Impact of International Investing in Today’s Climate

The U.S. has arguably the most stable stock market in the world, but does that mean it's always the best? I am Rob West.

Put another way, are we shortchanging ourselves if we don't consider international investing opportunities? I'll talk about that with Cole Pearson today. 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 decisions. Well, it's a delight to have Cole Pearson with us again today.

He's the President of Investment Solutions at One Ascent, which is a family of companies dedicated to faith-based investing and an underwriter of this program. Cole, great to have you back with us. Thank you, Rob. Great to be here. Well, thank you.

We're delighted to have you. You know, Cole, lots of investors are biased toward U.S. stocks, and there's obviously a lot going on around the world today. So how does One Ascent view international investing? Well, One Ascent views international investing as a critical part of an investment portfolio. It goes back to the philosophy of how we manage money at One Ascent.

We talked about that last time I got to speak with you. And that philosophy for us at One Ascent is three parts, values-based, long-term, and globally diversified. So when you think about global diversification, international investing is very important. It helps us invest in multiple markets so we can mitigate risk, enhance potential return.

We're very serious about that at One Ascent, so we focus our time. We have a specialty in the international space. There's lots of great companies, lots of great businesses that exist outside of the U.S., and so it's very important. Something that people may not realize is that international markets have actually outperformed U.S. markets in three out of the last five decades. Twenty-six in the last 50 years, international markets have outperformed the U.S. So recently it's been biased towards U.S., but international is very important in a long-term approach.

Well, that makes sense. A key part of a well-diversified portfolio. Now, Cole, you mentioned that values-based investing is at the core of what One Ascent does, helping people invest in alignment with what they value most.

Is this possible when investing abroad? We absolutely think that it is, right? And part of that's because we believe God's a big God. He made every single person, every square inch with dignity, not just us here in the U.S. We contend to forget that. I'm certainly guilty of that, but dignity is worth investing in, both here at home as well as abroad.

No different than missions, right? The way we think about missions and ministries that we support, we support those across the street, across town, and across the globe. So when it comes to investing, there's lots of exciting companies around the world, innovation, brilliant minds that aren't here in the States.

A few facts for you. Harvard Business Review did a study a few years ago. Of the top 20 CEOs, 11 of them were at companies outside the U.S. Very diversified markets and different things. So there's a lot of really brilliant people that we believe the Lord has made, and they're applying those gifts and skills in their markets. Our team at One Ascent has decades of experience in international markets. So we're really passionate about investing in those companies that are bringing blessing to society all around the world, not just here at home in the U.S. Yeah, that's really helpful. Now, obviously the wars in the Middle East and Ukraine are concerning resources like oil and microchip production are precious, and we're about to enter an election year. So how can Christians invest wisely amidst all this uncertainty, Cole?

That's a great question, Rob. Much of investing today, especially international investing, is index funds and passive funds. A core tenet of value-based investing is knowing what you own, right?

Understanding that. So when you take a passive approach or an index approach, you're just buying everything. So at One Ascent, the way we help Christians invest wisely in international markets is our three-step process. Eliminating those companies or perhaps those countries where products and practices are causing harm, things we don't align with. Evaluating to make sure they meet our investment objectives. And finally, elevating those companies that are making the world a better place. So with those passive funds, one of the largest index funds has about 2,000 companies in them. There may be companies that are publicly traded now, remind you, aligning with ISIS, for example, forced labor deals in China, complicit in state-owned enterprise, stealing of intellectual property here in the U.S. So knowing what you own is very important, and that's what we do at One Ascent.

We want to help you do that well and with wisdom, but also with excellence. And how can folks get more information and even maybe evaluate the investments they currently hold? You can learn more about value-based investing at oneascent.com. We have a tool called Click on Analyze My Investments. If you click there, it'll take you through a form, and we'd love to help you learn what's inside of your portfolios.

That sounds great. Cole, thanks for stopping by, my friend. Thanks so much for having us. That's Cole Pearson with One Ascent, an underwriter of this program. You can go to their website, oneascent.com.

