April 1, 2025 • 42 mins
There are many investment vehicles out there and some perform better than others. But there’s a lot of evidence to suggest that buying and holding index funds will pay off in the long run. On today's Faith & Finance Live, Rob West will welcome Benji Bailey of Praxis Mutual Funds to share some impressive information about index funds. Then Rob will answer your questions on different financial topics.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
S1 (00:08):
Did you hear about the guy who owned last year's
top performing funds? Yeah, too bad he bought them this year, though. Hi,
I'm Rob West. There's a lot of evidence to suggest
that buying and holding index funds will pay off in
the long run. Benji Bailey joins us today to make
the case with some impressive numbers. And then we'll take
your calls at 800, 500, 25 7000. That's 805, two
(00:33):
five 7000. This is faith in finance. Live biblical wisdom
for your financial decisions. Well, our guest today is our
friend Benji Bailey. He's vice president of investments and senior
fixed income manager at Praxis Mutual Funds, an underwriter of
this program. Benji, great to have you back.
S2 (00:54):
Rob, it is great to be with you again. You know,
last time we actually talked about bonds and this time
it's more about index funds. So some people might not
think this is the most exciting topics, but I want
to assure your listeners they are both very important.
S1 (01:07):
Yes, no doubt they are. And this is an area
of investing that has captured the interest of a lot
of folks. So I'm glad we can shed some light
on it. So let's start there. Why should indexes be
important for investors?
S2 (01:21):
Well, let me just step back a little bit. So
this past year, my family and I went to Joshua
Tree National Park. I mean gorgeous park, a fun place
to visit with family, you know. But there are signs.
And those signs directed you to the most impressive sites
in the park. You know, we took some trails. And
of course, frequently there are signs on that trail that
remind you that you're on the right path. Signs also
(01:42):
might inform you of upcoming turns. Now, could I have
figured out the way to go without those signs? Maybe. Okay, well, actually,
probably maybe not. I probably would have got lost. And
I may have wandered around for a long time and
I would have had some very frustrated family members. But
so my goal is to see the sites that are
special at the park. Then having signs and Guideposts is
so imperative.
S1 (02:02):
Yeah, that's exactly right. Now, how does this, of course,
relate to investing?
S2 (02:07):
Right. So investors have goals, you know, whatever they might be.
But in indexes. Or you could call them benchmarks if
you want are necessary Guideposts to make sure your investments
are getting closer to those future goals. So if you
have 30 years until retirement and you wait 25 years
and find out I've been going the wrong direction the
whole time, not good, right? So publicly available benchmarks like
(02:29):
the S&P 500 for large cap stocks or the Bloomberg
AG for bonds, they're great check ins and comparisons to
make sure you're generally on that right path.
S1 (02:38):
Yeah that's helpful. Now of course, some folks have heard
repeatedly that Main Street investors lose value or perform poorly
when actively trading stocks. Is that generally true?
S2 (02:49):
You know, actually that is correct. So if your goal
is to retire, then again Guideposts are important. But so
is looking at research to really understand what else can
help you along that path. So the Journal of Finance
published a study, and it showed that people that traded
individual stocks a lot underperformed. Those that didn't trade it
a lot. So the six year period the market was
up about 18%. So the least active traders, so people
(03:13):
that still did trade some of their own stocks were
up 16.4%. So not too bad a little bit worse.
But the most active traders up 11.4%. So they underperformed
by over 6% on average because they were just trading
so often in these individual stocks. And actually the study
was titled trading is hazardous to your wealth.
S1 (03:34):
Exactly right. So then what can investors do with this knowledge?
S2 (03:39):
Well, I think there's a few things, right. Certainly find
an experienced and thoughtful advisor that can help you on
the right path and keep you away from trying to
trade too much. Now, we also think that something that
offers more index like returns can be really helpful. You know,
bragging to our friends about our winning stocks may be fun,
although not very Christ like, but long term index like
returns is really the way to a fruitful retirement. Many
(04:02):
people have heard of Warren Buffett. He has a great quote.
The stock market is designed to transfer money from the
active to the patient. And if you go to the Bible,
Proverbs 1311 says, wealth gained hastily will dwindle, but whoever
gains little by little will increase it. So really, being
patient with your investments, spreading out your risks, we think
these are a great way to do this. And having
(04:22):
a portion of your portfolio in index like returns is
really important.
S1 (04:26):
Hmm. That's interesting. So can you explain for our listeners
the difference between an active mutual fund and a passive
mutual fund?
S2 (04:34):
Yeah. So active funds, they have managers that buy up
generally a smaller set of stocks. And they think those
stocks will outperform the market where passive funds generally buy
the stocks in an index and just hold them. Now
we think it's beneficial to have a portion of your
account in passive funds because, according to a study by
Morningstar Over the past 15 years, only 9% of active
(04:55):
large cap blend funds had higher returns than their passive peers,
so 91% of active funds underperform their passive peers.
S1 (05:04):
Interesting with us today. Our good friend Benji Bailey of
Praxis Mutual Funds, we're talking indexes will continue that conversation,
including can you use indexes and apply your faith values
more with Benji Bailey just around the corner here on
Faith and Finance Live, we'll be right back. Thanks for
(05:36):
joining us today on Faith and Finance Live. With me today,
my friend Benji Bailey, he's vice president of investments and
senior fixed income manager at Praxis Mutual Funds and underwriter
of this program, and a real leader in the faith
based investing space. By the way, if you want to
learn more, just go to Praxis. That's Praxis invests.com. We're
(05:59):
talking about indexes today. What are they. How should you
think about them. The place they should occupy potentially in your. Portfolio.
And can you align your faith values when you use
index investments. And let's go there next. Benji. You know
some investors are concerned with just buying the index because
they want their values reflected in their investments.
S2 (06:22):
Well that is completely a valid concern, right? So at
Praxis we don't own every stock in that public index. Right.
So an investor can invest with their values by removing
certain companies that produce objectionable content while still getting returns
that are close to the market.
S1 (06:38):
Yeah, but that sounds too good to be true.
S2 (06:41):
Well, that's because it is somewhat right. So the more
companies in an investor screens out of that index, the
more volatile their return will be around that index. So
if an investor takes one stock out of the S&P
500 buys the other 499, it's not going to really
affect their returns that much versus the index. Now, if
(07:01):
instead they take out half like you, take out 250
stocks out of the index and you buy the other 250,
then you can imagine that your returns will be much
more volatile. Now, I'm not necessarily saying that they're going
to be better or worse by taking out some of
those stocks that you know, don't match with your values.
I'm just saying the volatility is going to be much higher.
S1 (07:22):
Yeah. But it's exciting to know that that can actually
be done. So what does that look like at Praxis
Mutual Funds.
S2 (07:28):
Yeah. So at the Praxis mutual Fund, certainly we desire
to be good stewards of our client's money. So we
need to get returns that are fair and relatively close
to the index now. God also calls us to be
good stewards of what he's entrusted with us. So we
also need to care for and impact people's lives when
we can. And our equity mutual funds, we offer optimized
(07:50):
equity index funds so it isn't investing in the entire
index or replicating it. We're just doing an optimized equity
index fund. So our large cap stocks, they screen out
objectionable companies. And then we use a software program along
with a portfolio manager oversight, to reinvest the remaining portion
of that index in a way that gets close to
the public return over the intermediate to long term. We
(08:12):
recommend some of these things because it takes the emotion
out of investing, and that can be really beneficial. You know,
we know we only actually have so much willpower. And
so if we can pay attention to our Guideposts and
think about getting somewhere around market returns with a portion
of our portfolio, then we're more likely to really stay
on that good path.
S1 (08:30):
Yeah, that makes sense. Now, of course, investing with a
long range vision really means that you don't have to
worry about market fluctuations, right?
S2 (08:38):
That's right. And and another feeling that we really want
to stay away from is our inclination to invest when
things are good and then when to pull back, actually
and go to safety when things don't look so good.
And this is natural, right? I feel the same way. Right.
But it's actually the opposite of buying low and selling high.
Buying low of course, is going to mean you're going
to buy when it's a little uncomfortable. And selling high
(09:00):
is probably means you're going to sell when everyone else
thinks it's great. So I actually looked back at the
S&P 500 over the last 97 years. Your average return
is about 10%, but there were only five only five
annual calendar periods when the return was between 8 and 12%.
Only five. And only 12 times when it was between
in six and 14%. So kind of above or below
(09:22):
by 4%. There are actually 11 times when it was
down 8 to 12%, and 19 times when it was
up 26 to 36%. So so people think that the
returns around their index mostly kind of bounce around that average,
and occasionally it goes wildly up and down one way
or the other. That isn't true at all. It's actually
the market is very volatile and annual returns aren't likely
(09:44):
close to that average, so you need something that helps
to keep you less concerned about that volatility that you
have with the market. And you need an investment strategy
that you can set and then monitor infrequently. And so
just like that signpost that tells you that you're on
the right path, we also think it's really beneficial to
utilize broad indexes to compare your investments to and then
(10:06):
have a diversified investment portfolio. In fact, going back to
the Bible, Proverbs 21 five says the plans of the
diligent lead surely to abundance, but everyone who is hasty
comes only to poverty. Or Ecclesiastes 11 two it actually says,
invest in seven ventures. Yes, in eight you do not
know what disaster may come upon the land.
