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Christian Financial Perspectives episodes

January 15, 2021 92 – 21 Financial Scriptures to live by in 2021
Click below to listen to Episode 92 – 21 Financial Scriptures to live by in 2021
21 Financial Scriptures to live by in 2021

Learn the many ways the Bible teaches us about stewardship.

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In this episode, Bob and Bailey read and discuss 21 of Bob’s favorite stewardship verses that are a great way to start 2021 off right when it comes to your financial decisions. Did you know that the Bible contains over 1500 scriptures that have to do with money, stewardship, and possessions? Jesus actually spoke on stewardship more than heaven and hell combined. It’s hard to go to any book in the New Testament without seeing it.
With so many scriptures on stewardship and financial matters, it can be difficult to choose only 21, but here is our list in this episode of Christian Financial Perspectives:

Psalm 24:1
Haggai 2:8
Proverbs 22:26-27
Exodus 20:3
Exodus 20:15
Exodus 20:17
Matthew 6:25-34
Luke 16:10
Proverbs 15:22
Ecclesiastes 4:9-12
Psalm 1:1

Matthew 22:15-21
Romans 13:1-2
Matthew 25:35-40
Philippians 2:3-4
2 Corinthians 9:6-7
Malachi 3:10-11
Genesis 41:31-36
Proverbs 6:6-11
1 Timothy 6:10
Ephesians 5:11

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Bailey Theaker
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Bailey Theaker