Just click on Analyze My Investments. Your calls are next. The number, 800-525-7000.

That's 800-525-7000. I'm Rob West, and we'll be right back. The opinions offered during this program represent the personal or professional opinions of the participants given for informational purposes only.

Any information provided is not intended to replace advice from a financial, medical, legal, or other professional who understands your specific situation. Great to have you with us today on Faith and Finance Live. I'm Rob West. All right, it's time to take your calls and questions today on anything financial. We'd love to hear from you. The number to call is 800-525-7000.

That's 800-525-7000. Call with your financial questions today, whether it's your lifestyle in light of high inflation, maybe it's your giving. Maybe you want to give wisely here at the end of the year as we approach December tomorrow. Perhaps it's paying down debt.

You want a fresh start in the new year, wondering how to go about that, or maybe it's your long-term investments, especially in light of this volatile economy and market, although we've had some strength as of late, and that certainly continues today. Interesting to see what's going on in the markets today. The Dow Jones up nearly one and a half percent, 520 points. That's a new high for 2023, which is capping an 8% rally just this month, the month of November.

So why the strength in the market? Well, Jerry Bullier will be along tomorrow to give us his update and analysis on what's driving these markets and how we might think about where they're headed as we move into a new year. But in the meantime, taking your calls and questions today, the number 800-525-7000. You can call right now. Let's dive in. We're going to begin in Pennsylvania today. Hi Debbie, go right ahead.

Hello. Thanks for taking my call. I have a small PIP, personal investment plan, with my company and I'm retiring at the end of the year and it's not going to give me very much in my monthly payments. I was wondering if there's something else I can do with it because I do have the option of taking it out as a lump sum.

Yeah, yeah, got it. And this is obviously a qualified retirement plan. You're contributing to this pre-tax, is that right? Yes, I contribute a small portion to pre-tax and they supposedly put in 9% but it's not matching.

They don't have a matching program. All right, but they're automatically contributing 9% above whatever you put in? Yes. All right, and then how is it invested?

Who selects those investments inside the PIP plan? It's a Westpath, it's a company. Okay, all right.

And how is it performed, do you know? I have what they project here in front of me, I don't really understand all of it. Okay, very good. It says net rate of return, it says 1.4% which doesn't, I don't know what that means. Yeah, well, potentially it's after fees, that's your return 1.4% which isn't great, although the market's been down so the big question would just be over what time period that is. How much do you have in there today, roughly? It's $94,000. Okay, and how far away is retirement, did you say?

The end of December this year. Yeah, okay, so you're just a month away and have you put together a retirement budget? Debbie, do you know what you're planning for your monthly expenses to look like as you transition? Well, yeah, everything's paid off like our house, and I thought if I could come up with $1,400 total with my Social Security, that would be good, that's my budget.

But okay, this is going to be $100 short with what they're projecting. Yeah, all right. So you said you need $1,400 a month total, and that includes Social Security, is that right?

Yes. Okay, and what are you expecting to get per month from Social Security? With what we've taken out, it's just around $1,000.

Okay, all right. Well, you're going to be close. I mean, you know, with a $94,000 account, we would typically say, okay, as a starting point, and that's all it is, this doesn't replace you doing some, you know, real retirement planning with an advisor who could really look at all aspects of your financial life. But just as a rule of thumb, if we were to pull 4% a year from that $94,000, you know, that'd be around $310 a month or $3,700 a year. So that plus your Social Security, you know, leaves you about a, you know, maybe $100 a month short, $150, something like that. Now, if you pulled 5%, you'd obviously be there, because that would give you basically $400 a month that you could add to your Social Security. So I think the key right now is, as you separate from employment, probably rolling this out to an IRA, an Individual Retirement Account, and then hiring an advisor to manage this for you. The good news is, although we're expecting more modest returns in stocks over the next decade compared to the last couple of decades, just because, you know, we've been in a very low interest rate environment, and because inflation globally will probably prove stickier than we would like in terms of trying to get down close to our 2% target where inflation's been, we're probably entering a period with slower growth and earnings for companies because we'll probably have higher interest rates longer term, not where they are now, but certainly higher than where they have been. That coupled with some of the demographics and population shortages in terms of populations declining and therefore workers, you know, we're probably entering a slower growth environment.