S1 (10:26):
Yeah. That's helpful. You know, I want to go back
to something you said a moment ago. And that is
really the mechanics of how the screening and the values
alignment occurs there at Praxis Mutual Funds. And you mentioned
that it's a combination of software and data gathering alongside
the portfolio manager oversight to determine what companies are in
(10:48):
and what companies are out, whether that's bond investing or
equity investments. Will you just explain a bit more for
somebody who's new to this, how that actually works?
S2 (10:57):
Yeah. So there's a level of the quantitative where we're
looking to see how much revenue does a company generate
from these objectionable contents if that revenue is high enough.
And it's a pretty stringent screen that we have, they
barely need to have very much in revenue at all
in some of these objectionable things alcohol, tobacco, gambling or abortion.
And then we're going to screen those things out, meaning
(11:18):
that we're not going to invest in those, but then
we're going to then take the optimizer. It's a software program,
as I mentioned, and utilize that then to reinvest in
companies that can help it to perform as much like
the index as possible. So little pieces of those kind
of leftover companies put back together, then to perform as
much like the index as we can. And there's again,
(11:39):
still going to be volatility because we're screening things out.
But over time, what we've seen is this optimized portfolio
performs very close to the index.
S1 (11:47):
Now, the screening out is just one piece of the equation.
I know one of the things you're most excited about
there at Praxis Mutual Funds is the screening in and
the impact that you can have. In fact, I know
you all publish annually an impact report that's focused on
just that. So talk about that side of how you invest.
S2 (12:07):
Yeah, so incredibly true. We have something that we call
impact X. And the X is a multiplier, meaning that
you can do multiple different things and have a multiplier
effect to this. So screening out is important right. Taking
certain things out of your portfolio is important. Investing with
your values. But there's many other things that you can do.
Proxy voting is important. Making sure that you vote the
(12:29):
way that you want to. There's shareholder engagement. It's actually
taking that vote that you have and trying to make
a difference with that. And we also do community development investing,
and that's taking about 1% of each of the mutual
funds that we have and really investing it in Deep Impact,
almost think microfinance or other things that where people that
(12:50):
really have these needs and we want to put a
small portion, but still an important portion of each of
the funds into those things. So there's there's seven different factors.
And I named a few of those. And those are
what we call impact X. Again, have that multiplier effect
of making a difference with your money, not just screening
things out. But let's make a positive impact on the
world too.
S1 (13:09):
You know, we talk about every day what it looks
like to be a wise steward of God's money. And
that includes how we handle it, includes how we manage
it and plan for it. It includes how we give it,
but it should also include how we deploy it through
investment capital and how we're aligning that with what really
matters most to us as Christ followers. Well, unfortunately, we're
(13:30):
just about out of time today, Benji. But how can
folks get more information?
S2 (13:34):
And again, you mentioned our website Praxis Investments.com. It's a
great place to start. We have lots of information on
our four diversified equity funds and actually also on the
Praxis Impact Bond Fund, which we've talked about in the past.
By the way, I want to share my favorite book
on this deep dive of biblical views on stewardship is
Neither Poverty Nor Riches by Craig Blomberg. And of course,
(13:55):
Kingdom Advisors is a great source and Faith VI has
lots of great resources too.
S1 (14:00):
Yeah, I couldn't agree more about neither poverty nor riches.
One of my favorites as well. Benji, thanks for stopping
by today my friend.
S2 (14:07):
It's been great to be with you.
S1 (14:09):
That's Benjamin Bailey of Praxis Mutual Funds. The website again
is Praxis invests.com. All right. Your calls are next. The
number 800 525 7000. I'm Rob West and this is
Faith in finance live. We'll be right back.
S3 (14:31):
The opinions offered during this program represent the personal or
professional opinions of the participants are 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.
S4 (14:56):
Great to have you with us today on Faith and
finance live. I'm Rob West, looking forward to taking your
calls and questions today.
S1 (15:02):
That number to call 800 525 7000. Again that number (800)Â 525-7000.
We're looking forward to diving into your questions today. As
you think about managing God's money in light of biblical wisdom,
we want to be helpful. To that end, try to
be an encouragement to you. Be hopeful. Be reverent as
(15:23):
we approach God's Word, also wise as we give you
wise counsel. Now, I realize there's lots of things going
on in your financial life, and those will span the
topics from debt repayment to living within your means. Perhaps
you're trying to pay down some debt, or maybe you
just want to give wisely whatever it is in your
financial life today, we'd love to tackle that question. So
(15:45):
give us a call right now while we have some
lines open, they won't stay open for long. Again, that
number 800 525 7000. You can call right now. Uh,
a lot going on in the news today and in
the markets. But, uh, as we look at the news today,
we see, uh, a variety of topics, including what the
IRS has been processing as of mid-March. They've processed over 70,000,020,
(16:10):
24 tax returns. They've issued about 50 million refunds. Uh,
we're hearing the average refund is at about $3,300. That's
up from 3100 a year ago. Now, if you're expecting
a refund, what, uh, what do you plan on doing
with it, and how are you going to put it
to good use? Well, let me share a few wise
and useful things you might consider if you haven't landed
(16:32):
on that quite yet. Number one, start an emergency fund.
You know, if you don't have one already or if
you do, and perhaps you need to build it up,
you want to have ideally 3 to 6 months living
expenses to protect you in case of a job loss,
a medical condition or some other calamity. Second, start saving
for your next big purchase, such as an automobile. The
(16:53):
one you're driving won't last forever. You want to make
as big a cash down payment as possible when buying
a new car. So open a special account for your
next auto purchase, or perhaps start using the DeFi app.
You can make your car purchase one of those digital
envelopes that you're using the app to save money in.
And that way, when you're ready to make the purchase,
(17:14):
you know exactly how much you have. Third, pay off
some consumer debt. Credit cards are charging an average of 23%
in the interest rate these days, and reducing that debt
will keep more of your money in the bank and
reduce those interest charges you're paying. Next, If you don't
have consumer debt, maybe make an extra one time payment
(17:35):
against the principal on your mortgage. That will also reap
huge rewards and interest savings over time. And then finally
open a Roth IRA and deposit your refund check into it.
You have to have at least as much earned income
as the contribution you make, but that's probably the case
if you're receiving a tax refund. By the way, when
(17:55):
you do that, you're beginning to have that compound interest
work for you instead of against you, as in the
case of debt. You know, it's always tempting to go
on a spending spree when unplanned money, like a tax refund,
shows up. But that excitement is short lived, and the
benefits of using it wisely and being a faithful steward
of God's resources will last much longer. So hopefully that's
(18:19):
given you a few things to think about as you
consider what to do with your tax refund. All right,
let's dive into your questions. Today. We're going to begin
in Missouri. Hi, Stacy. Go right ahead.
S5 (18:29):
Hi. Thanks for taking my call. I have a question
about what I actually need to do as far as
whether we look at an estate attorney, whether we look
at a CPA, whether we look at a financial planner.
We have several homes and investments, and we're wanting to
(18:52):
create a trust, and we just don't know which direction
to go with this.
S1 (18:59):
Okay. Yeah. Very good. You know, this is a question
a lot of people struggle with. And, you know, there uh, is,
you know, no right or wrong answer. I think it's
just important to look at the benefits of each and
then decide which is the best fit for you. Uh,
when it comes to a trust, I mean, the real
upside there, uh, is that you're going to bypass probate.
(19:22):
You will be able to name your beneficiaries that the
trustee would ultimately distribute the assets to, but as opposed
to a will with a trust. It can go into
effect prior to death if you're incapacitated, or the assets
can be distributed well beyond your death based on certain
triggering factors. So, for instance, if you had minor children
(19:46):
and you said, we only want this money distributed at
our passing when they reach a certain age, or, you know,
every decade from, you know, 20 to age 40 or
something like that, you would have that control with a trust.
You would not at a will. Um, it also would
allow you to keep everything private, uh, because when you
go through a will and probate, it's all a part
(20:09):
of the public record. Um, so there are certain benefits,
you know, that you have with a trust that you
do not with a will, with a will. Everything happens
at death. And it does all go through the probate process,
which does involve some expenses, usually somewhere between 1 and 3%
of the estate and it takes a little bit of time. Now,
(20:29):
the upside of the will is a lot simpler to create.
You don't have to retitle assets in the name of
the trust, and it's less expensive. You might spend, you know,
4 or $500 for a will, whereas, you know, with
a trust it's going to often run you several thousand dollars,
you know, perhaps 2 or $3000. So, you know, I think,
you know, those are the positives and negatives of a
(20:52):
will versus a trust in terms of who to use.
I do recommend that you get an estate attorney to
draw up either one just because the online solutions, although
they can be effective and they'd be better than nothing. Uh,
you know, with this kind of decision making and making
sure that you're complying with the laws of your state.
