But it also assumes that we've got our assets positioned in a way that's appropriate, just given where we at, stage of life and so forth. So, you know, I think to that end, typically for somebody who's at age 60, we would say you probably need, just as a rule of thumb, and that's all it is, this doesn't replace really thorough planning for each person's unique situation. But as a rule of thumb, at age 60, just based on life expectancies, we'd say, you know, you probably want your assets maybe 50-50, 50 percent, and this is separate from that 6 to 12 months that you want in liquid reserves. But for that that's invested, 50 percent in stocks, 50 percent in bonds. Now, there's a lot more questions that come behind that around, okay, 50 percent in stocks, which stocks, and that's, you know, you'd have to work through that probably with an advisor in terms of are you in large cap or small cap, are you in dividend or growth, you know, are you using faith-based investments that are aligned to your values and screened out for those that are misaligned or using traditional investments. And then the same thing in the bond fixed income category, you know, short-term or long-term durations, corporates or governments, you know, all of those questions. And so there's obviously a process, but at a high level, probably a 50-50 allocation is right, and here's why.

You know, when you reach age 65, your life expectancy is 86, his is 83. So if the Lord tarries and you're in good health, you need this money to last two, three decades or more. And the way we do that, especially in light of inflation, is we invest it with the appropriate allocation, as I said, at age 60, maybe 50-50, or if you want to put 10% in bonds, or not bonds, but precious metals, maybe 45-45-10, that gives you a less risky, less volatile portfolio than somebody who said 100% invested in stocks and allows you to have some potential for growth that offsets inflation and that loss of purchasing power that occurs just because things get more expensive over time, and stocks and stock investments are one of the ways we offset that. So given all of that as a backdrop, tell me, do you know how you're currently positioned? Did you pull that money out of the 401k and put it 100% in stocks, or is there a mix of stocks and bonds? It's all diversified, but we're 60-40, and we're 60 on the stock side of it. I just didn't know if I should pull some out and put it in a CD where it's safe.

Yeah, I probably wouldn't do the CD. I would probably take the long view on this. Who's selecting the actual investments, you or somebody else?

Someone else I was going to change because I had that question. We go through Ameriprise Financial, but it's with a regular investor, and I wanted to do the integrity people you talk about. Would that be a tax implication if it's through the same bank and they just transfer over if I talk to someone over there? No, there wouldn't be because as long as you're keeping it inside that retirement account, so typically a 401k is rolled to an IRA, so they're likely in an IRA. If you moved from one advisor to the next, you'd keep it in the IRA so there's no distribution there.

Therefore, there's no tax consequence. There are some wonderful certified kingdom advisors at Ameriprise, so you could find one and stay right there, or you could transfer it to someone else. We usually recommend the CKA designation as a great starting place, and then you'd want to interview two or three advisors. I think if anything, maybe you're a little heavy in stocks, but somewhere in that 40 to 60%, you're at the upper end of that range is probably where you want to be. If you want to be more conservative as the allocation changes over time, maybe you back that down closer to 50%, but I think the big idea here is taking the long view. The bonds have been under pressure because interest rates have been rising.

That's going to change as interest rates come back down. That was an unusual period you experienced there that really is unprecedented, so I think over time you're going to do well here. You just need wise counsel and stay the course.

You can find a CKA on our website at Denise, thanks for your call. We'll be right back.

Stay with us. Hey, thanks for joining us on Faith in Finance Live. I know, we're going to talk about money, and you're like, money, really?

Every day for an hour? Is it just so we can get more of it? No, it's because the way we work out our money decisions is one of the key ways God shapes our spiritual journey. So we want our hearts in tune with his. We want to maintain an eternal perspective. We want to realize that we've been blessed as stewards or managers of God's resources, and God created money as a gift, a blessing. We're to enjoy it and provide for our families and use it to make memories with our kids and loved ones, and to bless others, to be the hands and feet of Jesus through our giving. You know, our handling of God's money is an incredible opportunity to be a witness for the Lord and to ultimately demonstrate our trust and dependence in him. So each day we gather together to work that out on this program and trusting him as provider of everything. Hey, I've got a couple of lines open today, room for maybe two more questions at 800-525-7000. That's 800-525-7000 you can call right now with any financial question today. Let's talk to Ana in New York. Go right ahead.

So I just had a quick question. So I had about a year and a half ago had bought a 2014 Buick Encore car, and I have been paying about $450 a month on this car. And at the end of paying off this car, it's going to be about $25,000. So currently I am not making enough money to be able to keep up with that payment, and I still owe another $20,000 on it. What do you think, like what can I do or like what are my options to be able to either get into a cheaper car or to pay this car off?