What God’s Word Says About Money
Website

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EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bob:
So welcome to the 92nd podcast where we’re going to be bringing you God’s word today, and the richness of scripture is just going to go throughout this whole podcast. Bailey, when I was putting this together, I always get so excited. I can hardly sit down. I mean, I just want to kind of go jumping around because God’s word excites me so much, and these 21 financial scriptures that we’re going to share today for living in 2021. And you can take all these scriptures and apply them. I’m calling these financial scriptures because all these scriptures speak into how we’re handling money and stewardship. I was just beside myself. I am so excited, and it’s hard to even sleep because as you start looking at all the scriptures on stewardship, it’s mind boggling. According to many biblical scholars, there’s over 1500 scriptures in God’s word that has to do with money, possessions ,and stewardship. And today, we’re only going to cover 21 of them. So it was really difficult to choose which 21 out of these 1500. How are you going to choose 21? But I had to do it because I don’t think we would have time to go over 1500 scriptures in a podcast.
Bailey:
We’d be here awhile.
Bob:
Yeah, it’d be hours and hours and hours. But these are great ones to look for in today’s podcast. And on our podcast website, we’re going to have all these scriptures listed. Most people don’t realize this. Jesus spoke on stewardship more than heaven and hell combined. And it’s hard to go to any book in the New Testament without seeing it. You can just turn, like in the book of Matthew, and you can’t go more than a page or two without seeing something that has to apply to scripture and finances. So let’s get started.
Bailey:
Yeah. So we’re going to go through 21 financial scriptures for 2021. And the way that we’ve kind of planned this out, Bob put a lot of time into studying the scriptures and searching for how to look at our finances through the lens of the Bible. And so I’m going to read the scriptures that Bob picked out, and then Bob, you’re going to offer up like a commentary on why you think that those are so vitally important as we look at our finances through the Bible.
Bob:
You mean Bob’s going to comment on something, huh?
Bailey:
Unheard of, right. So number one is Psalm 24:1. “The earth is the Lord’s and everything in it, the world and all who live in it.” And number two is going to be Haggai 2:8, “T,he silver is mine and the gold is mine declares the Lord almighty.”
Bob:
So, there’s a reason we started with these two scriptures because this is the foundation for stewardship because these scriptures help us to understand and really acknowledge that God owns everything. You’ve got to start with that. Like I said, that’s the foundation. When we acknowledge that God owns everything. I just think of everything. And that’s all our bank accounts, our investment accounts, our real estate, our retirement accounts, and all our personal possessions. And if he owns it and we’re managing it, then we really want to take care of everything that God’s given us with respect and honor, because that’s honoring God when we do, so this is number one. Psalms 24:1, you’ll hear me mention that time and time again that the earth is the Lord’s and everything in it and all who live in it. That means every single one of us. So hopefully, everyone’s going to go to that scripture and really look at that, put that over your doorpost, and put it on your desk
Bailey:
Right at the top of your checkbook.
Bob:
You got it. It’s a good one. That’s a very good one. I like that to put that at the top of your checkbook.
Bailey:
Number three is Proverbs 22:26-27. And it says, “Do not be a man who strikes hands in pledge or puts up security or debts. If you lack the means to pay, your very bed will be snatched from under you.”
Bob:
That’s a big one. And you notice what it says at the very end. Your very what will be snatched out from under you? This is a real warning to us about getting into too much debt that we may not be able to pay back. And I like this little quote saying from Ron Blue, who I’ve had on the podcast many times, that when we borrow money, we’re always presuming upon the future, but we really have no idea if the future is going to happen. None of us know if we’re going to even be here tomorrow with 100% certainty. So, this is why it’s always important, too, to plan for the unexpected, but take this scripture to heart if you’re going to be refinancing that house or buying a new one, or if you’re going to go buy a new car and you’re going to finance it, be very careful what you borrow money for and don’t get over your head. And really, the best thing is no debt at all. It’s very hard for many people. I mean, the price of cars today starts at like $30,000, and most people, they just don’t have 30, 40, $50,000 sitting around, but this is the importance of cash reserves, which we’ll go into later. Some good scriptures on that.
Bailey:
Number four is Exodus 20:3, “You shall have no other gods before me.”
Bob:
That’s the first scripture of the 10 commandments, and the 10 commandments have three or four scriptures in them that have to do with finances. And you say, well, how does that have to do with finances? Because it is warning us to not put anything before God and the worship of money, especially here in America and materialism, we’re bombarded with it every single day. And we need to be very careful about putting our work and putting other things and materialism in front of God, because it’s very clear here. You’re not to put other gods before me. So whatever you’re worshiping, that’s your god.
Bailey:
Hmm. Wow. Well, staying in line with those 10 commandments. Number five is Exodus 20:15, “You shall not steal.”
Bob:
This is the eighth of the 10 commandments. And it’s a reminder to us to be forthright and all of our dealings with others and the governing authorities. And you notice I said governing authorities. How could we be stealing from the governing authorities? If you’re not reporting your taxes properly and you’re not doing the proper accounting, trying to hide money, that’s stealing. So when you follow this commandment, what I love about this is you never have to be worried about covering your tracks behind you. You don’t have to worry about that concern. And there’s a scripture about not worrying, and we’re going to cover that one too.
Bailey:
Number six is Exodus 20:17, “You shall not covet your neighbor’s house. You shall not covet your neighbor’s wife or his male or female servant, his ox or donkey, or anything that belongs to your neighbor.”
Bob:
Yeah. We’re not going to probably covet somebody’s ox or donkey today, but are we going to covet their income? Are we going to covet what kind of car they drive or where they live or how much time they get off. And this scripture is the last of the 10 commandments, but it really reminds us not to envy what others have or support the redistribution of wealth we have not earned ourselves. How are we supporting the redistribution of wealth if we’ve not earned it ourselves? Well, one of those ways is by how we vote, and are we voting in politicians that are are going to redistribute wealth. They’re taking from one class that has not earned it or one class that has earned it and given it to the other. That scripture is warning us to be careful about coveting. Envy is one of the biggest problems many people have, and politicians, as you know, they use this platform to run on, to legally take earnings from one class of people to satisfy the sin of envy and give it to another class of people. Never thought about it that way, have you?
Bailey:
No, that’s a whole new perspective. I feel like we live in a social media age where it’s so easy to compare my life to everybody else’s and see what everybody else has and to want that and want my life to look a certain way. But this is just a really solid reminder.
Bob:
It is. And this is a reminder whenever you hear that term that the wealthy don’t pay their fair share. Well, that’s just a false statement. I mean, all you have to do is go look at the IRS website and look at the tax tables. And the wealthy are paying the largest percentage of their income of anybody. And the reason is that’s because that’s redistribution of wealth.
Bailey:
Wow. Wow. Well, number seven is Matthew 6:25-34, and it says, “Therefore, I tell you do not worry about your life, what you will eat or drink or about your body and what you will wear. Is not life more than food and the body more than clothes? Look at the birds of the air. They do not sow or reap or stow away in barns and yet your heavenly father feeds them. Are you not much more valuable than they? Can any one of you by worrying add a single hour to your life?”
Bob:
Isn’t that last part good? Can any of you by worrying add a single hour to your life? And you look at the birds of the air, and I mean, they’re always out and they’re gathering food. They’re not lazy, but they’re not worried about it. And I think this really speaks into that. Worrying about things is so unproductive. We can’t control things. We’ve got to leave that to God and trust in God that God has the world in the palm of his hand. So, it really comes down to believing that, do we believe truly that what we believe is really real and trusting that God has got it, has got all this. And there’s so much worry today. Especially, like you say, on social media that you were mentioning. Man, you’ve got to turn the news off or it will worry you to death because what’s going to happen? But that’s not what God has called us to. And I look at this, like worrying is a sin. It’s saying, do not worry. Okay.
Bailey:
Number eight is Luke 16:10, “Whoever can be trusted with very little can also be trusted with much. And whoever is dishonest with very little will also be dishonest with much”
Bob:
I would think this scripture speaks into being trustworthy with the little things. And when we are, God allows us to manage more of the big things, because it’s saying it’s very clear. Whoever can be trusted with very little can also be trusted with much. There’s a test. How are you doing with this small amount? I remember with our children when they were growing up, if we would give them a dollar or two, how did you do with that? Or you give them a $5. And I always talk to many of our clients about doing a pre inheritance experience with your children, especially those clients of ours that have done very well, and they have a million or 2 million plus, and the children going to inherit a large part of that. I always tell them, give them $10,000 and see how they do with that. Come back three or four months later, because are they really ready to inherit that million plus dollars? And if they’re not handling it well now, what makes you think they’re going to handle it well then?
Bailey:
The next couple go hand in hand. Number nine is Proverbs 15:22, “Plans fail for lack of counsel, but with many advisors they succeed.” Number 10 is Ecclesiastes 4:9-12, “Two are better than one because they have good return for their work. If one falls down, his friend can help him up. But pity the man who falls and has no one to help him up. Also if two lie down together, they will keep warm. But how can one keep warm alone? Though one may be overpowered. Two can defend themselves. A cord of three strands is not quickly broken.” And then number 11, Psalm 1:1, “Blessed is the man who does not walk in the counsel of the wicked or stand in the way of sinners or sit at the seat of mockers.”
Bob:
We’ve had entire podcasts just on these three scriptures because these scriptures have a lot to do with counsel and seeking biblical guidance because godly counsel is wise, and wise men and women who have handled it correctly can help you with all the financial resources and enable you to manage it well. And we’ve gotta be very careful about accepting advice from anyone that’s ungodly. Like it says there, “Blessed is the man who does not walk in the counsel of the wicked.” So when you’re looking for advice, and you need counsel, look for biblical counsel. And first, look at God’s word and see what God’s word says about it. You’ve heard me mentioned before my favorite book of the Bible is Proverbs, probably cause I’m a financial guy, because Proverbs just speaks so deep into how we handle our finances throughout the whole book. Of course, all of God’s word speaks into that too, as we’re talking about today. So this next one, these are a couple pretty long scriptures, but this also has something to do with what’s very, very important, and it’s how we handle our finances.
Bailey:
And number 12 is Matthew 22:15-21, and it says, “Then the Pharisees went out and laid plans to trap him in his words. They sent their disciples to him, along with the Herodians, ‘Teacher,’ they said. ‘We know that you are a man of integrity, and that you teach the way of God in accordance with the truth. You aren’t swayed by others because you pay no attention to who they are. Tell us then, what is your opinion? Is it right to pay the Imperial tax to Caesar or not?’ But Jesus, knowing their evil intent said, ‘You hypocrites. Why are you trying to trap me? Show me the coin used for paying the tax.’ They brought him a denarius and he asked them, ‘Whose image is this? And whose inscription?’ ‘Caesar’s,’ they replied. Then he said to them, ‘So give back to Caesar what is Caesar’s and to God what is God’s.'” And then number 13 is Romans 13:1-2, “Everyone must submit himself to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God. Consequently, he who rebels against the authority is rebelling against what God has instituted. And those who do so will bring judgment on themselves.”
Bob:
These scriptures really go with each other, don’t they? Cause it’s speaking of paying taxes. It’s like Jesus said, well, who’s picture is on this coin. And he said, well, give to Caesar what is Caesar’s and to God what is God’s. And then you come right over in Romans 13 about how we should submit to the authorities. There’s rules that we have to go by. We should pay our taxes. And I’m thinking about this comment I’m about to say. I’m pointing right at myself. Okay. We should pay our taxes without complaining about them. I’m guilty. Okay. Because we need to realize that’s God’s provision. So if we’re paying a whole lot of taxes, that’s God’s provision. Don’t complain about that. We can always pay less taxes. Everyone can pay less taxes. Well, how do you do that? By making less income or giving more away. So we’re commanded to submit to the governing authorities, whether we like it or not, as long as they’re not violating biblical principles.
Bailey:
That’s good. That’s a good reminder. Wow. Number 14 is Matthew 25:35-40, “For I was hungry and you gave me something to eat. I was thirsty and you gave me something to drink. I was a stranger and you invited me in. I needed clothes and you clothed me. I was sick, and you looked after me. I was in prison and you came to visit me. Then the righteous will answer him. Lord, when did we see you hungry and feed you or thirsty and give you something to drink. When did we see you a stranger and invite you in or needing clothes and clothe you? When did we see you sick or in prison and go to visit you? The King will reply. I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me.”
Bob:
What do you think this scripture is speaking into? It’s about speaking into helping others? And there’s another one right here in Philippians 2:3-4, “Do nothing out of selfish ambition or vain conceit, rather in humility, value others above yourself, not looking to your own interests, but each of you to the interests of others.” This goes right with that scripture. They go hand in hand about helping others with what God has given us and being a good manager of that. This next one speaks even more into these two. It’s kind of like the icing on the cake. Go ahead.
Bailey:
Number 16 is 2 Corinthians 9:6-7, “Remember this, whoever sows sparingly will also reap sparingly and whoever sows generously will also reap generously. Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.”
Bob:
He does, doesn’t he? He loves us to be cheerful about it. I remember when I used to be invited in a smaller church we were in, and they would always want me to, when it was time for the tithes and offerings, they’d want me to do the prayer. And I’d say, now I want to see everybody smiling when you’re putting money into the plate. We’re here to help others in need when we have that ability to do so with the resources that God has given us. These scriptures really speak into that. And there’s another one that goes into this too that is more icing on the cake.
Bailey:
Number 17 is Malakai 3:10-11, “Bring the whole tithe into the storehouse that there may be food in my house. Test me in this, says the Lord almighty and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not be able to have room enough for it. I will prevent pests from devouring your crops and the vines in your field will not cast their fruit, says the Lord almighty.”
Bob:
This scripture really speaks into giving a tithe or a 10th or even more of our income to the church and ministries that honor God and the incredible benefits that follow and also the protection like it says there. I will throw open the floodgates of heaven and pour out so much blessing. You’ll not have enough room for it. And that next one, I will prevent pests from devouring your crops. Now, we don’t have crops. Neither one of us are farmers, but I will prevent your car from breaking down on the side of the road. Things like that. I mean, you can take this and apply this scripture of tithing and protection, the protection that comes along with tithing. I’ve heard so many stories of people over the years that have tithed and seen a portion returned. And like I said, things just last and things just continue to go. And I hear so many good stories about tithing. I never hear any bad stories about it. And it’s the one place in the Bible, what does it say? We can what? We can actually test God in this. It says that. Test me in this and see if I will not throw open the heavens so wide that you won’t have enough room for it. So it’s the one place in scripture that it says that you can test God.
Bailey:
You can’t out-give God.
Bob:
That’s very hard when he owns everything. I’m going to read this next scripture. I love the story of Joseph and how he has the dreams. And this scripture is going to speak into being wise and saving during the good times for those bad times.
Bob:
So, listen to this Genesis 41:31-36, “The abundance in the land will not be remembered because the famine that follows it will be so severe.” You know that’s speaking of when tough times come. You kind of forget about the good times cause you’re in those tough times. “The reason the dream was given to Pharaoh in two forms is that the matter had been firmly decided by God, and God will do it soon. And let the Pharaoh look for a discerning and wise man and put him in charge of the land of Egypt.” That was Joseph. “Let Pharaoh appoint commissioners over the land to take a fifth of the harvest,” that’s 20%, “to take a fifth of the harvest during the seven years of abundance that they should collect all the food of those good years that are coming and store up the grain under the authority of Pharaoh to be kept in the cities for food. This food shall be held in reserve for the country to be used during the seven years of famine that will come upon Egypt so that the country not may not be ruined by the famine.” So this was this dream that he had. And if you go to the 41st chapter of Genesis, you’ll see this dream. Joseph was in jail, basically, and he could interpret this for him, not the Joseph in the New Testament, the Joseph in the Old Testament. I want to make sure that people understand that. And he interpreted this dream in saying tough times are coming. Right now, they’re good. Save 20% of everything you have. Because when those tough times come, you’ll be ready for them. And we’ll have grain stored up. Or in this case, this would be like cash reserves, saving your cash reserves. We’ll have cash reserves stored up when those tough times come. And there’s another scripture I liked that goes with this one as well.
Bailey:
Yeah. It’s number nineteen. It’s Proverbs 6:6-11, “Go to the ant you sluggard. Consider its ways and be wise. It has no commander, no overseer, or a ruler. Yet it stores its provisions in summer and gathers its food at harvest. How long will you lie there, you sluggard? When you get up from your sleep, a little sleep, a little slumber, a little fondling of the hands to rest and poverty will come on you like a bandit and scarcity like an armed man.”
Bob:
He’s saying you sluggard. Yeah. I mean, you’ve watched ants. They’re always busy. They’re not lazy. They’re working. They’re storing up, and here it’s saying the summer is the good times. Things grow in the summers. In the winter, things die out. And so it’s saving for those good times and it’s saying if you don’t, when those tough times come, scarcity, like a bandit, is going to come and it’s going to take you. A little folding of the hands and poverty will come on you. So, these two scriptures, Genesis 41 and Proverbs 6, really speak into how we should save up. And it’s been interesting during all this COVID-19 because we’ve seen during this time that no one had anything saved up and that’s why the government had to come in and bail out everyone because they hadn’t saved up for the bad times.
Bob:
And we’ve had really good times here in America for the past four or five years. The markets have been up. Unemployment has been at its lowest level and pretty much history, but you don’t see people saving up. And then when those times come, the government had to come in and print money. It’s still good right now, but what’s going to happen from all this borrowing that we’ve done. It’s going to have to all be paid back someday. And that’s either going to be through a massive weakening of the dollar and inflation, or we’re going to have to be taxed extremely high to pay back all this debt that we’ve incurred because we didn’t save up and didn’t follow this scriptural principle. All right. So we’ve gone through 19 scriptures. We’ve got two more. That’s going to make 21 scriptures to live by in 2021. So, here we go to these last two.
Bailey:
All right. Number 20 is 1 Timothy 6:10, “For the love of money is a root of all kinds of evil. Some people eager for money have wandered from the faith and pierced themselves with many griefs,” and number 21, Ephesians 5:11, “Have nothing to do with the fruitless deeds of darkness, but rather expose them.”
Bob:
So these are interesting scriptures and people might be thinking, why would you choose that number 21? How do you apply that to finances, right? Have nothing to do with the fruitless deeds of darkness but rather expose them. These are several of many scriptures that you’ll hear me talk about on Christian Financial Perspectives that speak into the awareness of greed and how it can destroy our faith in God.
Bailey:
Well, Bob, these are so helpful just personally as I look at my own finances as our listeners look at their own finances, but as a financial advisor, how do you apply these scriptures and these principles to that?
Bob:
Well like these last two, we apply these to real life here at Christian Financial Advisors by having nothing to do with the fruitless deeds of darkness, by not investing in companies or banking institutions that support that. We call that biblically responsible investing or values-based investing. And that’s what it really has to do with. It’s not supporting the fruitless deeds of darkness.
Bailey:
And being a firm that stands in those biblical principles. What are some of the challenges that you face that are unique?
Bob:
Well, when you’re not invested in companies that are involved in fruitless deeds of darkness, it does limit you in some ways and being biblically responsible because we can’t buy some of the well-known large tech companies that are so involved in supporting darkness and anti-Christian agendas and even anti American agendas. But our clients here and I believe following biblical principles is more important than selling our souls out and buying the companies because of greed. So we’re very careful that and not allowing greed to dictate us, but what’s interesting is the amazing thing about biblically responsible investing, based on the past, is that returns have been just as good or better. That’s a great thing, but that’s not the only reason to be biblically responsible in your investments because we want to follow God’s word, and that’s the most important thing. That’s number one is following God’s word. So there are 21 scriptures. We’re going to have, again, this all on our website for christianfinancialpodcast.com, and we do have “What God’s Word Says About Money” on our website. And you can click on that, but I would just invite you to take these scriptures, these 21, and live by these 21 scriptures in 2021. You can’t get hurt by them. I’ve never seen anyone hurt by following God’s word and following these biblical principles that are timeless. These were written over 2000 years ago, but they’re timeless and they’re still relevant to the day. And that’s what’s so amazing and wonderful about God’s word. It goes across the times. It’s infinite. You can always apply it no matter what time you’re in.
Bailey:
Well, Bob, I’ve said it before, but as a financial advisor, you really serve as a financial shepherd for people. And you really pastor them in that. So thanks for taking the time to study the scriptures and search the scriptures and share them with us. It’s been really helpful.
Bob:
That is Christian financial planning.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
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January 05, 2021 91 – Setting Goals and Living Life with Purpose in 2021
Click below to listen to Episode 91 – Setting Goals and Living Life with Purpose in 2021
Setting Goals and Living Life with Purpose in 2021