(21:13):
I'd rather you have that professional counsel, even though it's
going to cost you a bit more. Does that make sense, though?
S5 (21:19):
It does. We're trying to avoid the tax implications, too,
for our children who are grown and we have grandchildren, so.
S1 (21:26):
Okay. Yeah. Now, keep in mind, unless you have a
pretty massive estate, there really is no estate tax until
you get above an estate of 13.99 million. So for
most people, at least based on the tax laws today,
there really isn't any estate tax or inheritance tax. So
not a whole lot to consider there other than the
efficient transfer of the assets at the time and place
(21:49):
of your choosing. Hope that helps. Thanks for your call.
We'll be right back. Great to have you with us
today on Faith and Finance live, I'm Rob West. Looking
forward to taking your calls and questions today. 800 525
7000 is the number to call. Let's go to Florida next. Angela.
(22:10):
How can we help you today?
S6 (22:12):
Yes. Hi. Good afternoon. Thank you for taking my call.
Thank you for your ministry.
S1 (22:18):
Thank you.
S6 (22:19):
I, um, this is more of an obedient Question.
S1 (22:24):
Okay.
S6 (22:25):
Last year we sold, um, a house. And it is
always my intent. Whenever I get, um, the Lord blesses
me with more than I would normally have, that I
would put a tent together to the church or to
other organizations that I, you know, um, subscribe to. But
in we were in a year, a season of traveling.
(22:48):
And so I was doing all travel arrangements, and I
only gave to one, one tenth of what I was
supposed to give. And it's been my pastor was talking
about stewardship the other day. Over the month I became
so convicted, I remembered, my goodness, I did not put
the 90%, you know, in the tithe to to my church.
(23:12):
So in obedience, I wanted to know, according to my
financial advisor, um, why not wait until a CD that
is due, um, in July? Why not wait to take
it from that since it's such a lump sum? Take
it from that. And it would be. It would not
(23:34):
incur any taxes as opposed to taking it from our
investment account. Now, what is your your wise advice on
that please.
S1 (23:44):
Yeah. Well, first of all, Angela, let me just say
I appreciate the spirit and the heart behind this question. Uh,
because clearly you want to honor the Lord with every
part of your life, and that includes your financial stewardship
and as one piece of your financial stewardship, because I
believe the way we handle everything God entrusts to us,
(24:06):
whether we're enjoying it by, you know, planning a special
time with our family away or using it to provide
for our families, or perhaps helping somebody in need or
supporting the work of the local church. All of that
can be done to the glory of God. As we
surrender to God's purposes and accept our role as a steward.
So there's nothing more spiritual about giving money away than
(24:28):
there is using it, you know, to enjoy as long
as it's done. I think in an appropriate way, with
surrender and in a prayerful attitude. Now, it doesn't mean
we should live lavishly and, you know, just, uh, have
the mindless accumulation of wealth. Don't get me wrong there.
But I'm saying as long as we have the right
heart posture, really, it all can be done, uh, to
(24:50):
God's glory. As long as he is our ultimate treasure.
And money is a tool to accomplish his purposes. Now, clearly,
we're to be givers as God's people. We see that
throughout Scripture, and one place that shows up is in
the the biblical view of the tithe. We see, you know,
15 particular instances in Scripture, although the word itself is
(25:11):
there nearly 50 times. And as we look at that
Old Testament use of the tithe, there was actually three
different tithes. That totaled 23 and a third percent. But
I love the idea of you taking a portion of
your increase. And the word tithe means a 10th and
giving it to the local church. So I think you're
right on there. But I think as New Testament believers,
(25:33):
those who have seen what Christ did on our behalf
on the cross, we shouldn't stop there. Our giving should
even be sacrificial, going beyond the the proportionate gift. And
it should be something that we do as an act
of worship. And I think we should do it cheerfully,
because God's not an accountant, you know, watching every cent
that we give, uh, that's not how we please the Lord.
(25:55):
It's all about the why behind the gift. So with
that as the backdrop, let me ask or address this
specific question that you have in terms of where to
pull it from. I would start with not the counsel
that your advisor gave you, although I appreciate it because
part of his or her job is to help you
understand how to maximize the resources you have and the
(26:17):
the tax implications are one piece of that. But I
would start with what is your conviction as you think
about it and pray through it and talk to the
Lord about it. If you feel like he's leading you
to give that gift right away, then I would do
that without consideration of the tax impact. But if you
feel like no, I ultimately want to give it. But
(26:39):
this is not about, you know, this happening as soon
as possible. And, you know, I have the freedom then
to think about the right strategic use of these funds
in a way that minimizes a tax liability. There's nothing
wrong with that. I just wouldn't go that direction purely
for the financial reasons. If your heart and your conviction
(27:00):
is to do that as soon as possible, does that
make sense, though?
S6 (27:04):
Yes, it certainly does, yes.
S1 (27:06):
So so where would you say you're at in that process?
S6 (27:10):
I, I think because it is something that I had
vowed from before. I always like to do what I say. Yes. And.
And when I think, um, you know, of David, David
and the, um, um, the sacrifice that he had to make,
I think when he bought the the field from Aaron,
(27:33):
from that guy, and he said, should I not, you know,
make a sacrifice? It's like, you know, you had to
make a sacrifice. So he paid for it or something
like that. Um, I'm thinking that, you know, it's it's
it's a sacrifice I want to make. It's not necessarily about. Okay,
I'm going to save some money. I don't know if
(27:54):
it makes sense what I'm saying. Yes. You know, it's.
You know that, um, since I made this vow to
the Lord. Um, then I want to carry it out
as soon as possible. He saw in my heart that
I did not. I completely forgot that I did not
give the, you know, um, to the church. So I
(28:15):
wanted to know whether, you know, I should go ahead
and be obedient. Do it now or, you know, um, wait. Which,
you know, to save some dollars from taxes, you know,
you know. Yes, ma'am.
S1 (28:29):
So, yeah, I think you're talking about the story, um,
the araunah, the jebusite in second. Samuel. Um, and I
appreciate that conviction. Absolutely. And I think if that's the
way the Lord is convicting you, as long as you're
not doing it out of guilt or feeling like you've
displeased the Lord in any way, because I don't believe
(28:50):
that's the the the reality. I mean, I believe your
heart is such just even hearing you describe it, that
the Lord is, in my view, pleased with the approach
you're taking here, that you want to honor the Lord
and you want to honor your vows and your commitments.
And I can certainly appreciate that. And so I think
if your conviction is such that you need to do
this as soon as possible to honor that commitment, then
(29:13):
I would carry that out even if there was a
cost to it. And at that point I would say, okay,
let's look at the assets that you have today and
let's decide where the best place is to pull from,
even though it may cost you something, versus you waiting
and saving and doing it over time where you don't
have to liquidate one of these assets. So if you
(29:33):
were to do that now, give me a rundown of
what the possible assets are that you could tap into.
S6 (29:40):
Oh my goodness. Um. Ooh. Uh, I can't even begin
to tell you them.
S1 (29:46):
Um, okay.
S6 (29:48):
I could just say that the amount the total amount
is 500,000. So and it's coming from all different, you know, um,
plans that.
S1 (29:59):
And what is the amount you're looking to give right away?
S6 (30:03):
It would be around 9000. 10,000.
S1 (30:06):
Okay. Yeah. I mean the tax impact of that is
going to be so minimal. So here's what I would do.
I would call your advisor back and say, I appreciate
your counsel. You're doing exactly what I hired you to
do and telling me to wait. My conviction is that
I need to do this right now. And so what
I'd like for you to tell me is, what is
the wisest place to pull $9,000 today? Realizing that I
(30:29):
understand I will have a there will be a tax
hit on this. I'm willing to take that. I just
need to know the best place to pull that 9000,
and then I'd carry that out. Does that make sense?
S7 (30:41):
Yes. And you know what? As you were talking, I'm
thinking that God will always provide.
S1 (30:47):
Yes he will. Amen to that. God bless you, Angela.
We'll be right back. Hey, great to have you with
us today on Faith and Finance live. I'm Rob West.
We're taking your calls and questions. Let's head right back
to the phones. Cleveland, Ohio. Hi, Gina. Go ahead.
S8 (31:06):
Hi. Hi. How are you? It's so great to talk
to you guys. Um, such a knowledgeable station. And I'm
so happy that it's Christian Field. I have a question.
S1 (31:16):
Excellent. Thank you. Yes, ma'am.
S8 (31:18):
Um, I wanted to sign up. I went to space by, um, website,
and I wanted to sign up for Christian counseling and
to help with debt reduction. And in talking with the, um, person,
they asked for my social. And so it kind of
(31:38):
threw me off with so much scam, so many scams
going on today. It's hard to know what's what's real
and what's not. And when he asked me for my social,
I felt uncomfortable. And I just wanted to hear, is
that part of the protocol to to get it to
get connected with the debt counseling?
S1 (32:02):
Yeah. So were you talking to our friends Gina at
Christian Credit Counselors? Is that where you went?