Yeah, no, I certainly understand that. And let me ask you a couple of questions. You said you've got a payment of $450 a month. You still owe $20,000 on it. What do you think it's worth, Ana? So last time I took it to get it appraised, which was back in June, they were telling me between like $12,000 and $13,000. Wow, okay. Now when you say took it to get appraised, did you take it somewhere to sell it like CarMax or something like that? No, I took it back to the dealership that I had previously bought it from.

Okay. Yeah, I mean I'd probably go look at, E-D-M-U-N-D-S,, or Look at the private sale value. So if you were to sell it outright on your own, you'll want to see what the actual value of the car is.

They'll give you that number and you can tell them what make and model and miles and the condition and all the features, that kind of thing, and you'll get a pretty accurate reading. The reality is used cars are selling, they're still elevated, although we're down 6% from last year, we were up 18% the year before. So used cars are still priced pretty high, but it sounds like you are, even if it's worth $15,000 and not $12,000, you're still upside down and you don't have the $5,000 to come out of pocket if you were to sell it for $15,000, and so you're going to have a deficient balance there. You're not going to be able to satisfy the note.

So what do you do? Well, typically a dealer would tell you, well, come in, we'll get you in a lesser car that's less expensive and we'll roll the loan in. That's not going to work in this situation. That's just going to put you deeper in debt. The other option is you can ask for a loan modification where you'd work with the lender to change the terms of your loan because it's in their best interest to help you continue to make this payment so they don't have to sell this car for auction and they're going to get far less than you owe on it.

They know that, and so it's in their best interest to work with you. You could request a deferral where they agree to defer the auto loan payments that are no longer affordable. That would involve skipping a couple of payments.

I'm not excited about that just because that's, again, just going to put you in a bigger hole. You could refinance it, but that's not going to be helpful here just because, again, you're upside down. And then the other option is you sell it privately and somehow you get maybe a personal loan or something like that to the bank and then find another cheaper way. Maybe you're buying a scooter or something that can really take your cost of ownership way down and focus on getting this extra $5,000 or $7,000 paid off. The other option is you just continue to make this a learning opportunity and trim your budget, maybe pick up an extra few hours at work or pick up a second job so you can keep paying the $4.50 a month, and then next time around let's not get into the same hole. Unfortunately, there's not really any great options. It's really just a matter of which is the best of the options you have available to you. Does that make sense?

Yeah. I think at this point, number one, let's understand what is the true private sale value of this car. Edmunds or can help you with that. Can you get a loan to make up for the difference? Could you get a personal loan? I don't want you to borrow money from friends and family, but could you get a personal loan from your bank where you could get out from under this thing, but now you're without transportation. So the best option, even though again it's not great, is for you to probably stay in the car you own, continue to pay on it till you at least get the balance down to what it's worth, and the way to do that is probably to go back to that budget, look for every opportunity to cut back, try to pick up an extra side gig or something at work that's going to get your income up, and just try to hang on to this car and stay current as best you can. I think that's going to be my best advice right now.

I know that's probably not what you want to hear, but there's not a silver bullet here. You can do this. We'll ask the Lord to give you some wisdom as you navigate this, Ana, and we appreciate your call today. To Park Rapids, Minnesota, Evelyn, go right ahead. Hi, can you hear me? I can. Thanks for taking my call.

I just have a question. We sold our home and we were hoping to find a home, just take that money and buy a home, we're downsizing, and we haven't found one, so we have to rent for six months. And we're wondering, is there something we can do with that money that we can, instead of just putting it in a checking account, can we do a money market, or is there some other way to generate a little bit of savings to help it grow a little bit in six months?

Yeah, there is. I think your best option right now is probably just a high-yield savings account. I mean, you could get a little bit more, maybe an extra half to three-quarters of a point in a six-month CD, but that gives you less flexibility because you may find something a little quicker. But with a high-yield savings, you could get four and a half, in some cases you could get as much as five percent on your money.

With FDIC insurance, zero minimum balance, zero monthly fees. How much money are we talking about? What were the proceeds of the home sale? About $350,000 we have.

Okay. Yeah, so the great thing is that over 12 months, you could get $17,500, so in six months, you're talking almost $9,000, which would go a long way to help paying for the expenses, the closing costs, when you turn around and buy. And hopefully at lower mortgage rates a year from now, or at least six months from now. We think that these seven and a half percent mortgage rates will come down probably to about the highest fives by the end of next year. So I would head to, Evelyn, that's, and you'll find the very best banks with the most compelling and highest yields right now. You're going to see banks that are five star rated with FDIC insurance between four and a half and five percent.