But, you know, we are probably entering a very favorable environment for bonds. And so the idea that you would transition to more of a balanced portfolio where you might have as much as half in bonds and half in stocks, and then you try to limit your withdrawals to no more than 5% a year ideally, then the goal would be for you to be able to maintain that roughly $9,400,000 balance and be able to pull out that roughly $400,000 a month or $4,800,000 a year. That plus Social Security, if you really kind of dial into your budget and look for ways to trim and cut back and just are really thoughtful about what you're spending, you know, sounds like that could work.

It doesn't give you a whole lot of margin, though. So that would be, I guess, the only issue. Do you have any emergency savings set aside beyond this, Pip?

Just the bare minimum, about $3,000. Yeah. All right.

Yeah. And, yeah, so I mean, that's just going to require that you're really careful there. The other option is, you know, you look at perhaps some, you know, part time work, maybe for a season. So you're pulling less from your retirement accounts, you know, that could hopefully make up what you were planning to pull from the $94,000. Let that continue to grow and delay, you know, your having to withdraw from it. Obviously, if you could delay Social Security, that would help, too, because that check would grow. But given that, you know, you're just 30 days away, it sounds like, you know, your plans are already in place to retire. And so if the Social Security is really the core part of your income, then obviously, you don't have that flexibility. So I think anything you can do to delay or slow the withdrawals from the personal investment plan would obviously be helpful because it just gives it a chance to grow and, you know, take some of the pressure off of you having to pull that out.

Just given, you know, you're right up to the edge in terms of your monthly spending and you don't, you know, have much in the way of reserves. Does that make sense? That makes sense, yes. And this is not government backed, but they say they are very stable.

I don't know. Well, yeah, no, you're going to be rolling this out probably to an IRA anyway. And then, you know, it has protection through SIPC toward theft or fraud. Now, as soon as you invest it, you've got market risk in terms of these investments losing value unless you put it in a guaranteed product like a CD or maybe you put it into an annuity with a guaranteed return and then you're relying on the strength of the insurance company and then they would guarantee a monthly payout every month.

And if that's what you're looking for, I'd get with an advisor and explore an annuity option. Debbie, all the best to you in this next season. Thanks for your call.

We'll be right back. Well thanks for joining us today on Faith and Finance Live. I'm Rob West and we're taking your calls and questions today.

In fact, we've got some lines open. So whatever you're thinking about today financially, we'd love to hear from you at 800-525-7000. Again, that's 800-525-7000.

You can call right now. You know, as we end, as we near the end, I should say, of 2023, let me invite you to consider supporting the work here at Faith and Finance. We need your help in order to continue to equip God's people to be good and faithful stewards of his resources. We have a year-end goal of $250,000 from listener support.

We're well on our way here in this last couple of months of the year. Already $70,000 in the door, but still a ways to go. You know, our vision is that we would see all Christians really understand that God is their ultimate treasure, which changes everything about how we handle money. Because we understand that it starts with our faith and then money is an expression of that or a tool to accomplish God's purposes. Well, it changes everything and it allows us to be that wise and faithful steward. And if you'd like to help us equip more stewards on this journey, we'd invite you to do that at faithfi.com.

Just click on give at the top of the page. You'll see our new impact report, which gives you some analysis of what God has allowed us to do this year and where we're headed next year. Because at the end of the day, it's about seeing changed lives, people equipped on this journey and released to be all that God has for them, especially in this area of generosity. Listen to one of our listeners who was impacted by this message. I just wanted to say, other than Mr. Burkett, you are the only one that I've ever listened to on the radio that told the truth about giving, especially dealing with tithes. We try to teach people you don't pay your tithes.