S8 (32:07):
Yes.
S1 (32:08):
Okay. Yeah. Yeah. Um. I'm not surprised that they're asking
for your social. I believe that is required in order
to verify accounts and and get you into this program. Um,
so I can tell you, just based on the fact
that we've worked with Christian credit counselors for, uh, you know,
over a decade, and we know all the principals there personally,
(32:30):
and they've worked with thousands of our listeners. We've never
had a single complaint. This is a trustworthy and reputable, uh,
ministry that's been serving God's people in this area of
debt management for a long, long time. Uh, going all
the way back to, uh, Crown Financial Ministries under Howard Dayton.
So I would be very comfortable that if they're asking
(32:51):
you for your social and you've initiated that contact directly
to either, um, you know, Christian credit counselors.org, and you
call the toll free number that if they're needing your
social as a part of the application process, not just
an an introductory call where you're understanding, but if you're
wanting to move forward with the program, I would be
(33:11):
comfortable with you giving them your social.
S8 (33:14):
Okay. Okay. That's why I wanted to. That's why I
wanted to find out. Um, yeah. Because we live in
a strange world today.
S1 (33:24):
Well, we do, and it's a good sign, Gina, that
your antennas were up on that. That tells me that, uh,
you're putting some necessary precautions in place because you're exactly right. You.
The last thing you want to do, be doing is
just giving out your Social Security number to to various people,
especially with how many fraudsters there are. But when you're
with a trusted organization like Christian credit counselors, uh, often
(33:47):
it is necessary. And, and, you know, they can be trusted.
So I would be very comfortable with you proceeding.
S8 (33:54):
Okay. Thank you.
S9 (33:55):
Be blessed.
S1 (33:56):
You're welcome. Yeah. You as well. Thanks for your kind
remarks about the program. Uh, let's go to, uh, Illinois. Hi, Kathleen.
Go ahead.
S10 (34:03):
Um, I have, uh, we have a, an annuity and
we have things that are in Edward Jones and like
the annuity. It's been almost a year. I haven't turned
it on because I want to get it out of
there because it's only I mean, it's only going to
be paying 4%. And after I looked at all the fees,
(34:25):
I realized that they charged almost as many fees as
what we got in the interest on it. And I
want I we also have two regular IRAs there. You know,
I mean we want to I want to put it
into like one I, you know, one uh, IRA at
(34:46):
a company, you know, like Schwab, I have an inherited
IRA at Schwab. And I was thinking of opening it
and then just paying the whatever fees I have to
do to monitor it myself. But I don't know if
that's a smart thing to do. I have like three
different choices of. Well, first of all, Edward Jones, I
(35:09):
don't like the guy that I have because he did
a couple things that were not in our best interest. And, um,
even now, uh, you know, his suggestions are not ones
that I'm in favor of. If I was going to
stay with them. And then also, the mutual funds don't
(35:30):
have as much of a profit value as the stocks
and the bonds. Right? I know they're made up of
stocks and bonds, but, um, even, like, if I was
going to stay with with them, then it's still going
to be like our we've been there for like over
12 years, and the interest that we've gotten on the
(35:52):
other ones has been in anywhere from 5 to 6% lately,
and it's probably really down right now. But I mean,
everywhere else, I mean, for that amount of time, we
should have had a lot of growth.
S1 (36:04):
Yeah. Well, I appreciate that background, Kathleen. Let me say
a couple of things about this. But one quick question.
What's the roughly the total of the investable assets that
you have there when you put all the accounts together?
S10 (36:17):
Um. Ah, the annuity. I mean, it's almost 200. Oh, yeah.
I should explain that in a minute, but it's like that.
And then I'm going to say that we probably have
around 500,000.
S1 (36:35):
Okay. Yeah.
S10 (36:36):
Maybe thousand, depending on what's going on.
S1 (36:39):
Yeah, sure. And that's obviously a significant sum of money.
So here's my thought. I mean, number one, Edward Jones
is a great brokerage firm. Uh, you know, they are
a wonderful institution. They have more certified financial planners than
any firm in the industry. They're soon to have right now.
They're the number the second largest for Certified Kingdom advisors.
(37:02):
And just based on their growth rate, they'll be the
largest of CPAs in the country. So nothing wrong with
Edward Jones. Just like any firm in the, you know,
up and down Wall Street, you can have an advisor
that you work well with and you might have one
that you don't. And they could be at the same firm.
So perhaps the next step for you. And again, if
(37:23):
you wanted to move to Schwab to your point and
manage it yourself, you absolutely could. You need to make
this call. You're the steward. But I think with that
sum of money, my advice would be for you to
have an advisor. Now, it may not be the one
you have right now because clearly you've lost confidence. It
doesn't sound like there's been a lot of great communication,
and you should understand exactly how you've done. And if
(37:46):
you've underperformed the market, you should understand why. And it
sounds like you do not. And so, you know, my
recommendation would be number one, I would love for you
to keep an advisor who's overseeing this, but perhaps consider
a change. And maybe what you do is look for
a certified Kingdom advisor who's also at Edward Jones for
(38:06):
you to move the account to. And that way you
could stay right there at Edward Jones. You wouldn't need
to move out of the firm, but you could change
the advisor. And I'd perhaps interview 2 or 3, find
the one that you feel like is the best fit.
But at the end of the day, with that significant
sum of money, I'd rather that money not be on autopilot.
I'd rather you be with an advisor you have a
(38:28):
good rapport with who really spends the time to get
to know you, and or you and your husband understand
where God's taking you, you know, clearly builds an investment
strategy that makes sense based on your goals and objectives,
and keeps you really informed in the process. Does that
make sense, though?
S11 (38:45):
And then I've got.
S10 (38:46):
Two other I've got like, um, Fisher and then another
person who uses, uh, Schwab, but he's like an independent
and he wants to only charge me like 75% of a,
you know, like 0.75 of a.
S9 (39:00):
Percent.
S1 (39:01):
Right?
S11 (39:01):
And that's like really good.
S10 (39:03):
But he would he uses, um, people that, you know,
that work at Schwab, okay. For his.
S11 (39:09):
Choices.
S10 (39:10):
So I don't know to do that. And then like
Fisher investment is higher and then like at Edward Jones,
if I choose them as a fiduciary, then that's going
to be, you know, 2 or 3% or something, even
if I change and then, um, yeah.
S9 (39:26):
So yeah.
S1 (39:26):
Yeah. Well, you got a lot of moving parts here.
Here's what I would do. I would try to find
an advisor that you establish a good rapport with. Yes.
You should look at the fees. That's certainly one consideration.
It's not everything. Uh, there's a lot more to a
relationship with an advisor and a fiduciary who's overseeing your investments,
providing tax planning advice, perhaps, you know, assisting with financial planning,
(39:48):
even helping you align your values as a believer with
your investment decisions and your financial planning. So all of
that goes together. Yes, you should look at the fees,
but I would probably, you know, is it bad to
have multiple advisors? No. It just creates more complexity. So
if you could find one advisor that you really feel
good about, the fees are in line. The performance is there.
(40:09):
They're spending the time with you. And preferably they share
your values. As a Christ follower, that would be the
place that I would go next. Um, and perhaps look
to consolidate everything under one roof with that trusted advisor
that emerges over time. Now, if you want to find
a CX there at Edward Jones, you can go to
our website faith. Com and click find a CX. But
(40:31):
hopefully that gives you some things to think about here.
And um, I'm confident you'll make the right decision. Thanks
for your call today. Let's finish in Cleveland, Ohio. Where?
Excuse me. Carl. Go ahead.
S12 (40:43):
Yes. Hi. Thank you for your ministry. Um, I received
a about. It says an unclaimed payable on death, which
is suggesting that I'm the person that that money's going to.
I was reluctant about contacting them, wondering if this was
a valid thing and didn't know how to approach it.
(41:04):
There's various information with claim numbers and they get there.
S1 (41:09):
So is this coming from a law firm or a
bank or an executor who's named in this?
S12 (41:15):
From a, uh, it says, uh, it says solicitors, um,
the legal department. Yeah.
S1 (41:25):
Yeah. Okay. So what I would do is, first of all,
you could check the probate records, because if this is
tied to someone's estate, the probate is a part of
the public record. So you could check that. I would absolutely,
you know, be suspicious about this because there's a lot
of scammers that use a fake inheritance. Um, you know,
to garner information, personal information from you that they could
(41:48):
use to steal your identity. Um, does it say whose
estate it's connected to?
S12 (41:55):
Yes.
S1 (41:56):
And is that a family member of yours?
S12 (41:59):
Well, I haven't been in touch with a lot of
my family. My parents? I'm, um, retired myself, but. And
my family on both. My father was huge. And, uh,
it says that they did a deep search here and
found me.
S1 (42:16):
Yeah. Okay. Well, I would, uh, use an internet search
to search for the sender independently and see if you
can verify them. I would reach out and ask for
detailed information. Uh, proof, uh, without giving your info and
no payment for sure. And if you need to get
a local attorney to help you investigate this and dig
(42:39):
into it, don't give any information out until you verify
its validity. Thanks for your call. Faith in finance is
a partnership between money, radio and faith. We'll see you tomorrow.