I think that's your best option. Stay with us. Much more to come on Faith and Finance Live. So glad to have you with us today on Faith and Finance Live. I'm Rob West. Hey, did you know we have a webpage on the website?

That's right. It's at forward slash finance. So that's forward slash finance. On that page, you're going to see a form that says ask Rob West a financial question.

You can type in your name and your email address, type in your question, hit submit. And that comes right into my producer, Amy Rios. And we tackle those emails, among other times, each Wednesday afternoon. In this final segment of the broadcast, we call it Money Mail. You send us questions. I try to answer them. And Amy is going to help us do that. Amy, good afternoon. Hey Rob, thanks for having me do this again.

I love doing it. We had to skip a couple of weeks. We did. Yeah, we had share and we had all kinds of- I was kind of sick too.

You were sick and yeah, there's always something. Glad to be back at it. That's okay. We're back at it. I know you have a pile of emails. I think we're going to try to get to three of them today.

Yes, sir. We've got this first one from Tammy. And her question is, if you work an extra job, what's the best thing to do with that income after your emergency fund is built up?

But you're not debt-free, so you've still got this debt hanging out there. Yeah, I love this question, Amy, because Tammy, it's all about priorities, right? So we have competing priorities.

We have limited resources. And these are all good things, right? Saving your emergency fund, that's good. Paying off debt, that's good. Saving for the future is good. Giving it wisely, that's good. So how do we prioritize?

You know, we can look to Scripture for some priorities here and some principles that we can pull out. My best advice would be, I appreciate you said you're not debt-free. So if that's debt other than your home, I would say let's focus there once your emergency fund is built up. Let's try to pay off all your consumer debt. Certainly credit cards, average interest rate right now, 20%. If it's a car, let's try to get that paid off. If it's a mortgage, I would say you may want to put maybe one extra payment a year. But I'd probably look to other priorities. Is there a medium-term savings goal like funding a college education for the kids? Or do we want to bump up your retirement savings to 10 to 15% because you've been at a number less than that?

Or finally, do you want to do some giving? I think any of those would be in play. But if we're talking about debt other than a mortgage, I'd absolutely prioritize that. Okay, so if she's got this emergency fund and it's fully funded, should she leave that in place or should she take some of that to pay off the debt?

Yeah, that's a great question. I would say if you have the full six months and you don't see anything on the horizon, I mean, I realize by definition an emergency fund is for things that you can't see. But if you have a good stable job, you don't anticipate anything coming on the horizon, I'd be comfortable with you pulling that all the way down to three months expenses, especially if you have high-interest credit card debt. But I wouldn't go below that.

Okay, thank you, Rob. So next, Don writes, I'm 61 and I work full-time. There is a $35,000 balance in my 401k. My previous employer offered a voluntary limited time opportunity to receive $55,000 as my full retirement payment. Or I can get monthly annuity payments around $340 a month.

What should I do? Yeah, this is a tough one because it really depends in part on when you plan to retire and might need this money. If it's within the next five years, you're probably better off with the annuity payments, that guaranteed stream of income.

If you pull out the $55,000, you of course have to pay taxes on it. What's left wouldn't have enough time to grow into something that you could safely draw $4,000 a year from, which is what those annuity payments would add up to. And if that solves for a gap between your expenses and the other income sources you have, which would give you peace of mind to know that your bills will be covered, then I would say there's real benefit to that. After taxes, the lump sum would only give you around half of that $350 a month. Now, you will still have that balance intact, so that's one of the upsides. But if you're really trying to get that guaranteed monthly check and that's going to help you close the gap on your budget, then I would say that's probably a better option. Okay, that makes perfect sense. Finally, Frank writes, how much net worth do you believe a couple would need at retirement to self-insure and not have to pay for long-term care if that becomes a need?

Yeah, that's a great question. Typically the rule of thumb, and that's all it is, is if you have assets, and this is going to sound like a lot because it is, but if you have assets over $2 million, now these are your total assets, you can afford to take the risk and self-insure because you'd probably be able to comfortably pay for a worst-case scenario of needing long-term care. Typically that runs two to three years max. But given inflation, you probably could increase those figures to be completely safe, probably to $3 million, just because of the rising cost of healthcare. So I would say if your net worth is north of $3 million, you should absolutely consider self-insuring. If not, and that's obviously the majority of people, then if you can fit it into your budget, I do like long-term care insurance. It can be expensive, and it can increase over time.

Those premiums can go up, so just make sure you've got room to allow for that in your budget, because if you have to drop it at some point down the road, obviously it will all be for naught. Perfect. Thank you so much, Rob, and you guys keep those emails coming.