You pay a power bill, you pay a water bill, a house payment, and you don't like doing that. But when you do like y'all say and learn what the true meaning of giving is all about, it changes your life. And I listen to you religiously daily because I know I'm going to get the truth and I'm going to get the true meaning. And I just want you to know, I really appreciate you being the man of God you are and teaching people the true meaning of giving. And I would challenge anybody out there, take three months and learn what the meaning of giving is and see if it don't change your life. Instead of paying your tithes at church, start giving, just give it and learn what the true meaning of giving is that y'all teach.

Wow. You know, it's not about what I share on a daily basis. It's about directing you back to the scriptures to understand the heart of God as it relates to your high calling. And I believe that it is your high calling as a steward or a money manager of the King of Kings resources. I'm grateful for that testimony and so many more that have been impacted by this message. So if you count on this program, maybe you've found some value in it, you've been able to apply something practically to your financial life and you'd like to help us reach our year end goal here at Faithfi, we would again direct you to our website to give a gift of any amount. And we mean that twenty five, fifty dollars, five hundred, five thousand, whatever it is, monthly or one time, you can make a gift at faithfi.com. Just click give. That's faithfi.com.

Just click give. And thanks in advance. All right, let's take your phone calls today.

The lines are nearly full. So we're going to dive into Canton, Ohio. Hi, Mike. Go ahead, sir.

How are you doing? Great. Thanks. Thank you for taking my call.

Sure. So here's my situation. I've never been good with money my whole life. I've had decent jobs and just I've been going through it just just frivolously. And a couple years ago, God touched my life and started to work with me with money.

And since then, I've actually I'm sixty five years old now and I've actually started to save money. And two years ago, I started to tie listening to the principles that you've been preaching and others in my life from a religious standpoint. And God has worked on my life to say that everything that I have really belongs to him. And, you know, what I give is what he puts on my heart to give. And I tied as a discipline. And I've actually been I've actually turned my life around.

My question to you is this. I don't know what else I can do. I make eighty thousand a year at my job. I've been able to in the last couple of years get about eighty thousand put in my 401k. My company matches five percent of it. And I put my max in for the last couple of years.

And it's grown a little bit. I have probably about fifteen thousand dollars worth of credit card debt, about fifteen thousand dollars worth in loan debt. I rent right now, so I don't have a mortgage.

I rent and I have about five thousand dollars in savings. And I was wondering if you could give me some advice as to what I could do over the next two, three years. I think as long as the Lord continues to bless my health, I have the type of job that I work out of my home.

And it's more of a consulting type job. So I'm able to continue to make the money I made. And I'm on pace right now that if I work for the next couple of years, you know, should Social Security be around?

It's telling me that I should have about forty two hundred dollars a month in Social Security. Hmm. OK. Yeah, Mike.

Well, I appreciate that background. And first of all, let me just affirm this idea that, you know, the most important decision you've made is to surrender your life to Jesus and really to pursue him and recognize that he is our abundance first and foremost. He's not the access to our abundance. He is our abundance. And when we see him as our ultimate treasure and then realize our role, then, is faithfulness, faithfulness to opportunity, which is as a steward of God's word and our relationships and our time and the calling and the skills that he's given to us and, yes, the financial resources. And so we immerse ourselves in God's word to try to, you know, conform our minds to the image of Christ and really pursue righteousness. And we get involved in a church family.

And, you know, those are the things that I hear you describing. And obviously that transforms our lives. And I love the fact that you've even had a tangible demonstration of that through the act of giving, which is really should be an act of worship. It's something that we should do.

And it has a way of loosening the grip of money over our lives. So I think the key for you right now is really to stay on this track, to continue to work as long as you can. Let that Social Security build up to age 70.

It'll grow eight percent a year. That'll maximize that check. And let's focus on getting you out of debt right now. I want to do two things.