Bye bye.
Did you hear about the guy who owned last year's
top performing funds? Yeah, too bad he bought them this year, though. Hi,
I'm Rob West. There's a lot of evidence to suggest
that buying and holding index funds will pay off in
the long run. Benji Bailey joins us today to make
the case with some impressive numbers. And then we'll take
your calls at 800, 500, 25 7000. That's 805, two
(00:33):
five 7000. This is faith in finance. Live biblical wisdom
for your financial decisions. Well, our guest today is our
friend Benji Bailey. He's vice president of investments and senior
fixed income manager at Praxis Mutual Funds, an underwriter of
this program. Benji, great to have you back.
S2 (00:54):
Rob, it is great to be with you again. You know,
last time we actually talked about bonds and this time
it's more about index funds. So some people might not
think this is the most exciting topics, but I want
to assure your listeners they are both very important.
S1 (01:07):
Yes, no doubt they are. And this is an area
of investing that has captured the interest of a lot
of folks. So I'm glad we can shed some light
on it. So let's start there. Why should indexes be
important for investors?
S2 (01:21):
Well, let me just step back a little bit. So
this past year, my family and I went to Joshua
Tree National Park. I mean gorgeous park, a fun place
to visit with family, you know. But there are signs.
And those signs directed you to the most impressive sites
in the park. You know, we took some trails. And
of course, frequently there are signs on that trail that
remind you that you're on the right path. Signs also
(01:42):
might inform you of upcoming turns. Now, could I have
figured out the way to go without those signs? Maybe. Okay, well, actually,
probably maybe not. I probably would have got lost. And
I may have wandered around for a long time and
I would have had some very frustrated family members. But
so my goal is to see the sites that are
special at the park. Then having signs and Guideposts is
so imperative.
S1 (02:02):
Yeah, that's exactly right. Now, how does this, of course,
relate to investing?
S2 (02:07):
Right. So investors have goals, you know, whatever they might be.
But in indexes. Or you could call them benchmarks if
you want are necessary Guideposts to make sure your investments
are getting closer to those future goals. So if you
have 30 years until retirement and you wait 25 years
and find out I've been going the wrong direction the
whole time, not good, right? So publicly available benchmarks like
(02:29):
the S&P 500 for large cap stocks or the Bloomberg
AG for bonds, they're great check ins and comparisons to
make sure you're generally on that right path.
S1 (02:38):
Yeah that's helpful. Now of course, some folks have heard
repeatedly that Main Street investors lose value or perform poorly
when actively trading stocks. Is that generally true?
S2 (02:49):
You know, actually that is correct. So if your goal
is to retire, then again Guideposts are important. But so
is looking at research to really understand what else can
help you along that path. So the Journal of Finance
published a study, and it showed that people that traded
individual stocks a lot underperformed. Those that didn't trade it
a lot. So the six year period the market was
up about 18%. So the least active traders, so people
(03:13):
that still did trade some of their own stocks were
up 16.4%. So not too bad a little bit worse.
But the most active traders up 11.4%. So they underperformed
by over 6% on average because they were just trading
so often in these individual stocks. And actually the study
was titled trading is hazardous to your wealth.
S1 (03:34):
Exactly right. So then what can investors do with this knowledge?
S2 (03:39):
Well, I think there's a few things, right. Certainly find
an experienced and thoughtful advisor that can help you on
the right path and keep you away from trying to
trade too much. Now, we also think that something that
offers more index like returns can be really helpful. You know,
bragging to our friends about our winning stocks may be fun,
although not very Christ like, but long term index like
returns is really the way to a fruitful retirement. Many
(04:02):
people have heard of Warren Buffett. He has a great quote.
The stock market is designed to transfer money from the
active to the patient. And if you go to the Bible,
Proverbs 1311 says, wealth gained hastily will dwindle, but whoever
gains little by little will increase it. So really, being
patient with your investments, spreading out your risks, we think
these are a great way to do this. And having
(04:22):
a portion of your portfolio in index like returns is
really important.
S1 (04:26):
Hmm. That's interesting. So can you explain for our listeners
the difference between an active mutual fund and a passive
mutual fund?
S2 (04:34):
Yeah. So active funds, they have managers that buy up
generally a smaller set of stocks. And they think those
stocks will outperform the market where passive funds generally buy
the stocks in an index and just hold them. Now
we think it's beneficial to have a portion of your
account in passive funds because, according to a study by
Morningstar Over the past 15 years, only 9% of active
(04:55):
large cap blend funds had higher returns than their passive peers,
so 91% of active funds underperform their passive peers.
S1 (05:04):
Interesting with us today. Our good friend Benji Bailey of
Praxis Mutual Funds, we're talking indexes will continue that conversation,
including can you use indexes and apply your faith values
more with Benji Bailey just around the corner here on
Faith and Finance Live, we'll be right back. Thanks for
(05:36):
joining us today on Faith and Finance Live. With me today,
my friend Benji Bailey, he's vice president of investments and
senior fixed income manager at Praxis Mutual Funds and underwriter
of this program, and a real leader in the faith
based investing space. By the way, if you want to
learn more, just go to Praxis. That's Praxis invests.com. We're
(05:59):
talking about indexes today. What are they. How should you
think about them. The place they should occupy potentially in your. Portfolio.
And can you align your faith values when you use
index investments. And let's go there next. Benji. You know
some investors are concerned with just buying the index because
they want their values reflected in their investments.
S2 (06:22):
Well that is completely a valid concern, right? So at
Praxis we don't own every stock in that public index. Right.
So an investor can invest with their values by removing
certain companies that produce objectionable content while still getting returns
that are close to the market.
S1 (06:38):
Yeah, but that sounds too good to be true.
S2 (06:41):
Well, that's because it is somewhat right. So the more
companies in an investor screens out of that index, the
more volatile their return will be around that index. So
if an investor takes one stock out of the S&P
500 buys the other 499, it's not going to really
affect their returns that much versus the index. Now, if
(07:01):
instead they take out half like you, take out 250
stocks out of the index and you buy the other 250,
then you can imagine that your returns will be much
more volatile. Now, I'm not necessarily saying that they're going
to be better or worse by taking out some of
those stocks that you know, don't match with your values.
I'm just saying the volatility is going to be much higher.
S1 (07:22):
Yeah. But it's exciting to know that that can actually
be done. So what does that look like at Praxis
Mutual Funds.
S2 (07:28):
Yeah. So at the Praxis mutual Fund, certainly we desire
to be good stewards of our client's money. So we
need to get returns that are fair and relatively close
to the index now. God also calls us to be
good stewards of what he's entrusted with us. So we
also need to care for and impact people's lives when
we can. And our equity mutual funds, we offer optimized
(07:50):
equity index funds so it isn't investing in the entire
index or replicating it. We're just doing an optimized equity
index fund. So our large cap stocks, they screen out
objectionable companies. And then we use a software program along
with a portfolio manager oversight, to reinvest the remaining portion
of that index in a way that gets close to
the public return over the intermediate to long term. We
(08:12):
recommend some of these things because it takes the emotion
out of investing, and that can be really beneficial. You know,
we know we only actually have so much willpower. And
so if we can pay attention to our Guideposts and
think about getting somewhere around market returns with a portion
of our portfolio, then we're more likely to really stay
on that good path.
S1 (08:30):
Yeah, that makes sense. Now, of course, investing with a
long range vision really means that you don't have to
worry about market fluctuations, right?
S2 (08:38):
That's right. And and another feeling that we really want
to stay away from is our inclination to invest when
things are good and then when to pull back, actually
and go to safety when things don't look so good.
And this is natural, right? I feel the same way. Right.
But it's actually the opposite of buying low and selling high.
Buying low of course, is going to mean you're going
to buy when it's a little uncomfortable. And selling high
(09:00):
is probably means you're going to sell when everyone else
thinks it's great. So I actually looked back at the
S&P 500 over the last 97 years. Your average return
is about 10%, but there were only five only five
annual calendar periods when the return was between 8 and 12%.
Only five. And only 12 times when it was between
in six and 14%. So kind of above or below
(09:22):
by 4%. There are actually 11 times when it was
down 8 to 12%, and 19 times when it was
up 26 to 36%. So so people think that the
returns around their index mostly kind of bounce around that average,
and occasionally it goes wildly up and down one way
or the other. That isn't true at all. It's actually
the market is very volatile and annual returns aren't likely
(09:44):
close to that average, so you need something that helps
to keep you less concerned about that volatility that you
have with the market. And you need an investment strategy
that you can set and then monitor infrequently. And so
just like that signpost that tells you that you're on
the right path, we also think it's really beneficial to
utilize broad indexes to compare your investments to and then
(10:06):
have a diversified investment portfolio. In fact, going back to
the Bible, Proverbs 21 five says the plans of the
diligent lead surely to abundance, but everyone who is hasty
comes only to poverty. Or Ecclesiastes 11 two it actually says,
invest in seven ventures. Yes, in eight you do not
know what disaster may come upon the land.