Write down your 2021 goals to help you find purpose this year.

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What are your goals for 2021? Bob and Bailey share 21 personal and financial goals, in no particular order of importance, that are ideas for goal setting for 2021. From eating healthier to creating an estate plan, these are ideas for everyone!
Did you know that, according to a Harvard Business School study, 83% of the population does not have any clearly defined goals much less financial, 14% have goals but they never write them down, and only 3% have goals that are actually written down! Writing down your goals makes it more likely that they will be achieved. It doesn’t have to be 21 goals, but maybe 5-6.
When you do write down your goals, think of the acronym SMAC. Make your goals:
Specific to you personally. Not what someone else wants.
Measurable so that you can see progress along the way
Achievable so that it is possible to reasonably reach your goals
Compatible with your values and beliefs

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Bailey Theaker
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Bailey Theaker

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
SCHEDULE AN APPOINTMENTDid you enjoy this episode? Sign up for email updates and never miss an episode.
EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bob:
So, welcome to our first podcast of 2021. Bailey, I am amazed we made it through 2020. COVID and all that crazy stuff. And you know what? This is our 91st podcast. Now, can you believe that we have that many podcasts? I tell you every subject you can possibly imagine from buying a car to buying a house to how much you should put in your 401k to the different stages of life planning. We’ve done it all. And if you are just listening and today’s your first time, go back because there’s so much good information, good education for you. But we like to start off each podcast with a scripture. So, go ahead and read it.
Bailey:
We do. It’s Philippians 3:14 and it says, “I press on toward the goal to win the prize for which God has called me heavenward in Christ Jesus.”
Bob:
Hey, there’s a word in there that has to do with today’s podcast. Which word is that?
Bailey:
Goal.
Bob:
Yes. Yeah, we’re going to talk about goals today, and I want 2021 for me, for you, and everyone that’s listening to us. I want 2021 to be a year of living life on purpose. Seize the day and make this a good year, the best year ever. So many of us are, like you say, we just kind of want to be done with 2020. That was just a crazy year not just with COVID, but all the wildfires. I remember when we went up to Colorado in August like we always do, and we couldn’t get out of the condo cause everything was on fire and the smoke in the air. And it was like, yeah, this is kind of on par for 2020. So, I’m really looking forward to this year of 2021. I love that scripture, “Press on toward the goal to win the prize for which God has called me heavenward in Christ Jesus.” God is calling us to live this life on purpose. Genesis 2:15 is another scripture I like. It says, “The Lord God took the man and put him in the garden to work it and take care of it.” That is also saying we’re not put here just to coast through life, but to work it and take care of it. Like I say, with this being the first podcast of 2021, I thought today is going to be a good time for the subject “living life on purpose”. And we’re going to talk about setting goals, setting lots of goals. Think about this now. Everyone might not relate to this, but me I’m such a goal setter. I just thought, well, okay, it’s 2021. Let’s set 21 goals. And as it started getting into me and I started thinking about this, I actually came up with more than 21 goals. So, we’re going to share more than that with you today, but you don’t have to pick all 21. I just want you to listen and glean off. Take five or six of these, maybe, for yourself. And there’s every kind of goal you can imagine from financial to personal to spiritual goals. They’re all kind of mixed in there.
Bailey:
Yeah, I think it’s exciting to do this kind of thing because one way to look at it is that it’s goals that you’re setting for yourself. But another way is to say we’re kind of dreaming. We’re dreaming about the possibilities that are available just this next year. And if there’s anything we’ve learned in 2020 it’s that things might not always look the same. And so, maybe take advantage of the day that you’re in today because it might not look that way tomorrow. You might not have the same things available to you tomorrow. It might look completely different. So, live today intentionally. This is kind of a space to dream about what that could look like.
Bob:
The word that you said intentional, to live the day intentionally. I shared this in our last newsletter, and I want to want to share this as we get to talking about goals. And it’s an old study I heard from many years ago by Harvard, and it was from their Harvard Business School, and it said that that 83% of the population doesn’t have any goals, any clearly defined goals. I find that sad. It’s just kind of like walking around in a maze. You don’t know where you’re going. 14% of the population does have goals, but they never write them down. 3% of the population though, in this study that they did, has no goals, and they write them down. That’s the key is writing the goals down. What’s interesting is is they went back and they studied the people that wrote down their goals and they found they were earning 10 times more than the 83% of the group that didn’t have any goals. They’re earning that much more money. And in addition, the studies showed that individuals with written goals also tend to be healthier and have a happier life, happier marriages, than those without goals. So, it’s definitely worth it as we’re here at the beginning of the year. So, it’s a new start. Think of 2021 is a new start, a fresh start, to write down your goals. And I use kind of a formula, and I’ve been using this for years and years and years. I got it over here in my briefcase, I meant to pull it out before we started the podcast, but I’ll reach over here while you’re talking and grab them out. I’ve got my goals laminated, and I pulled out one just before I came over here to make the recording for today’s podcast. It was from 2010, and I looked at all those goals and I’ve hit them all, every single one of them. But when you’re setting goals, I want you to think of this acronym of SMAC, S-M-A-C, and the S means specific. Make it specific to you personally, not what someone else wants. It needs to be your goal. Measurable, make a goal that you can see progress along the way. Like one of these goals is going to be to put less food on my plate. That has to do with losing weight. So, I can measure that. I can easily measure that by not getting on the scale every day, but once a week. I can measure that and see that my weight is dropping. Or, when you’re saving, you can measure that and see your savings going up and being specific with that. It may not be reasonable for you, Bailey, to save a $1000 a month towards cash reserves, but maybe it’s reasonable to save $50 a month. So, you’ve got to make that to you. Achievable was another one, that’s the A in SMAC. So make it achievable, aiming high is good, but not so high that it’s impossible to reach that goal. And then it’s got to be compatible. Your goals need to be compatible with your values and beliefs. So, by being specific with your goals over the years and putting them in writing, like I said, I’ve reached nearly 100% of them over time. I’ll show you this form here, and we’re going to go over the form that I’ve got here at the end. And we’re going to make this available on the podcast website on christianfinancialpodcast.com. And you can go to that.
Bailey:
About writing down your goals, it reminded me of this quote that a pastor of ours used to say all the time, which is the faintest ink is more powerful than the strongest memory. And his point was that you should always write things down. And when you think that it’s just going to stick in your brain and “oh, I’ll remember that later” when it comes to every area of your life – when it comes to memorizing scripture or making goals or anything like that, the faintest ink is actually stronger than the strongest memory that you could possibly have.
Bob:
That’s interesting. Say that one more time. Just that the thing…?
Bailey:
The faintest ink is stronger than the strongest memory.
Bob:
Okay. That’s very interesting how that phrases that.
Bailey:
Yeah! So, I think you can set goals in every area of your life, from financial goals to physical goals, to spiritual or relationship goals. You can put them in every area of your life, and you get to pick which goals you might want to adopt for yourself in 2021 and which ones you don’t really care for and don’t really fit you. And so they do get to be specific for you. So here we go, we’re going to go through 21 possible goals that you could have. And like we said, maybe they fit you. Maybe they don’t, maybe they inspire you to dream up some new goals for yourself. But the first one, and this is a big one for me personally, would be to pay off some more debt this year. I think all of us could stomach paying off a little more debt. And so for me, it’s going to be buying less non-essential things, specifically eating out. I think I spend a lot of my money on eating out. And so, spending less on that and putting that money towards paying off debt.
Bob:
Yeah. it’s amazing what you can spend on eating out. It’s amazing what people just spend on coffee, coffee alone. A lot of people spend $4 or $5 a day, and they’re doing that, out of 365 days, maybe they’re doing that 300 days. And if you’re spending $5 times 300, that’s $1,500 that you’re spending on coffee when you could probably buy enough coffee from the grocery store to do the same thing for maybe a $100.
Bailey:
Probably better coffee.
Bob:
Yeah, my wife has, what is it called? You’ve seen it at our house. She pours it over. She’s got the container and she puts the coffee in there. She pours the hot water right over, and it’s so good. I mean, it’s amazing. So, that is a great goal to pay off that debt, eat out less. And that will give you the extra money to pay off that debt. This is one of mine. It always is. I guess, at 58 years old the metabolism slows down, and I need to lose some weight. So I say, okay, how am I going to do that? I’m gonna lose some weight by putting less food on my plate. My wife is such an amazing cook and she cooks three meals a day from scratch. I find myself going back two and three times. So, I need to quit doing that. And we’ll talk to Rachael about that. Fix less.
Bailey:
Fix less food. Yeah. Well, and in line with paying off more debt for me, I think it’d be helpful to not add more debt in addition to that that I have to pay off. And so, I’m setting the goal of cutting all unnecessary spending on our credit card, to just stop putting things that we don’t need to on it and adding to the debt that we have to pay off. And number 4 would be well, I’m a reader. And a lot of times I read books that I kind of call junk food books or junk food reads. They’re not helpful. They’re not great reads. I just read them just to kind of take up the time. I would like to spend a little more time reading books that are actually positive and good for me rather than ones that either have no effect or have somewhat of a negative effect.
Bob:
Yeah. “The Purpose Driven Life” is one of my favorite books. It’s from a long time ago by Rick Warren, but that’s a good one to read. Have you read it before?
Bailey:
Yeah. That’s a great book. And then you mentioned this before, but to stop buying overpriced coffee. I mean, we have a pour over, too, at our house and we want to get a chemex, which is the same thing, just bigger, and you can make really good coffee at home. I usually buy coffee on the way to work because it’s convenient. But I think there’s something to be said about taking a little bit longer to move through the morning slowly and do things like that with intentionality. I think that’s a good goal.
Bob:
So what are you going to do with that savings? You’re going to pay off debt and other things that some people can do if they don’t have as much debt, they can invest it, invest those dollars or give away the savings to those in need. And what’s interesting when you say that about the coffee. I’m not so sure if it’s more convenient. I think it’s more convenient to make it at home. We have the pot that you just have the water in it. I mean, it takes literally less than 30 seconds to put some water in it, fill it up, turn it on. I wait for it to get to the boiling point then do the pour over. The total time in that is about four minutes or five minutes. I see these lines at these coffee drive-throughs and it looks like people are waiting in those lines for 15 or 20 minutes sometimes. So I’m not so sure if that’s really convenient or not. I think you can spend your time better. Here’s one of my goals. I think this is one that we could all relate to is limit our smartphone usage to no more than an hour a day. There’s just so many more productive things you can do than just look at your phone. We’ve become a society where we walk around looking at our phone all the time. So, that’s going to be one of my goals.
Bailey:
And not spending as much time on your phone, they have studies that prove that that actually just makes you more productive as a person. Like it makes your brain work better.
Bob:
You also sleep better. Oh boy, that’s a big one for me, watch less negative news and more Andy Griffith. Look at life from the perspective of it’s always half full instead of half empty. I’ll tell you, the news can be so negative and that will get into your soul. I have some relatives that I’ll go see them and I mean, Fox News is on all the time. They’re even watching it until 10 at night. And I’m thinking, okay, this is so depressing to watch this after awhile, especially with all what was going on last year and we had all the riots and everything. Turn that stuff off. It’s not helping your inner soul at all. I mean, I’m not saying to completely bury your head in the sand, but it doesn’t need to be on more than an hour a day at the very most.
Bailey:
Sure. Goal 8 eight would be building more cash reserves for emergencies and unexpected expenses. I know that we could all use a little more cash reserves.
Bob:
Yeah. When that air conditioner breaks, you shouldn’t have to go to your investment portfolio or go to your credit cards. You should have enough in your cash reserves, in your savings account, to be able to pay for that.