I want you to connect with our friends at Christian credit counselors dot org to get the interest rates down. And I want to connect you with a coach. So stay on the line. Thanks for joining us today on Faith and Finance Live here on Moody Radio. I'm Rob West. We're taking your calls and questions today. Let's head right back to the phones to Newcastle, PA. Lynn, go right ahead.

Hi. I wanted to get your opinion on whole life insurance. We're really good on kind of checking off the boxes of all our savings and even estate planning. And is there any place for whole life? Yeah.

Yeah. I mean, there is a place. I mean, generally, when you you know, let's say you're behind on retirement savings and you're looking for a way to to really maximize your tax deferred investment opportunities and, you know, maybe a max out plan at work or you don't have one. And so life insurance can be another way to save in a tax deferred environment. But apart from some real isolated cases, I'm just not a big fan of whole life insurance because you're mixing insurance and investing. And it just tends to be more complicated. It's more expensive.

I mean, my preferred way to go about these two things would be to separate them. And then for your life insurance, you just buy pure term insurance, which is the least expensive. It allows you to get the coverage you need while you need it, which is during your working years. At a minimum, you need 10 to 12 times your incomes. If you're making 60,000 a year, you need at least, you know, 600 to 800,000. If you're making 80,000 a year, you might need one a million dollars in life insurance. And then on top of that, some people add the cost of paying off the mortgage, maybe a college education, paying off debt. And term insurance is the most cost effective way to buy the true amount that you need. And then you save in tax deferred vehicles that are pure investments. So you're not getting the drag of the fees and expenses and you know, you can get a better rate of return through a 401k or IRA or both. You know, maybe you have a self employed situation, you're saving through a SEP IRA or something like that.

That would be my preferred approach. Because when you reach that season of life where you've, you've reached your accumulation goal, you know, and you've answered the question, how much is enough, then you can drop the life insurance. Because there's not a risk there. If you're married, and one spouse passes away, the other spouse is not counting on that income, because there is no income, it's living off of, you know, retirement assets and social security. And the kids aren't depending on you anymore, that kind of thing. So unless there's, you know, a lifelong dependent, like a special needs child, or again, you know, you're looking for extra tax deferred savings vehicles.

I really like term insurance over the whole life. Does that make sense? Oh, great. Yes, I appreciate the explanation. All right. Thanks, Lynn. We appreciate your call today. God bless you. Let's go to Illinois. Hi, Donna.

How can I help? Hi, social security question here. All right.

Yep. So my husband's eligible to draw. And he's a lower wage earner, and I'm not eligible for another like four years. So I'm just, we're just trying to figure out if it makes sense for him to, I know there's something with like the spouses. So social security as well, like, part of being part of his payment. So I kind of read through some of the rules, and I wasn't clear on how it all works.

Yeah. So the key is he can take either his own benefit based on his work record, or he can take a spousal benefit based on yours. And the most he'd be able to get on a spousal benefit is 50% of yours. So the question is, and that's if he waits until full retirement age, if he takes it at 62, then he's going to get a reduced amount, you know, 50% is the max. So maybe he gets 30% or, or something like that, because it's going to be reduced for him taking it early. So I think the key is, you know, one option is he could if he, if he believes that, you know, getting, you know, the his benefit down the road will be the higher amount and he's still working. He could, you know, once you start taking yours, he could get the spousal benefit, and then switch or he could do the opposite of that, he could start taking his own. And then, you know, once you start collecting, then if it makes sense, he could switch to his spousal benefit on you. But it really just depends upon which is going to be the higher, he can't collect both, he can collect the higher of the two.

So what I would probably do Donna is connect with the Social Security Administration, SSA.gov, schedule a meeting, and determine, you know, what is the appropriate path forward, you know, based on his actual work record and based on yours as a spousal benefit, and then determine which one is going to be the higher and the appropriate time to take either of them just in order to maximize them. Does that make sense? Yeah, perfect. Yeah, yeah, very good. Appreciate your call.