S1 (10:26):
Yeah. That's helpful. You know, I want to go back
to something you said a moment ago. And that is
really the mechanics of how the screening and the values
alignment occurs there at Praxis Mutual Funds. And you mentioned
that it's a combination of software and data gathering alongside
the portfolio manager oversight to determine what companies are in
(10:48):
and what companies are out, whether that's bond investing or
equity investments. Will you just explain a bit more for
somebody who's new to this, how that actually works?
S2 (10:57):
Yeah. So there's a level of the quantitative where we're
looking to see how much revenue does a company generate
from these objectionable contents if that revenue is high enough.
And it's a pretty stringent screen that we have, they
barely need to have very much in revenue at all
in some of these objectionable things alcohol, tobacco, gambling or abortion.
And then we're going to screen those things out, meaning
(11:18):
that we're not going to invest in those, but then
we're going to then take the optimizer. It's a software program,
as I mentioned, and utilize that then to reinvest in
companies that can help it to perform as much like
the index as possible. So little pieces of those kind
of leftover companies put back together, then to perform as
much like the index as we can. And there's again,
(11:39):
still going to be volatility because we're screening things out.
But over time, what we've seen is this optimized portfolio
performs very close to the index.
S1 (11:47):
Now, the screening out is just one piece of the equation.
I know one of the things you're most excited about
there at Praxis Mutual Funds is the screening in and
the impact that you can have. In fact, I know
you all publish annually an impact report that's focused on
just that. So talk about that side of how you invest.
S2 (12:07):
Yeah, so incredibly true. We have something that we call
impact X. And the X is a multiplier, meaning that
you can do multiple different things and have a multiplier
effect to this. So screening out is important right. Taking
certain things out of your portfolio is important. Investing with
your values. But there's many other things that you can do.
Proxy voting is important. Making sure that you vote the
(12:29):
way that you want to. There's shareholder engagement. It's actually
taking that vote that you have and trying to make
a difference with that. And we also do community development investing,
and that's taking about 1% of each of the mutual
funds that we have and really investing it in Deep Impact,
almost think microfinance or other things that where people that
(12:50):
really have these needs and we want to put a
small portion, but still an important portion of each of
the funds into those things. So there's there's seven different factors.
And I named a few of those. And those are
what we call impact X. Again, have that multiplier effect
of making a difference with your money, not just screening
things out. But let's make a positive impact on the
world too.
S1 (13:09):
You know, we talk about every day what it looks
like to be a wise steward of God's money. And
that includes how we handle it, includes how we manage
it and plan for it. It includes how we give it,
but it should also include how we deploy it through
investment capital and how we're aligning that with what really
matters most to us as Christ followers. Well, unfortunately, we're
(13:30):
just about out of time today, Benji. But how can
folks get more information?
S2 (13:34):
And again, you mentioned our website Praxis Investments.com. It's a
great place to start. We have lots of information on
our four diversified equity funds and actually also on the
Praxis Impact Bond Fund, which we've talked about in the past.
By the way, I want to share my favorite book
on this deep dive of biblical views on stewardship is
Neither Poverty Nor Riches by Craig Blomberg. And of course,
(13:55):
Kingdom Advisors is a great source and Faith VI has
lots of great resources too.
S1 (14:00):
Yeah, I couldn't agree more about neither poverty nor riches.
One of my favorites as well. Benji, thanks for stopping
by today my friend.
S2 (14:07):
It's been great to be with you.
S1 (14:09):
That's Benjamin Bailey of Praxis Mutual Funds. The website again
is Praxis invests.com. All right. Your calls are next. The
number 800 525 7000. I'm Rob West and this is
Faith in finance live. We'll be right back.
S3 (14:31):
The opinions offered during this program represent the personal or
professional opinions of the participants are 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.
S4 (14:56):
Great to have you with us today on Faith and
finance live. I'm Rob West, looking forward to taking your
calls and questions today.
S1 (15:02):
That number to call 800 525 7000. Again that number (800)Â 525-7000.
We're looking forward to diving into your questions today. As
you think about managing God's money in light of biblical wisdom,
we want to be helpful. To that end, try to
be an encouragement to you. Be hopeful. Be reverent as
(15:23):
we approach God's Word, also wise as we give you
wise counsel. Now, I realize there's lots of things going
on in your financial life, and those will span the
topics from debt repayment to living within your means. Perhaps
you're trying to pay down some debt, or maybe you
just want to give wisely whatever it is in your
financial life today, we'd love to tackle that question. So
(15:45):
give us a call right now while we have some
lines open, they won't stay open for long. Again, that
number 800 525 7000. You can call right now. Uh,
a lot going on in the news today and in
the markets. But, uh, as we look at the news today,
we see, uh, a variety of topics, including what the
IRS has been processing as of mid-March. They've processed over 70,000,020,
(16:10):
24 tax returns. They've issued about 50 million refunds. Uh,
we're hearing the average refund is at about $3,300. That's
up from 3100 a year ago. Now, if you're expecting
a refund, what, uh, what do you plan on doing
with it, and how are you going to put it
to good use? Well, let me share a few wise
and useful things you might consider if you haven't landed
(16:32):
on that quite yet. Number one, start an emergency fund.
You know, if you don't have one already or if
you do, and perhaps you need to build it up,
you want to have ideally 3 to 6 months living
expenses to protect you in case of a job loss,
a medical condition or some other calamity. Second, start saving
for your next big purchase, such as an automobile. The
(16:53):
one you're driving won't last forever. You want to make
as big a cash down payment as possible when buying
a new car. So open a special account for your
next auto purchase, or perhaps start using the DeFi app.
You can make your car purchase one of those digital
envelopes that you're using the app to save money in.
And that way, when you're ready to make the purchase,
(17:14):
you know exactly how much you have. Third, pay off
some consumer debt. Credit cards are charging an average of 23%
in the interest rate these days, and reducing that debt
will keep more of your money in the bank and
reduce those interest charges you're paying. Next, If you don't
have consumer debt, maybe make an extra one time payment
(17:35):
against the principal on your mortgage. That will also reap
huge rewards and interest savings over time. And then finally
open a Roth IRA and deposit your refund check into it.
You have to have at least as much earned income
as the contribution you make, but that's probably the case
if you're receiving a tax refund. By the way, when
(17:55):
you do that, you're beginning to have that compound interest
work for you instead of against you, as in the
case of debt. You know, it's always tempting to go
on a spending spree when unplanned money, like a tax refund,
shows up. But that excitement is short lived, and the
benefits of using it wisely and being a faithful steward
of God's resources will last much longer. So hopefully that's
(18:19):
given you a few things to think about as you
consider what to do with your tax refund. All right,
let's dive into your questions. Today. We're going to begin
in Missouri. Hi, Stacy. Go right ahead.
S5 (18:29):
Hi. Thanks for taking my call. I have a question
about what I actually need to do as far as
whether we look at an estate attorney, whether we look
at a CPA, whether we look at a financial planner.
We have several homes and investments, and we're wanting to
(18:52):
create a trust, and we just don't know which direction
to go with this.
S1 (18:59):
Okay. Yeah. Very good. You know, this is a question
a lot of people struggle with. And, you know, there uh, is,
you know, no right or wrong answer. I think it's
just important to look at the benefits of each and
then decide which is the best fit for you. Uh,
when it comes to a trust, I mean, the real
upside there, uh, is that you're going to bypass probate.
(19:22):
You will be able to name your beneficiaries that the
trustee would ultimately distribute the assets to, but as opposed
to a will with a trust. It can go into
effect prior to death if you're incapacitated, or the assets
can be distributed well beyond your death based on certain
triggering factors. So, for instance, if you had minor children
(19:46):
and you said, we only want this money distributed at
our passing when they reach a certain age, or, you know,
every decade from, you know, 20 to age 40 or
something like that, you would have that control with a trust.
You would not at a will. Um, it also would
allow you to keep everything private, uh, because when you
go through a will and probate, it's all a part
(20:09):
of the public record. Um, so there are certain benefits,
you know, that you have with a trust that you
do not with a will, with a will. Everything happens
at death. And it does all go through the probate process,
which does involve some expenses, usually somewhere between 1 and 3%
of the estate and it takes a little bit of time. Now,
(20:29):
the upside of the will is a lot simpler to create.
You don't have to retitle assets in the name of
the trust, and it's less expensive. You might spend, you know,
4 or $500 for a will, whereas, you know, with
a trust it's going to often run you several thousand dollars,
you know, perhaps 2 or $3000. So, you know, I think,
you know, those are the positives and negatives of a
(20:52):
will versus a trust in terms of who to use.
I do recommend that you get an estate attorney to
draw up either one just because the online solutions, although
they can be effective and they'd be better than nothing. Uh,
you know, with this kind of decision making and making
sure that you're complying with the laws of your state.
(21:13):
I'd rather you have that professional counsel, even though it's
going to cost you a bit more. Does that make sense, though?