Bailey:
Number 9 would be finish getting that bachelor’s degree or master’s degree or doctorate degree that you started on years ago. Or maybe, go to school for the first time. Maybe it’s something you’ve been considering. Take the leap.
Bob:
That’s a good goal. Yep. so many people have started on their bachelor’s. They never finished it. Maybe they’ve got three years and they’ve just got one year to go or get that Master’s. We were just talking. One of our clients just yesterday, I think 52-53 years old and is getting their master’s degree. I’m like, wow, that’s great. You wouldn’t think at that point in life you would want to do that. But I think it’s fantastic. It’s never too late.
Bailey:
My husband, he got a couple of credits when he was 18 and when he graduated high school and didn’t finish, and this year he’s almost 30 and he’s going back to school. He’s going to seminary because he’s found something that he really loves and he’s passionate about. And so he’s kind of picking it back up and he’s going to finish it.
Bob:
That’s a great goal. That is a fantastic goal.
Bailey:
Another great goal would be to set the standard for yourself, to wait at like 48 to 72 hours before buying big new stuff. Don’t allow emotions to make all your financial decisions. But to kind of say, if I’m thinking about making a decision, I’m going to wait. I’m going to wait two to three days before I make that purchase.
Bob:
Now, if you’re going to buy a car, they’re going to hate you when you say that. But it’s interesting. I’ve got a five-year old Ford Explorer. It’s getting close to the 100,000 mile mark. I get that new car itch, but I’ve gone and looked at several and I see the prices of cars. And every one of them they’re like, well, we can make this deal today. I was like, no, you’re talking to a guy that makes a financial podcast. I’m not going to let my emotions get involved. And it’s interesting. The two or three I’ve gone and looked at, I’ve allowed three or four days to really get in and settle down. And man, I think I’m going to be good with my Explorer for maybe another 100,000 miles. I go out and look at it, it’s in good shape. I mean, why not? Maybe I can go five more years, make it a 10 year old car. I think about what’s the reason for buying a new car? So I think about that car, and is it really a need or is it just a want? So by waiting several days, those emotions calm down and you get away from that. Here’s another goal that’s interesting that comes along here. This is a financial goal that I see for a lot of people. I want you to think about setting a goal this year of maybe getting a life insurance policy if you’re younger and you’re a breadwinner or increasing the coverage on the one that you do have, because I see this more times than not. I’ll see the life insurance policy strictly to cover maybe one year of income if the income winner were to get in a terrible accident and were to take their life. Unfortunately, I’ve been in the business so long that I’ve seen lives taken by car accidents and sickness. I want you to make it a goal for many of you to go look at your life insurance policy and see how much you got and how much would it cost for you to increase that to at least 10 times your income. Because think if something happened to you and you have younger children, you want to be able to provide a financial stipend for them for at least 10 years. So, I think that’s a good goal for this year.
Bailey:
Absolutely. And kind of in line with that would be just kind of getting things in order, just in case. Updating your will, a medical power of attorney. Getting those things, if you don’t have them, setting them up, but not to live in fear, but just to walk in wisdom that life is happening all around you and things happen and life changes. You want to prepare so that the people around you are taken care of.
Bob:
That is a really good goal. About 80% of the population does not have a will at all. So, we have here to update the will, but a lot of them don’t we have a will. So, I would make that a goal this year, too, to get a will and a medical power of attorney. I mean something, if you were to get in a bad accident, you need to be able to tell people what you want done to you and a durable power of attorney, which has to do with the financial decisions, being able to be made by your spouse, or if you’re not married, like we have those power of attorneys for our youngest daughter because she’s not married so we can help make decisions if something were to happen to her. We just actually updated that this last year. Boy, this is a big one. Go get a complete physical and screening. Make that a goal ASAP and every few years after that, and get that physical of your lungs, your heart, your colon, prostate for men, and breasts for women, because remember the five deadliest cancers today is prostate cancer for men, breast cancer for women, pancreatic cancer, colorectal cancer, and lung cancer. And as long as you’re getting those physicals and you find it at the beginning stages at stage one, you have such better odds than procrastinating to get that physical of all those different areas. I just had a complete heart exam, and that doctor was so excited. She says, I think you’ve got about another 40 years left on you. I was like, I’m 58. It means I’m going to 98. She said, you can go do P90X all you want. Your heart’s in perfect condition. But I had a complete heart exam. Y’all know around here, it took a couple of times. I did a complete nuclear stress test and they did the ultrasound and everything of my heart, but it all came out good. I feel good about that. I’m exercising harder and I’m noticing my breathing is getting better. So important to make that a goal if you’ve not had a complete physical in at least, if it’s been two or three years, it’s too long,
Bailey:
And doesn’t it feel good once you just get those things done and you kinda know where they’re all at? You did it. It’s done.
Bob:
Exactly. And if there is something you find, unfortunately, like you say, get it at the beginning stages. Rachael was a cancer survivor. If we’d done some more screenings, we would have caught it much faster. And she’s fine now. But we’d gotten to nearly stage three. And next, start putting money in a retirement plan, like a 401k or IRA if you’re not doing that, or increase your contributions a little bit if you already are. That’s a great goal.
Bailey:
And we had talked about this a little bit earlier, setting a goal to wait two to three days before making major decisions. But I think you could increase that even to a week or two for really large purchases like cars or boats, or just really expensive items that you’re looking at. Why don’t you just wait? Wait a week. Wait two weeks and see how you feel after that. It might be a very different story after that two week waiting period.
Bob:
I noticed the next step kind of goes with this, doesn’t it?
Bailey:
Yeah. To create a detailed monthly budget and then try to stick to it. Something that I think most of us try to do at the beginning of every year is make that new budget and try and stick to it. And that is a goal to be reckoned with. I would love to do that.
Bob:
Yeah. So by waiting, you can go back and look at your budget and think, okay, can my budget really take this large purchase that we’re looking at? Maybe it’s a car. Maybe it’s a new house, or maybe even it’s a vacation that you really want to do, but you can’t afford it. So, do a staycation, lots of nice parks around here. Oh, we’re going to talk about that one later, too. You know what? We’re at goal number 17 now. And so, if any of these kind of stuck with you and you’re like, “Hey, I want to make that one of my goals.” Again, we’re going to put this entire script on our website and you can just go through it and see all these written out. I think this is such a worthy goal is to spend more time in prayer for 2021 and reading the Bible, because God’s word is so full of wisdom. I think all of us can use this. We’ve gotten so caught up and we’re just so busy that I am guilty of not spending enough time in prayer and reading my Bible enough. I’ve always put this as one of my goals every year. It just pretty much automatically goes in to remind me to read God’s word daily. Along with the daily thing, too, is exercise daily. It’s easy to procrastinate on this. And this is a great goal. This is always one of my goals to exercise for at least 30 to 60 minutes a day. That might be just taking an outdoor walk or just doing some old-fashioned calisthenics like pushups, sit ups, and jumping jacks. Those are old-fashioned. You don’t have to go to a gym that you have to drive to that’s 15 to 30 minutes away. You can do that right in your own living room floor or just outside in your backyard. But it’s so important that you do that. You’re going to feel the difference in your life with the amount of energy you have and it’s going to help you be so much more healthy.
Bailey:
Goal number 19 would be to volunteer more often, whether that’s in a charity or in your local church body to find a place to serve and do that more. I mean, it’s kind of in line with doing a physical or getting those things done. It just, it feels good. It’s good for your soul. It’s good for your community. It’s good for everyone. It benefits everyone. And so, find a place to serve. Find a place where you can regularly say, this is not all about me. And I’m going to serve the people around me.
Bob:
You know what that does, too? It releases the bondage that all of us have, and that is a bondage of selfishness. So when we’re helping and volunteering with charities and giving more, that releases that bondage. It’s makes us more Christ-like. He came here to serve, not to be served.
Bailey:
Good. Yeah. Goal number 20 would be to focus on the positives of life and not the negatives. One of my favorite ways to do this is I have this journal that I call my “ever be journal” because there’s a song that says your praise will ever be on my lips. And so it’s my ever be journal. It’s a journal that I fill with reasons that I should praise God, the reasons that his praise will ever be on my lips. And so if you could start jotting down the positives of life, the things that we have to be grateful for, rather than focusing on the negatives, I think that would be a helpful goal. And then goal number 21 would be to spend more time with the people you love.
Bob:
So there’s 21. Do you notice it keeps going? So I’m going to go through some of these last eight or nine, because I started listing these down, and I was amazed at how many goals I could come up with. I could have continued to go, but there is just a few more. So, we’re going to go through these pretty quickly. Put others’ needs before my own. Again, that’s Christ-like. Listen to positive uplifting music. Here we go. This is speaking directly to me. If you’re a workaholic, I am. Work less, and play more. There’s an old saying, and I’ve heard many pastors say this. I’ve never met a person on their death bed that said they wished they had worked more, but they always say, I wish I’d spent more time with my family, more time reading the word of God, more time serving, and helping others.
Bailey:
Well, number 25 would be do special acts of kindness for someone at least once a week like taking them some food or flowers. I love to write people cards. And so I’ll drop those in the mail pretty regularly. And goal number 26 would be get outside of your comfort zone. Go do something that you wouldn’t normally do.
Bob:
Number 27, and we were down to just a few more, buy that state or national park pass and go visit one every few weeks and enjoy God’s outdoor creation. He created it for us to enjoy. Go enjoy it. And there’s so many beautiful state parks around the entire nation and national parks. Rachael and I, we buy a state park pass, an annual pass, and we just go visit parks all the time. And many of them, we’ll go back to four and five times because just so many of them have lakes and trails and hiking trails. They’re just beautiful, and you can buy a state park pass. I don’t know what we pay, Rachael does it, but I think it’s like a hundred dollars. But when you think about that, you’re going to visiting it throughout the whole year. It’s pretty cheap entertainment, and it’s a great way to get out and enjoy life. Plant some flowers or vegetables, tend to them weekly, and watch them grow. I planted a bunch of flowers in my front yard this last year. It’s a row of them, and you can see them as you go up. They’re just really high now. And it’s been amazing to watch that go from just three or four flowers. I planted about 20 different ones, and they’re all over the place. And now all 20 of them have 20 flowers. It’s just gorgeous as you walk up our sidewalk to our house. And it’s been fun to watch that.
Bailey:
Sure. I love that. And goal number 29, which is our last goal on our list, would be to finish some projects that you’ve already started in the last few years. I know I have about a million DIY projects that are about half finished, and I ran into a spot where I just felt like I couldn’t move on. I think I’m just going to tie them up. I’m going to finish them up. And again, it feels good to finish something you started. And so, pick those back up, finish them up.
Bob:
Well, I hope we helped motivate you today with setting goals for 2021. We’ll put this on our podcast website. Again, I have a goals form that I use and you notice, Bailey, how I’ve got spiritually what I want to do and what I will do to accomplish the goal. I write that in there – physically, financially, relationally, mentally, and professionally. These are how I piece all these together. And all of these goals that we mentioned today will fit within one of these categories. We talked about spiritual and physical and financial and relational and mentally and professionally. I want you to still remember that the Harvard study we talked about at the beginning of the podcast, it’s so important that the 3% that have written goals were earning an astounding 10 times more than 83% of people that didn’t have any goals at all. Similar studies have shown that individuals with written goals tend to have better health and happier marriages than those without goals. I hope we’ve motivated you today to live life on purpose in 2021, not a life of mediocrity, but one on purpose. Talk to you in a few weeks.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
0 min
December 22, 2020 90 – Charitable Giving Strategies Using Non Cash Assets
Click below to listen to Episode 90 – Charitable Giving Strategies Using Non Cash Assets
Charitable Giving Strategies Using Non Cash Assets