SSA.gov is where you want to go and they'll be able to get you the information you could schedule an in person or a virtual visit. Thanks for your call today. Let's go to Naples and welcome Mary. Hi there. Hi there. Thank you for taking my call. Sure.

I have a question. I am retiring in four months. And I'm trying to do a budget. I am debt free. I have no debt whatsoever other than my regular monthly expenses. My question is, what is taxed? I'll be drawing Social Security, but I'll also be receiving Florida retirement as well.

FRS. Yeah, but I can't get a straight answer from anyone as to what's taxed. Are they taxed?

Yeah. So your pension is taxed as ordinary income and will contribute to any other earned income for the calendar year. With regard to Social Security, you have it depends upon how much earned income you have.

And so it really just depends upon ultimately where that's going to be. Do you file as an individual or do you file a joint return? Individual, I'm widowed. OK, so if your income, your combined income is between twenty five and thirty four thousand, then you'd pay income tax on up to 50 percent of your benefits. If you're over thirty four thousand, it would go on up to eighty five percent of your benefits. Social Security benefits would be taxable. So it would be a matter of determining that that adjusted gross income as to, you know, based on the FRS, the pension that you're receiving, plus any other earned income, you know, kind of where that allows you to fall in terms of how much income you have and what percentage of if any of your Social Security benefits, you know, would would be taxable. So what I would probably do, Mary, is do you normally prepare your own return?

I do not. I have a CPA. OK. Yeah, I just schedule a visit, given that, you know, any time we've got a major change coming, like you do in February when you retire, it's a good idea just to do some pre-planning. So I'd go and schedule a visit with your CPA prior to February. You know, this is we're getting into a busy time of year, so maybe they could sneak in here before the end of the year or first part of January and just do some tax planning and help your and ask your tax professional to determine exactly what will be taxable based on your your actual FRS record and what's going to be coming in, plus what you're going to get from Social Security. They can tell you they can do an estimate, an estimate on on what you'll be needing to pay. And then that'll help you determine exactly how much income you'll have left so that you can build your budget around it. And having that specific information, I think will be a really important planning tool.

So I'd get that appointment schedule in your CPA sooner rather than later and just let them know you want to do some tax planning, giving given your upcoming retirement. I hope that helps you, Mary. Thanks for your call today. We appreciate it. Folks, we're going to take a quick break when we come back. Your questions on anything financial?

We're going to head to Ford Meyers and talk to Daniel next about a mortgage and what percent of your income it should be. Stay with us. We'll be right back. Thanks for joining us today on Faith and Finance live here in our final segment of the broadcast today. We're going to try to get to as many questions as we can.

Let's head right back to the phones to Fort Myers, Florida. Hi, Daniel. Go ahead, sir. Hey, hi.

How you doing? Thank you. Thank you so much for taking the call. Thank you for calling. Absolutely.

So here's the thing. I know it might be details involved, but just a question about housing right now. The thing is, thank God we don't have the only debts we have is our car. I'm talking we have my wife and I. And the thing is, the market that people saying, you know, that percentage interest will go down.

So their prices will go up. And if we decide to purchase a house right now, it will be like forty five or a piece of income, roughly. So I don't know if it's wise enough to forty five percent of our income for a house. I always try to have my mind set to thirty percent, roughly. But what do you think about the forty five?

And if it's wise to wait or I don't know. I don't have a question. Yeah, no, I appreciate the question, though. And here's the thing. I mean, I wouldn't try to get into it or buy a house you really can't afford out of fear that you might miss out on increases. You know, we've seen a tremendous rise in home prices and largely because we just don't have enough homes in this country for the demand that exists. You know, they're trying to remedy that and we have new home starts that are increasing.

And that's why the housing prices have held up despite this rapid increase in interest rates. But you know, your payment, principal interest, taxes and insurance, if it's forty five percent of your take home pay, you're just really going to struggle, Daniel, to cover everything else. I mean, especially just given how high food prices are and you've got to add utilities on top of that.