S5 (21:19):
It does. We're trying to avoid the tax implications, too,
for our children who are grown and we have grandchildren, so.
S1 (21:26):
Okay. Yeah. Now, keep in mind, unless you have a
pretty massive estate, there really is no estate tax until
you get above an estate of 13.99 million. So for
most people, at least based on the tax laws today,
there really isn't any estate tax or inheritance tax. So
not a whole lot to consider there other than the
efficient transfer of the assets at the time and place
(21:49):
of your choosing. Hope that helps. Thanks for your call.
We'll be right back. Great to have you with us
today on Faith and Finance live, I'm Rob West. Looking
forward to taking your calls and questions today. 800 525
7000 is the number to call. Let's go to Florida next. Angela.
(22:10):
How can we help you today?
S6 (22:12):
Yes. Hi. Good afternoon. Thank you for taking my call.
Thank you for your ministry.
S1 (22:18):
Thank you.
S6 (22:19):
I, um, this is more of an obedient Question.
S1 (22:24):
Okay.
S6 (22:25):
Last year we sold, um, a house. And it is
always my intent. Whenever I get, um, the Lord blesses
me with more than I would normally have, that I
would put a tent together to the church or to
other organizations that I, you know, um, subscribe to. But
in we were in a year, a season of traveling.
(22:48):
And so I was doing all travel arrangements, and I
only gave to one, one tenth of what I was
supposed to give. And it's been my pastor was talking
about stewardship the other day. Over the month I became
so convicted, I remembered, my goodness, I did not put
the 90%, you know, in the tithe to to my church.
(23:12):
So in obedience, I wanted to know, according to my
financial advisor, um, why not wait until a CD that
is due, um, in July? Why not wait to take
it from that since it's such a lump sum? Take
it from that. And it would be. It would not
(23:34):
incur any taxes as opposed to taking it from our
investment account. Now, what is your your wise advice on
that please.
S1 (23:44):
Yeah. Well, first of all, Angela, let me just say
I appreciate the spirit and the heart behind this question. Uh,
because clearly you want to honor the Lord with every
part of your life, and that includes your financial stewardship
and as one piece of your financial stewardship, because I
believe the way we handle everything God entrusts to us,
(24:06):
whether we're enjoying it by, you know, planning a special
time with our family away or using it to provide
for our families, or perhaps helping somebody in need or
supporting the work of the local church. All of that
can be done to the glory of God. As we
surrender to God's purposes and accept our role as a steward.
So there's nothing more spiritual about giving money away than
(24:28):
there is using it, you know, to enjoy as long
as it's done. I think in an appropriate way, with
surrender and in a prayerful attitude. Now, it doesn't mean
we should live lavishly and, you know, just, uh, have
the mindless accumulation of wealth. Don't get me wrong there.
But I'm saying as long as we have the right
heart posture, really, it all can be done, uh, to
(24:50):
God's glory. As long as he is our ultimate treasure.
And money is a tool to accomplish his purposes. Now, clearly,
we're to be givers as God's people. We see that
throughout Scripture, and one place that shows up is in
the the biblical view of the tithe. We see, you know,
15 particular instances in Scripture, although the word itself is
(25:11):
there nearly 50 times. And as we look at that
Old Testament use of the tithe, there was actually three
different tithes. That totaled 23 and a third percent. But
I love the idea of you taking a portion of
your increase. And the word tithe means a 10th and
giving it to the local church. So I think you're
right on there. But I think as New Testament believers,
(25:33):
those who have seen what Christ did on our behalf
on the cross, we shouldn't stop there. Our giving should
even be sacrificial, going beyond the the proportionate gift. And
it should be something that we do as an act
of worship. And I think we should do it cheerfully,
because God's not an accountant, you know, watching every cent
that we give, uh, that's not how we please the Lord.
(25:55):
It's all about the why behind the gift. So with
that as the backdrop, let me ask or address this
specific question that you have in terms of where to
pull it from. I would start with not the counsel
that your advisor gave you, although I appreciate it because
part of his or her job is to help you
understand how to maximize the resources you have and the
(26:17):
the tax implications are one piece of that. But I
would start with what is your conviction as you think
about it and pray through it and talk to the
Lord about it. If you feel like he's leading you
to give that gift right away, then I would do
that without consideration of the tax impact. But if you
feel like no, I ultimately want to give it. But
(26:39):
this is not about, you know, this happening as soon
as possible. And, you know, I have the freedom then
to think about the right strategic use of these funds
in a way that minimizes a tax liability. There's nothing
wrong with that. I just wouldn't go that direction purely
for the financial reasons. If your heart and your conviction
(27:00):
is to do that as soon as possible, does that
make sense, though?
S6 (27:04):
Yes, it certainly does, yes.
S1 (27:06):
So so where would you say you're at in that process?
S6 (27:10):
I, I think because it is something that I had
vowed from before. I always like to do what I say. Yes. And.
And when I think, um, you know, of David, David
and the, um, um, the sacrifice that he had to make,
I think when he bought the the field from Aaron,
(27:33):
from that guy, and he said, should I not, you know,
make a sacrifice? It's like, you know, you had to
make a sacrifice. So he paid for it or something
like that. Um, I'm thinking that, you know, it's it's
it's a sacrifice I want to make. It's not necessarily about. Okay,
I'm going to save some money. I don't know if
(27:54):
it makes sense what I'm saying. Yes. You know, it's.
You know that, um, since I made this vow to
the Lord. Um, then I want to carry it out
as soon as possible. He saw in my heart that
I did not. I completely forgot that I did not
give the, you know, um, to the church. So I
(28:15):
wanted to know whether, you know, I should go ahead
and be obedient. Do it now or, you know, um, wait. Which,
you know, to save some dollars from taxes, you know,
you know. Yes, ma'am.
S1 (28:29):
So, yeah, I think you're talking about the story, um,
the araunah, the jebusite in second. Samuel. Um, and I
appreciate that conviction. Absolutely. And I think if that's the
way the Lord is convicting you, as long as you're
not doing it out of guilt or feeling like you've
displeased the Lord in any way, because I don't believe
(28:50):
that's the the the reality. I mean, I believe your
heart is such just even hearing you describe it, that
the Lord is, in my view, pleased with the approach
you're taking here, that you want to honor the Lord
and you want to honor your vows and your commitments.
And I can certainly appreciate that. And so I think
if your conviction is such that you need to do
this as soon as possible to honor that commitment, then
(29:13):
I would carry that out even if there was a
cost to it. And at that point I would say, okay,
let's look at the assets that you have today and
let's decide where the best place is to pull from,
even though it may cost you something, versus you waiting
and saving and doing it over time where you don't
have to liquidate one of these assets. So if you
(29:33):
were to do that now, give me a rundown of
what the possible assets are that you could tap into.
S6 (29:40):
Oh my goodness. Um. Ooh. Uh, I can't even begin
to tell you them.
S1 (29:46):
Um, okay.
S6 (29:48):
I could just say that the amount the total amount
is 500,000. So and it's coming from all different, you know, um,
plans that.
S1 (29:59):
And what is the amount you're looking to give right away?
S6 (30:03):
It would be around 9000. 10,000.
S1 (30:06):
Okay. Yeah. I mean the tax impact of that is
going to be so minimal. So here's what I would do.
I would call your advisor back and say, I appreciate
your counsel. You're doing exactly what I hired you to
do and telling me to wait. My conviction is that
I need to do this right now. And so what
I'd like for you to tell me is, what is
the wisest place to pull $9,000 today? Realizing that I
(30:29):
understand I will have a there will be a tax
hit on this. I'm willing to take that. I just
need to know the best place to pull that 9000,
and then I'd carry that out. Does that make sense?
S7 (30:41):
Yes. And you know what? As you were talking, I'm
thinking that God will always provide.
S1 (30:47):
Yes he will. Amen to that. God bless you, Angela.
We'll be right back. Hey, great to have you with
us today on Faith and Finance live. I'm Rob West.
We're taking your calls and questions. Let's head right back
to the phones. Cleveland, Ohio. Hi, Gina. Go ahead.
S8 (31:06):
Hi. Hi. How are you? It's so great to talk
to you guys. Um, such a knowledgeable station. And I'm
so happy that it's Christian Field. I have a question.
S1 (31:16):
Excellent. Thank you. Yes, ma'am.
S8 (31:18):
Um, I wanted to sign up. I went to space by, um, website,
and I wanted to sign up for Christian counseling and
to help with debt reduction. And in talking with the, um, person,
they asked for my social. And so it kind of
(31:38):
threw me off with so much scam, so many scams
going on today. It's hard to know what's what's real
and what's not. And when he asked me for my social,
I felt uncomfortable. And I just wanted to hear, is
that part of the protocol to to get it to
get connected with the debt counseling?
S1 (32:02):
Yeah. So were you talking to our friends Gina at
Christian Credit Counselors? Is that where you went?
S8 (32:07):
Yes.