Learn about how to efficiently give to your favorite charities.

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Tis the season for giving, so what better way to celebrate the giving spirit of Christmas than to learn how to give better and more efficiently. When most people think of giving to their church or charity, they usually only think of what they have in their checking and savings accounts to give. Yet, on average, only about 10% of assets are held in cash.
In this podcast, Bob covers the most efficient ways to give using the other 90% of what’s in non-cash assets. He is joined by a charitable giving expert, Ryan Assunto of the National Christian Foundation, to talk about giving more efficiently. The National Christian Foundation is the largest Christian, non-profit organization in the United States assisting donors in donating to charitable causes. NCF is also the leader in accepting non-cash assets, and is the nation’s largest provider of donor-advised funds focused primarily on Christian givers.

GUESTS: Ryan Assunto of the National Christian Foundation
HOSTED BY: Bob Barber, CWS®, CKA®
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Ryan Assunto

National Christian Foundation
Website

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
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EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bob:
So welcome to today’s podcast, podcast number 90. I’m kind of astounded when I say that. I can’t believe that I’m at my 90th podcast already, but being that this is right before Christmas, and we’re going to be bringing this to you. I thought it’d be a great podcast to do on giving. And a couple of years ago, I developed a program called 10-4-4 giving. I presented this in many churches and charitable organizations, and I thought what would be nice today is get one of the experts on giving to do the podcast with me. So, I have on the other line with me through our technology, Ryan Assunto. Hey Ryan, welcome to the podcast.
Ryan:
Hey Bob. Thank you. It’s great to be with you today.
Bob:
You’ve done this before, so you know how to do this and I have a feeling you do these quite often.
Ryan:
Anytime I get a chance to talk to you, Bob, I’m glad for it. It’s always good to talk about giving with a financial advisor who likes to encourage his clients to give.
Bob:
Well, being around Christmas time too, that’s always top of mind. And also, here we are at the end of the year. So there are tax advantages, but that’s not the only reason that we give. We give because God’s word calls for it. It releases the bondage of selfishness. Scripture says it’s more blessed to give than receive, and there’s no doubt about that. I just wanted you to come on with me and Ryan, tell the audience a little bit about you. I mean, I know about you. I know you’re with the National Christian Foundation, one of the largest Christian foundations in the United States. You’re in Austin, so you’re not far from me, but we’ve got listeners in New York and California and Chicago, and all over the place. So, tell everybody about your experience and a little bit of your background before I get you to come in and help me with this.
Ryan:
Sure, sure. I’d be glad to. So you’re right. I work with National Christian Foundation. I’m the president of the Austin affiliate, and NCF is a charitable giving organization that helps generous givers find creative ways to give more to the causes they care about most. We have a national office just outside of Atlanta, Georgia, and about 30 local offices all spread across the country in different metropolitan areas. We have the privilege of walking alongside generous givers as they use the resources God has put in their hands to support the charities, the churches, the nonprofits that they love. Bob, most people as you well know, most people have a financial strategy but they don’t really have a giving strategy. So, they end up just kind of with a shotgun approach to their charitable giving. They end up missing opportunities. They end up wasting money in places and at NCF, it’s our privilege to come alongside generous donors and help them develop a giving strategy so they can be wise stewards of all that they own and experience the joy of growing generosity.
Bob:
So you’re a business, a nonprofit business, that is all about helping people to give more wisely and in better ways.
Ryan:
That’s exactly right. So we are a nonprofit and we’re a faith-based nonprofit explicitly as National Christian Foundation. Our vision is every person reached and restored through the love of Christ. And our mission statement is mobilizing resources by inspiring biblical generosity. So we are clearly faith-based and yes, we help folks, again, think about creative ways to give from all of their wealth. In the United States, when you look at how we own things, assets are held in the US in a kind of a mix of cash and non-cash, but only about 10% of the assets we own are in cash. 90% are in other things like real estate, publicly traded stocks, privately held business, other kinds of non-cash assets. But when you look at how we give in the US, 80% of all charitable giving happens in cash, which means 80% of all charitable giving comes out of only a 10% slice of the wealth pie. So we have a lot of resources that go untouched when it comes to charitable giving. And at NCF, we help people think about their entire balance sheet. We help them think about their non-cash assets, as well as their cash assets, and how to mobilize those for kingdom causes.
Bob:
As the program is called, it’s called 10-4-4, and we’re going to go over 10 planned giving strategies, 4 planned giving time periods, and then we’re going to go over 4 planned giving tools. And these tools are what NCF can help us with.
Ryan:
That’s right. That’s right. We love to help people with the particular tools, as well as the the strategies and the time periods to help folks give things away. So, we work alongside people like you all the time to help clients make the best decisions when it comes to charitable endeavors.
Bob:
So the first giving strategy that I’ve shared when I’ve given this presentation in churches and charitable organizations is the estate plan. So how can we use the estate plan in our charitable giving?
Ryan:
Well, you can name charities in your will to give things and assets away when, upon your death, you can name charities in your will. We frequently encourage people to name a donor advised fund as a particular type of charitable giving vehicle that allows your heirs after your passing to decide where your charitable assets may end up. So if you want them to engage in giving as a part of the legacy that you leave, then the charitable assets can be left to a donor advised fund, and your heirs can be the advisor on that fund to select where those assets may end up.
Bob:
But you can give out of a donor advised fund. You can give to a church. You can give to any of your favorite charities. Cause we have one, we call it our family giving fund, and that can be in your will or your trust. And then, like you say, your beneficiaries can help you. That really a great way to create a legacy.
Ryan:
Absolutely, absolutely. When people think in terms of legacy planning, they’re usually thinking about how to pass down assets to their children. But what we all know is true is that there are challenges that come with inherited wealth. And so, involving charitable giving in your estate planning in your will, can be a helpful way to pass along values, and not just valuables, to your kids. So what I mean is if you leave charitable wealth in a donor advised fund for your heirs to give away, then you are in effect saying to them, giving is a value in this family. And I intend for it to always be a value in your life as my children. And so I’m giving you something practical that you can work with, that you can do something with, to be a part of giving things away.
Bob:
I caught on to something as you were talking there. You said values, not just valuables.
Ryan:
That’s exactly right. That’s exactly right. There’s an old saying that says shirt sleeves to shirt sleeves in three generations. And what that means, basically, is you’ve got an initial generation that creates wealth, a second generation that spends and uses the wealth, and then a third generation that really didn’t have to work for it. They didn’t watch anybody work for it, so they don’t appreciate it. So they typically squander the wealth. So the family goes from shirtsleeves to shirtsleeves. That is really hardworking to really hardworking in three generations. Frequently, that’s because of a lack of communication or a lack of the handing down of values. Most family wealth goes away, not because of poor legal planning or poor investment advice, but because of poor communication and a lack of trust and relationships. And so what we see is, again, when you utilize charitable giving as a tool to make an impact in your family, then the communication about giving, the values that are expressed through giving, the way that your eyes are opened through giving opportunities, you really do end up making an impact in your kids and grandkids that you couldn’t make if you just left them a big hunk of cash.
Bob:
Right now, right around Christmas time and New Year’s, the families are getting together. We’re keeping our social distancing, but we’re still getting together. This is a good time to talk about these giving strategies. I can watch my children’s eyes light up when I start talking about this. They’re like wow. This is pretty cool. I mean, you’d be surprised how your children don’t mind. I mean, mine haven’t minded and we’ve shared with them, how we’re going to give a percentage from our estate plan to the donor advised fund. So let’s get into the second strategy. So we have the estate plan and the second strategy I’d like to share is retirement plan assets. Now this is like your 401k or your IRA. And, Ryan, I’m amazed how many people I see every single day, they have the large asset. Those 401ks can easily be 500 to 1.5 Million dollars. And they’ve never thought about including a charity or a donor advised fund or a giving fund as part of the primary beneficiaries or the contingent beneficiaries, which it makes so much sense too, financially, because all that money that’s going to go to the heirs is going to be taxed 100%, where if you give it to the charity, it’s not. So I think this is one of the greatest assets to give away at death to a charity is using your retirement plan assets.
Ryan:
Absolutely, absolutely. These IRAs, 401ks, just like you talked about, these qualified plans where you get to a place where you have to take a required minimum distribution, obviously through your life, you take those RMDs, you use them for your lifestyle and then at your death, there is generally something left and the question becomes how do you plan? What do you do with that something? And one of the things you can do is use it as your charitable giving vehicle. It becomes a great tax efficient passing of assets to just give this to charity. The other thing that I would say about it that we see most frequently is for people who are taking their required minimum distributions, they are taking their RMDs, and they are utilizing those monies for their lifestyle. If they are receiving their RMD and then writing checks to charity, they’re leaving money on the table.
Bob:
Yes, they are. That’s right.
Ryan:
A tax burden, but they don’t have to. They can send qualified charitable distributions from their IRAs directly to charity. There’s a double benefit here. It counts against your required minimum distribution, but you never actually have to recognize it as income. So, you’ve skipped the taxes on the income recognition and you send money directly to the charities you care about most. Each individual taxpayer can do this up to a hundred thousand dollars every year. So if you have an RMD that you are taking and then making charitable gifts from that income, I would tell you, please reverse that scenario. Give from your RMD first, and then only take the portion of your RMD that you need to fund your lifestyle. You will, number one, pay less in taxes, and number two, send more to the causes you care about most with these qualified charitable distributions.