And, you know, just you put it all in there and it just makes it really challenging for you to have any kind of margin or surplus for you to be able to give and save and and live on the rest. I mean, my recommended percentage is twenty five percent, not even thirty percent. So I wouldn't make a premature purchase because, you know, because you think housing prices are going to continue to go higher.

I don't think there's any reason to believe they're going to go. You know, we're going to see as rapid of an increase, even with the interest rates coming down, as we did a few years ago, pre pandemic, I think we're going to see more modest growth. And I think the key for you right now is to try to focus on getting a bigger down payment so that you're borrowing less. And, you know, hopefully, you know, maybe in time you've got income that's growing. Maybe you're getting raises and and bonuses, things like that. Maybe you find a better paying job along the way. But, you know, that would be a major red flag for me with you buying a house at forty five percent. I appreciate that so much.

That's exactly right. I mean, at least I feel more in peace. OK, OK. I shouldn't rush it. So I appreciate it.

Yeah, I just I wouldn't. And I think you're going to be fine. I think let's just focus on doing the right thing. And that is building the financial foundation under you, saving, keeping your lifestyle or your spending in check.

And and then let's let's see if you can buy something down the road, especially when the interest rates are lower, which will help just in terms of that overall mortgage payment. Thanks for your call, sir. Let's go to Chicago. Hi, Sarah.

How can I help? Hi, Rob. Thank you for taking my call. So I just have a question regarding a rental property that my husband and I own. So this was like the first house that we purchased. And we got married twenty two years ago.

So unfortunately, it's not paid off. And now we're at the age where we have two kids. Well, one's in college and next year we'll have a second child in college. All right. I've always kind of joked that this is our college savings plan.

Yeah. But I'm just trying to get your information, you know, like have you if you don't mind weighing in on the situation is now the right time to sell because I'm concerned about, you know, FAFSA and all that huge cash. But as far as like freeing up that money where we're not really getting a return, I never expected that the same renter would be there for for nine years.

And she has kind and she's been taking, you know, great care of the house. But we really haven't been seeing any type of profit on it. So, you know, now just with the huge burden of college and not wanting to incur debt, I am thinking that might be the right time but wanted your opinion. Yeah, I think it's a great question. I mean, obviously, given that it's not it's not cash flowing, that is a consideration. Now, what the benefit here is that even though you haven't had much in the way of profit, obviously, the home has been appreciating, I would expect, and the mortgage is being paid by somebody else. So you've got a group an asset that's appreciating. And as long as you've been able to cover the debt service and the expenses, the property insurance and the taxes and, you know, any kind of repairs or maintenance along the way, then somebody else has been funding that asset that has been appreciating over time. Now, the question is, what's the best use of that asset? And given that you've got this major expense coming up, the question is, you know, do you take on debt, which would be at a high interest rate, and you're not going to get, you know, a return a guaranteed return equal to, you know, what you would be paying in student loan interest, that's for sure, on the house. So I think this probably is the time with a, you know, still a very robust housing market despite these high interest rates. And especially given that it's not throwing off income that you're counting on, it's just been an appreciating asset, it probably is the time to take this liquidate it, pay the capital gains tax, and then, you know, get it invested in a more passive investment strategy, where a portion of it, you know, could have a time horizon of, let's say, the next five or five years or so until that second one graduates, where you can systematically pull it out and pay for college debt free.

I think that makes sense. You know, the only other thing to consider is just, you know, are there other ways to pay for college and let's not miss those. So, you know, our kids work, you know, worked really hard. And, you know, they we turned, you know, they turned their bedrooms into a college college application scholarship factory there for a while, and they applied for every scholarship and grant known to man. And, you know, you can encourage them to work in the summer and, you know, maybe in their latter years of college, maybe they're getting some part time work to help to pay. So I would look for ways without borrowing that you can offset the cost of college without feeling like you have to write the full check.