S1 (32:08):
Okay. Yeah. Yeah. Um. I'm not surprised that they're asking
for your social. I believe that is required in order
to verify accounts and and get you into this program. Um,
so I can tell you, just based on the fact
that we've worked with Christian credit counselors for, uh, you know,
over a decade, and we know all the principals there personally,
(32:30):
and they've worked with thousands of our listeners. We've never
had a single complaint. This is a trustworthy and reputable, uh,
ministry that's been serving God's people in this area of
debt management for a long, long time. Uh, going all
the way back to, uh, Crown Financial Ministries under Howard Dayton.
So I would be very comfortable that if they're asking
(32:51):
you for your social and you've initiated that contact directly
to either, um, you know, Christian credit counselors.org, and you
call the toll free number that if they're needing your
social as a part of the application process, not just
an an introductory call where you're understanding, but if you're
wanting to move forward with the program, I would be
(33:11):
comfortable with you giving them your social.
S8 (33:14):
Okay. Okay. That's why I wanted to. That's why I
wanted to find out. Um, yeah. Because we live in
a strange world today.
S1 (33:24):
Well, we do, and it's a good sign, Gina, that
your antennas were up on that. That tells me that, uh,
you're putting some necessary precautions in place because you're exactly right. You.
The last thing you want to do, be doing is
just giving out your Social Security number to to various people,
especially with how many fraudsters there are. But when you're
with a trusted organization like Christian credit counselors, uh, often
(33:47):
it is necessary. And, and, you know, they can be trusted.
So I would be very comfortable with you proceeding.
S8 (33:54):
Okay. Thank you.
S9 (33:55):
Be blessed.
S1 (33:56):
You're welcome. Yeah. You as well. Thanks for your kind
remarks about the program. Uh, let's go to, uh, Illinois. Hi, Kathleen.
Go ahead.
S10 (34:03):
Um, I have, uh, we have a, an annuity and
we have things that are in Edward Jones and like
the annuity. It's been almost a year. I haven't turned
it on because I want to get it out of
there because it's only I mean, it's only going to
be paying 4%. And after I looked at all the fees,
(34:25):
I realized that they charged almost as many fees as
what we got in the interest on it. And I
want I we also have two regular IRAs there. You know,
I mean we want to I want to put it
into like one I, you know, one uh, IRA at
(34:46):
a company, you know, like Schwab, I have an inherited
IRA at Schwab. And I was thinking of opening it
and then just paying the whatever fees I have to
do to monitor it myself. But I don't know if
that's a smart thing to do. I have like three
different choices of. Well, first of all, Edward Jones, I
(35:09):
don't like the guy that I have because he did
a couple things that were not in our best interest. And, um,
even now, uh, you know, his suggestions are not ones
that I'm in favor of. If I was going to
stay with them. And then also, the mutual funds don't
(35:30):
have as much of a profit value as the stocks
and the bonds. Right? I know they're made up of
stocks and bonds, but, um, even, like, if I was
going to stay with with them, then it's still going
to be like our we've been there for like over
12 years, and the interest that we've gotten on the
(35:52):
other ones has been in anywhere from 5 to 6% lately,
and it's probably really down right now. But I mean,
everywhere else, I mean, for that amount of time, we
should have had a lot of growth.
S1 (36:04):
Yeah. Well, I appreciate that background, Kathleen. Let me say
a couple of things about this. But one quick question.
What's the roughly the total of the investable assets that
you have there when you put all the accounts together?
S10 (36:17):
Um. Ah, the annuity. I mean, it's almost 200. Oh, yeah.
I should explain that in a minute, but it's like that.
And then I'm going to say that we probably have
around 500,000.
S1 (36:35):
Okay. Yeah.
S10 (36:36):
Maybe thousand, depending on what's going on.
S1 (36:39):
Yeah, sure. And that's obviously a significant sum of money.
So here's my thought. I mean, number one, Edward Jones
is a great brokerage firm. Uh, you know, they are
a wonderful institution. They have more certified financial planners than
any firm in the industry. They're soon to have right now.
They're the number the second largest for Certified Kingdom advisors.
(37:02):
And just based on their growth rate, they'll be the
largest of CPAs in the country. So nothing wrong with
Edward Jones. Just like any firm in the, you know,
up and down Wall Street, you can have an advisor
that you work well with and you might have one
that you don't. And they could be at the same firm.
So perhaps the next step for you. And again, if
(37:23):
you wanted to move to Schwab to your point and
manage it yourself, you absolutely could. You need to make
this call. You're the steward. But I think with that
sum of money, my advice would be for you to
have an advisor. Now, it may not be the one
you have right now because clearly you've lost confidence. It
doesn't sound like there's been a lot of great communication,
and you should understand exactly how you've done. And if
(37:46):
you've underperformed the market, you should understand why. And it
sounds like you do not. And so, you know, my
recommendation would be number one, I would love for you
to keep an advisor who's overseeing this, but perhaps consider
a change. And maybe what you do is look for
a certified Kingdom advisor who's also at Edward Jones for
(38:06):
you to move the account to. And that way you
could stay right there at Edward Jones. You wouldn't need
to move out of the firm, but you could change
the advisor. And I'd perhaps interview 2 or 3, find
the one that you feel like is the best fit.
But at the end of the day, with that significant
sum of money, I'd rather that money not be on autopilot.
I'd rather you be with an advisor you have a
(38:28):
good rapport with who really spends the time to get
to know you, and or you and your husband understand
where God's taking you, you know, clearly builds an investment
strategy that makes sense based on your goals and objectives,
and keeps you really informed in the process. Does that
make sense, though?
S11 (38:45):
And then I've got.
S10 (38:46):
Two other I've got like, um, Fisher and then another
person who uses, uh, Schwab, but he's like an independent
and he wants to only charge me like 75% of a,
you know, like 0.75 of a.
S9 (39:00):
Percent.
S1 (39:01):
Right?
S11 (39:01):
And that's like really good.
S10 (39:03):
But he would he uses, um, people that, you know,
that work at Schwab, okay. For his.
S11 (39:09):
Choices.
S10 (39:10):
So I don't know to do that. And then like
Fisher investment is higher and then like at Edward Jones,
if I choose them as a fiduciary, then that's going
to be, you know, 2 or 3% or something, even
if I change and then, um, yeah.
S9 (39:26):
So yeah.
S1 (39:26):
Yeah. Well, you got a lot of moving parts here.
Here's what I would do. I would try to find
an advisor that you establish a good rapport with. Yes.
You should look at the fees. That's certainly one consideration.
It's not everything. Uh, there's a lot more to a
relationship with an advisor and a fiduciary who's overseeing your investments,
providing tax planning advice, perhaps, you know, assisting with financial planning,
(39:48):
even helping you align your values as a believer with
your investment decisions and your financial planning. So all of
that goes together. Yes, you should look at the fees,
but I would probably, you know, is it bad to
have multiple advisors? No. It just creates more complexity. So
if you could find one advisor that you really feel
good about, the fees are in line. The performance is there.
(40:09):
They're spending the time with you. And preferably they share
your values. As a Christ follower, that would be the
place that I would go next. Um, and perhaps look
to consolidate everything under one roof with that trusted advisor
that emerges over time. Now, if you want to find
a CX there at Edward Jones, you can go to
our website faith. Com and click find a CX. But
(40:31):
hopefully that gives you some things to think about here.
And um, I'm confident you'll make the right decision. Thanks
for your call today. Let's finish in Cleveland, Ohio. Where?
Excuse me. Carl. Go ahead.
S12 (40:43):
Yes. Hi. Thank you for your ministry. Um, I received
a about. It says an unclaimed payable on death, which
is suggesting that I'm the person that that money's going to.
I was reluctant about contacting them, wondering if this was
a valid thing and didn't know how to approach it.
(41:04):
There's various information with claim numbers and they get there.
S1 (41:09):
So is this coming from a law firm or a
bank or an executor who's named in this?
S12 (41:15):
From a, uh, it says, uh, it says solicitors, um,
the legal department. Yeah.
S1 (41:25):
Yeah. Okay. So what I would do is, first of all,
you could check the probate records, because if this is
tied to someone's estate, the probate is a part of
the public record. So you could check that. I would absolutely,
you know, be suspicious about this because there's a lot
of scammers that use a fake inheritance. Um, you know,
to garner information, personal information from you that they could
(41:48):
use to steal your identity. Um, does it say whose
estate it's connected to?
S12 (41:55):
Yes.
S1 (41:56):
And is that a family member of yours?
S12 (41:59):
Well, I haven't been in touch with a lot of
my family. My parents? I'm, um, retired myself, but. And
my family on both. My father was huge. And, uh,
it says that they did a deep search here and
found me.
S1 (42:16):
Yeah. Okay. Well, I would, uh, use an internet search
to search for the sender independently and see if you
can verify them. I would reach out and ask for
detailed information. Uh, proof, uh, without giving your info and
no payment for sure. And if you need to get
a local attorney to help you investigate this and dig
(42:39):
into it, don't give any information out until you verify
its validity. Thanks for your call. Faith in finance is
a partnership between money, radio and faith. We'll see you tomorrow.
Bye bye.
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