Once again, it's forward slash finance. Thanks, Amy. Grateful for you, and happy to tackle those emails, and absolutely, as Amy said, be sure to send those along. We'd be happy to address them next Wednesday. All right, we're going to round out the program today. We've got a few calls remaining. Let's see what we can tackle here.

800-525-7000 to Florida. Colin, go ahead, sir. Hey, Rob. Thank you for your ministry. Yes, sir.

Thank you. My question is, what information, what data are you looking at that tells you that interest rates on homes are going to drop over the next year? Yeah, so this is, you know, economists, as they look out and project these interest rates, they look at the fed funds rate, and then they look at how that will affect mortgage interest rates, obviously nobody knows for sure where these numbers are going. But the best estimate and this obviously every time the Fed continues to keep rates intact or we have the possibility of raising, you know, what we've seen with this recession is we expected it to come this year.

It looks like it's probably been pushed out to next year. And that's largely driven by just the strength of the consumer because of the balance sheets, the savings they had built up post-Covid and the resilience of the job market, which has been incredibly strong. Both of those things have kind of pushed the looming recession that most economists think we have out into 2024. But the best case thinking is, at least at this point, based on how we're projecting the Fed to proceed into next year, is that we'll begin to see those rates dip down into the high fives by the end of next year. Now, is that guaranteed? Absolutely not. This is just kind of the consensus of economists when you look across the board.

And, you know, what's that worth? Probably not a whole lot other than just it's, you know, some good thinking being brought to bear on the current economic environment that's tenuous at best and certainly continues to be uncertain. Does that make sense? It does. So your confidence is not extremely strong in that. That's just what could happen.

That's exactly right. I mean, that's what kind of the consensus of economists who forecast rates are saying now about where mortgage interest rates are going, just based on the best readings today on where the Fed might be going from here, just based on the economic data as it stands right now. That's, of course, going to continue to change, and then we'll be able to dial into that a little more closely as we get into next year.

So I wouldn't, you know, necessarily make decisions on that. We've been telling people, you know, the key is when you're ready to buy, buy. You know, because as long as you've got a sufficient down payment, as long as you can afford the mortgage, often when we're buying a home, we're not doing it as an investment. Yes, we want it to appreciate, but by definition, we would buy and sell investments when they accomplish their purpose.

And that's not the way we approach our homes because we live there. So if you're needing to buy a house, I would say go ahead and do that, even if you have to refinance a couple of years down the road. But just based on what we know today, we're expecting, you know, to hit a five handle on those mortgage rates by the end of next year. Could that slip into 2025?

Absolutely it could. So that's just, you know, best case thinking at this point. Colin, we appreciate your call today. Thanks for being on the program.

To Orlando, Florida. Hi, Roberto. Go ahead. Hi. Good afternoon, Rob. Thank you for taking my call. I have a quick question. We had some money on the saving account in Wells Fargo Bank, and one of the representatives was trying to offer us the possibility to rolling to switching from the saving into a CD that they will pay like a federal interest rate if we give the certain amount of money for at least a year.

So what did you talk about? Yeah, I mean, you're not going to get a whole lot more. I mean, right now, the best high yield savings we're seeing a five percent, most of them the high yield online banks are at four and a half.

About the best you're going to find right now on a one year CD with FDIC insurance is going to be about five point six. So you're going to get somewhere between a point, a half a point to a point in additional interest over 12 months. How much money are we talking about? Well, they were asking, you know, that to put about 50. Fifty thousand thousand. Yeah. Yeah. I mean, so you're talking an extra five hundred dollars if you lock it up for 12 months, you know, potentially, you know, could be as little as two hundred and fifty dollars.

I mean, that's not insignificant, but we're not talking a ton of money here. So that's where I think you have to decide, do I want to lose access to it for a year and get an extra half a point to a point or do I want to keep it completely liquid in high yield savings? I think the key is don't just automatically assume your local bank is going to give you the best rate.

I'd be heading to to see who's offering the most attractive interest rates right now, whether it's high yield savings or CD. Does that make sense? Yes. Matt, do we have a time for another quick question? We don't. Unfortunately, we're out of time. But Roberto, I'd love to get you back on the program tomorrow. So if you want to stay on the line, our people, our team will try to help you do that. Thanks for your call, sir. Well, that's going to do it for us. Faith and Finance Live is a partnership between Moody Radio and Faith Fi. Thank you to Josie, Dan, Jim and Amy. Couldn't do it without them. Thank you for being here as well. God bless you. Come back and join us tomorrow.
Whisper: medium.en / 2023-10-21 22:07:46 / 2023-10-21 22:25:00 / 17

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