But at the same time, given what you're describing about the house, I think seeing this as a source to pay for whatever you're going to cover is probably better than taking on student loans. Yeah. Okay.

So I just was wondering if there were any other questions or, you know, things that we just didn't consider, but I don't think so. Because, I mean, yeah. Is it appreciating?

Yeah, it's probably done well. But I think that at the end of the day, because it's not throwing off income, it's really just, are we better off letting this home continue to appreciate? Because the value is the value and it's going to grow. Or, you know, and in order to do that, we'd have to borrow to pay for college and with, you know, student loan rates where they are right now, I mean, you're talking 9% plus. And so are you going to get a guaranteed 9% a year growth in that home? No, you're not.

You're not going to get anywhere close to that is certainly not going to be guaranteed. So I think given that it makes more sense for you to take this asset and shift it into stocks and bonds with a portion kind of earmarked for college than it does to continue to let it just grow and let that renter service the debt and take on a high interest student loan payment. Yeah, that makes sense. Well, I appreciate your input. Okay, well, thanks for calling.

I appreciate it and all the best to you as you enter a really exciting season of life with your kiddos of heading off to college. Let's go to Indianapolis. Hi, Sean, go right ahead.

Hi, Rob, thanks for taking my call. A question is, is it a good choice to reduce my 401k contribution down to just what my company matches and take that added income to pay off a car debt? Yeah, it's a good question.

Yeah, I mean, you don't want to give up the match. That's free money. You know, what are you putting in percentage wise now? And what would you be putting in percentage wise if you reduced, you know, your contribution? So currently, I'm putting in 16%.

And I would take it down to 5%, which is what the company matches. Okay, so you're getting 21% now between your portion and the match? Or is it 16 all in? Correct.

No, 21 total. Okay, yeah. So you'd have 10% going in. And what would that do in terms of your payoff? How quickly would you be able to pay it off if you did that?

We should approximately be able to pay this vehicle off within two years. Yeah. Okay. And what is your age? 52. Okay. Yeah.

I mean, I like that. I mean, if you want to prioritize being debt free, I expect this is at a higher interest rate. I mean, you know, you've got to factor in the opportunity cost, which is just, you know, the more you put in, you know, the more you have that compounded growth, not just for the next two years, but for the next, you know, 20 or 30 years or more, if the Lord Terry's and you're in good health, I mean, you need this money to last to your 90s or beyond. And so what is the potential value of that, you know, that extra 10%, let's say 11% that you would have put in over 24 months, compounded for the next 30 years, it's going to be a lot more than the interest you pay. So I guess that would be the only consideration is, you know, apart from you just having a conviction to be debt free as soon as possible. And then I'd say go for it. If you're really just looking for the math, yes, you'd pay off the debt. But in terms of the compounded effect of that money growing on a tax deferred basis, you know, for the next 30 years, and I'm obviously going well beyond your retirement date, because you need this money to last for decades, potentially in retirement.

You know, that's where I think you continuing to contribute at the level you are and just paying the car off a little slower out of current cash flow, probably would come out better on paper, just because of the effect of compounding. Does that make sense? Yeah, that does. I didn't think of it that way.

Yeah. So I think that's the only consideration. But again, if you guys are like, Listen, we thought about it, maybe we've prayed about it. And we just feel like we should be out of debt as quickly as we can.

Well, then go for it. And then 24 months from now, you bump that back up to 21%. The other option is you split the difference, maybe you don't go all the way down to five, maybe you go to 10, which allows you to put in 15%. And instead of paying it off in two years, you're paying it off in three.

But I think you do have to look at the impact of that compounding on that money that you haven't put in over the next two years, you know, into the future before you fully appreciate the impact financially of that decision. Thanks for your call, Sean. God bless you, my friend. That's going to do it for us, folks.

Faith and Finance Live is a partnership between Moody Radio and Faith Fi. Thanks to my team today, Dan and Amy and Lynn and Robert. I'm Rob West. We'll see you next time. Bye-bye.