Bob:
Ryan, this is one of the biggest things that we do at Christian Financial Advisors. I’d say the majority of our retirees, and they’re very fortunate, most of them have a nice pension plan and we have a lot of retired military. So, they’re making a good pension there and then maybe social security on top of that. So, they don’t need their RMD. And we send hundreds of thousands of dollars every year to charities utilizing this strategy.
Ryan:
Yes. Yeah, it’s a great strategy. It’s super efficient. And for folks who are again in that stage of life where they’re taking their RMDs, our encouragement is give first, and the benefits are tremendous.
Bob:
Now, the third strategy I have here is highly appreciated stocks. And as we are getting towards the end of the year and we’re rebalancing our accounts, we balance many times often anyway. And because we did that back in March when the market was at all time lows, we have a lot of appreciated assets in our portfolios. I imagine a lot of our listeners do too as well. So here at the end of the year, think about instead of giving cash, give the highly appreciated stock. Now, Ryan speak into that.
Ryan:
So yeah, giving highly appreciated stock is tremendously tax efficient. I will say in the unique scenario that is 2020, you have to be a little bit careful with this strategy, because when you’re giving away gains like this, you need to make sure you’re giving away long-term capital gains. Gains that are less than a year old are not as efficient as games that are a year and a day old. So what we would tell you, though, is anytime you’re rebalancing your portfolio, look for your long-term capital gains. Look for your biggest winners. This is where people who are rebalancing, this is what they’re looking for anyway, right? Because you want to buy low and sell high, right? So you’re looking for things to sell so that you can take cash and then buy something that is soon to run up against, something that might be low. So what we would say, instead of buy low and sell high, we would say give high. We would say give away your winners, because that’s where you have the most capital gains exposure to give away. So, for somebody who, let’s say they’re giving away $20,000 to $25,000 a year, maybe it’s a lot more than that. Maybe it’s a lot less than that, but let’s just pick that number. Somebody has given away about $25,000 a year, we would say, Hey, quit writing checks to charity. Quit writing checks from your cash that has already been taxed. Take $25,000 of your most appreciated stocks. Give those in kind. In other words, don’t sell them then give the cash. Give them as stocks. You’ll get the full deduction for a non-cash gift. That is it didn’t cost you any cash to get that deduction, then take your cash that you were going to give to charity and reuse it to rebalance your portfolio. At the end of the day, your portfolio has lost no value, but you have increased your cost basis in your portfolio so that when you do start selling investments for your own lifestyle purposes, you have a lower tax burden that day. So not only do you give pre-tax assets to charity, which equates to more money to charity over time, you also continuously reset your basis in your portfolio, lowering your tax burden over years and years and years. People who do that strategy all their life long and give stock from a taxable portfolio and then rebalance with cash, they find themselves, once they near a retirement, with a efficient cost basis in their portfolio, meaning they don’t have a lot of tax to pay upon retirement. And they’ve given away more for decades.
Bob:
So Ryan, you’re the expert in giving. So, you can’t do this with short term gains.
Ryan:
That’s correct. You can give away short term gains. Don’t ever say you can’t. It’s just not as efficient. So when you give away something you’ve owned for less than a year, your deduction is your cost of basis in that investment. If you give away something that’s long-term capital gains, it’s a true capital asset. Your deduct-ability is now based on fair market value at the time of the gift.
Bob:
Okay. I’m glad you clarified that.
Ryan:
Yeah. So for short term capital gains, your deduction is limited to your cost basis.
Bob:
All right. So man, we’ve got 10 of these we’ve got to go through. So we’ve gone through three so far.
Ryan:
I’m talking a lot. Sorry, Bob. I get pretty excited when people are talking about giving strategies.
Bob:
You get kind of excited, don’t you?
Ryan:
I do.
Bob:
Yeah, that’s a good thing. All right. So the giving strategy number four is real estate. And man, I mean, when people think of real estate, they normally just think of their house, but they don’t think of that little residential lot they own somewhere or some of the acreage, a couple acres they own, or maybe it’s a condominium or it’s an office building. But by the way, I want to mention, no timeshares here. That doesn’t work, but they don’t think of all the different types of real estate there. I bet you’ve seen some big gifts from real estate.
Ryan:
We’ve seen some great gifts from real estate and yeah, you’ve listed a lot of them – empty lots, right? Commercial lots, residential lots, apartment complexes, rental property of any sort, office buildings. Real estate’s a great gift for several reasons. Number one is you get a fair market value. You get a deduction that’s based on fair market value. And number two is a really efficient flow of funds to charity either if it’s ongoing rental income, or if it’s sales proceeds, assuming their real estate has little to no debt. Debt is always a question mark with real estate because so much of our real property assets are financed with debt. We do a pretty thorough evaluation to decide is a gift of real estate really going to send more to charity or not? But at NCF, we have a team of attorneys and accountants on staff in-house that evaluates real estate gifts to determine whether or not they really are more efficient. But man, if you’ve got passive income being produced from a debt-free source, there’s not a better charitable giving vehicle. A charity can own that asset indefinitely and not have to deal with unrelated business income tax on our side. And so, the donor gets a big deduction, and the charity gets an ongoing income stream to continue to support your fund as long as you want us to own the asset.
Bob:
Okay. So you can give away that rental income. Let’s say you have a rental house and you want to put the rental house in a charitable program of some kind, can you give the rental house and keep the income or vice versa?
Ryan:
Yeah. When you give the rental house, you give it to a donor advised fund, you give away the income stream, but then that becomes the vehicle that funds your giving. So instead of recognizing that rental income personally, and then writing checks to charity, the charity just owns the income stream. And so that flows into your giving fund for you to recommend grants to your church and your favorite charities.
Bob:
Okay. So that can hold on to that real estate or it can sell it. And either way, there’s not going to be a tax burden and you’ll get a tax deduction for it. Okay. All right. So our giving strategy number five that I have for the 10 ways of giving is a business interest. I know you’ve got some pretty cool stories. Let’s not share all of them, Ryan. We only have 45 minutes to do this, but pick one of your stories that you really like about where someone’s given away some of their business interests, but they continue to own the business.
Ryan:
Yeah. So we’ve had a couple. Just a few things here, but one of the most significant ones is there was a giver who gave us a piece of their business each year and received a deduction each time they it did it for about four years running. And at the end of the day, we ended up with a substantial piece of their business as charity there. That is to say there, the benefits flowing to their donor advised fund. So we owned the business. We owned a non-controlling piece of the business. That’s important. As a grant making charity, we are looking to not be in control of the business interest gifts that are given to us, except that we have a say in what to do with them and how to dispose of them. But we really want to follow our donors lead because again, they’re the best stewards of these assets.
Ryan:
We don’t know how to run all these businesses, but we can be passive shareholder with an owner who does know what they’re doing. And then charity is like a silent partner, like a limited partner investor in the company at that point. And we receive dividends or sales proceeds as they are generated from the business. We can own these businesses across multiple tax years. Sometimes, we have to dispose of our interest in five years. Sometimes, we do not depending on a lot of different factors, but we can hold a gift of business interest in an ongoing way over time. And that can become really beneficial for a charitable business owner to share in the ownership of his company with charity.
Bob:
So he can say, I’m going to hold back. I’m going to own 90%. I’m going to allow the charity to own 10%.
Ryan:
That’s correct. They can do 1% or 2% or 10% or 99%. We’ve taken business interests gifts all over the spectrum. And it’s very encouraging to watch business owners. In our communities, it’s not uncommon to have somebody who says, I really want to operate this business like it’s God’s. I want to operate this business like it’s his. We were sort of bought into the theological idea that God owns it all, and we’re merely stewards. I think that’s a good, solid, biblical idea to buy into, but it sometimes can be hard to work out, but it’s true that God owns it all. And if that’s true, people will come to us and say, Hey, I want God to own my business and what we would say is, well, I can’t make God an owner, but you can give it away. There is a charity that supports kingdom causes that can be an owner of your business with you and help you think about how to steward it from a godly perspective and help you think about how to flow funds into kingdom causes in the most efficient way possible.
Bob:
So many questions go through my mind. We could spend another 30 minutes on this. I mean, I’m just thinking about the way you own your business and what kind of structure, et cetera. But hey, if this peaks your interest and you’re hearing us on the podcast and you’re a business owner, contact us and I’ll get you in touch with Ryan and we can talk about that.
Ryan:
We love having those conversations, and we have them all the time. One of the joys of working with NCF, I mentioned our team of in-house attorneys and tax counsel. We have received over the last call it 20 years or so, 20-25 years, over $3.7 billion in value of different business interest gifts, thousands upon thousands of business interests gifts have been made to our organization over the years. Our team is very well versed on how to walk through or how to create particular kinds of ownership structures so that your charitable goals are met, and your business continues to operate effectively.
Bob:
Was that with a B?
Ryan:
That was with a B, yeah.
Bob:
3.7 Billion. I think y’all know what you’re doing, then. So if you’re a business owner, and you love the Lord or know one that does, definitely look at this strategy. All right. The sixth strategy, boy, this is a big one for those of us in Texas or a listener up in Pennsylvania, anybody that’s around oil and gas and that’s the oil and gas interests. And this could be so big here in South Texas. Have you seen any examples like this?
Ryan:
We have. We have. Yeah, several different kinds. We’ve got people who have given us oil and gas rights. Generally, the passive mineral interests are the best gifts to make here. And so, there’s a lot of tax implications around gifts of oil and gas that might have to do with depreciation or depletion and recapture and how that plays into things. These are complex gifts, I will say. But again, that’s where a team like NCF comes alongside you to be helpful and can create a lot of value. We’ve seen some givers give royalty streams and basically sort of works a little bit like a gift of passive income from debt-free real estate, right, Where you’ve got this ongoing cashflow. In many cases is being recognized by a donor who, or an individual who doesn’t need it for their lifestyle, right? Aagain, they’re already inclined to be charitable. They’re going to give money away anyway. So what we come alongside and say is, Hey, let’s do that in the most efficient way possible. Frequently, that is give the mineral interestS themselves and let the royalty streams flow offline for you, totallY outside of any tax burden you might incur and flow directly into your charitable fund so that more money goes to the causes you care about.
Bob:
Now, can they do a percentage of the mineral rights?
Ryan:
They can. They can. And Bob, to be fair, that’s what we most often see. It’s pretty rare when somebody will say, yeah, I want to give you 100% of this royalty stream I’ve got, right. Most people need some of it for their lifestyle or something personal to fund other investments or other business activity. The most often we see a percentage interest gift.
Bob:
Okay. So, and y’all just think about all the different mineral rights. There’s oil rights. There’s natural gas. There’s even water rights that come into play here. So, the seventh strategy is an interesting one many people never think about, and this is miscellaneous valuables and collectibles. I’ve got some really cool examples and you’ve seen my presentation, so let’s go over some of them.
Ryan:
Yeah. So I’ll start by saying these gifts are also complex and you need a good advisor walking with you through the process. It is not uncommon. I’ll speak like a charity representative for a bit here. It’s not uncommon for good hearted charitably minded individuals to make a gift to a charity that ends up being a burden to that charity. What I mean by that is, imagine this scenario, and this is actually a real life scenario. We had a good hearted individual who loved the Lord and loved charity, want to give an old school bus to a new school that was forming, right. And the bus itself was actually really old, to the point where it was broken down and needed a tremendous amount of repair work. It was a hassle, so to speak, for the person who owned it and they thought it would be good to give it to somebody who could use it. Well, if the school bus doesn’t run, the school can’t use it, right. It’s going to be a real headache to take it somewhere, to get it fixed, to service it, to get it back in use, and become functional, to the point where there were several schools that looked at that bus and said, no, thank you. I’d rather not have the hassle. So, when you’re giving gifts like these, my encouragement to the donor is put yourself in the seat of the charity and ask the question is the gift actually usable. And one of the things we see frequently these days is an old laptop, right? You get an old laptop or two or three, and somebody says, Hey, I want to give this to a missionary school overseas. Well, you know what? If that laptop can’t get on the internet at your house, it can’t get on the internet overseas either. So, it’s not a gift that’s necessarily going to be really usable. So I appreciate the heart behind all of these gifts, but you do want to think about are you giving something that’s valuable, that’s usable, or are you giving something that you just want to get rid of? And if it’s something that you just want to get rid of, be careful with that, because you might be creating a burden for a charity that is not good for them and their mission. So with that disclaimer, let me say, if you’re talking about artwork and antiques and automobiles and boats and airplanes and these kinds of things that do have significant value, they can be great charitable gifts. They really can be. You do need to give these sorts of assets, most frequently, to a charity that is going to use them for their charitable purposes. That’s where you’re going to get the highest and best tax deduction. In other words, if you give a piece of art to somebody like me as a donor advised fund provider, because I’m somebody who’s going to probably just take that art and sell it and then you use the cash to put it in your donor advised fund. You’re not going to get much of a deduction for that. You’ll get a better deduction if you take that artwork and give it to a museum that’s going to display your art and use that art as a part of its charitable purpose.
Bob:
What about the classic automobile? Let’s say the automobile is worth $30,000. Can’t they give that to the charity or donor advised fund and then a donor advised fund can sell that automobile for $30,000? Now, is that a $30,000 deduction?
Ryan:
It is, but interestingly enough with automobiles, and we had looked into this earlier this year for one of our donors, with automobiles, the deduction does not become usable until the charity sells the asset. For that $30,000 car, the charities got to sell it for the donor to take that deduction. So there’s a series of paperwork issues that have to be handled correctly to substantiate the value of the deduction and the gift of a car, frequently, it’s kind of the same. If the donor takes the car and sells it and then gives the cash as opposed to the donor giving the car to charity and having charity sell it.
Bob:
All right. All right, let’s go to the next strategy. Boy, this is one I’ve seen over the years. People collect a lot of gold and silver and they had these gold bars, and they don’t know what to do. I mean, I’ve seen some of our clients inherit huge amounts of gold from their parents and they don’t know what to do with it and how to get rid of it, and it’s expensive and the commissions can be high. Let’s say they’ve got $25,000 worth of gold and silver. Can they give that to a charity and receive that deduction for it? Or, does it have to be sold again before they receive that deduction?
Ryan:
They can give precious metals like this and receive a deduction. And the caveat here is they have to actually give it to a charity that can, and will, take physical possession of it. And so if you think about just the mechanics and the logistics of giving away gold coins or gold bars, you will need to give that again to a charity who is equipped to take physical possession. So, that might mean special safes or special transport or something like that. So that the charity can say, yes, I’ve taken physical possession of this precious metal or stone. And then you’ve got an appraiser who will say here’s how much that is worth. And that becomes the value of your deduction.
Bob:
Does the National Christian Foundation do this kind of thing?
Ryan:
We unfortunately do not, at least as a rule, because we are scattered all over the place. We just don’t have the infrastructure to support these kinds of gifts.
Bob:
Okay. All right. Maybe your local church though, could, I don’t know. You’d have to go to them and talk to them about it.
Ryan:
That’s right. You do. That’s that’s the key, Bob, is you’d have to go to the individual charity and discuss this with them and discuss their capacity to receive the gift appropriately.
Bob:
Well, I think you’d be surprised, Ryan, how many people have gold and silver coins like this, or gold, bars and it’s worth a lot and they don’t know what to do with it, and they’re trying to figure it out.
Ryan:
Yep. It can be a challenge. And it’s a great thing to think about how to be generous with it. You just want to be careful. In the charitable giving space, most of us are accustomed to a charity receiving a check, right? Cause that’s how we give, again, back to that kind of 80% of all charitable gifts happen in cash. Most of us go, oh, there’s nothing to receiving a gift. I just write my charity a check, and they take it. Yes, that is true with cash. The receiving of a gift gets complicated as the assets get more complicated. You want to make sure you’re having an individual conversation with the charity you want to support about can you actually receive this gift?
Bob:
So let’s get to number 9, we’ve got 9 and 10, and then we’re going to get into four different time periods of giving and different vehicles that we use. So planned giving strategy number 9 is very simply things like life insurance policies or anything that has a beneficiary name to it. Like we said earlier, that could be your IRAs, but a lot of life insurance policies, you get to a point in your life and you still have that policy. And at that point, you’re debt free and the kids are out of the nest and you could go in and just change the beneficiary designation on your life insurance policy to a donor advised fund or to those charities that you really love.
Ryan:
That’s exactly right. That’s exactly right. And that can create a tremendous future benefit to charitable causes. Now, again, in the scenario as you’ve described it, you’re setting up your heirs to give more than you being a part of your giving, but this can be a great blessing to lots of different churches, lots of different charities, lots of different organizations when they are a part of somebody’s life insurance proceeds. Absolutely.
Bob:
And it could be a partial beneficiary. It doesn’t have to be all the way.
Ryan:
That’s exactly right. It’s exactly right. Let’s say you have three children and you divide your life insurance proceeds equally between the three or however you divide it up. Well, you could divide by four, right. And you said give some to each of your children and some to your charitable fund, lot of ways to think about.
Bob:
Okay. And then our last one is the power of giving before selling. This is something that I’ve always been very intrigued by. Actually, the first time I heard this was from you and the National Christian Foundation. So we take an example here of a $300,000 asset that’s been completely depreciated. And example number one is you’re going to sell the asset and then give some of the cash to charity, maybe like 10% or example number two, give a portion of the asset and then sell it. So let’s go over this scenario and try to bring this to where somebody can hear this on the podcast and understand what we’re talking about.
Ryan:
Yeah. So giving before a sale event can be dramatically consequential. The benefit that can be created by giving an asset before a taxable event is significant. So what you’ve listed here with a $300,000 asset that’s fully depreciated, you sell the assets, then give cash, and again, you’ve got your 10% gift. But if you said, okay, let’s figure out where that puts me as an individual in terms of my take-home. And that’s going to be a certain number. You could say, all right, if I want to end up in the same place, but I give first then how does that change my giving? What you’ve written here is, somebody can give a portion of the asset and then sell. And then there ends up being an extra 10 grand in this scenario given to charity that is fantastic. And the family typically ends up in the same place, maybe a little bit better place, if they give before they sell. What I mean by that is when you think about walking through a sale of an asset, the proceeds are going to end up in probably one of three buckets. They’re going to go to you, they’re going to go to pay your tax bill, or they’re going to go to charity. And when you give before a sale, what frequently happens is that you’re able to convert tax dollars into charitable dollars without affecting what you take home. So you give more by giving pre tax. Sometimes, depending on the dynamics of cost basis and debt and capital gains versus ordinary income recognition and how those things work, if you’re looking at all capital gains on a debt-free asset, then it is possible to take home the same number and increase your giving by 50% or more just by changing the timing of the sale. Meaning, if you give your business, let’s say, before a sale, instead of giving cash after the sale, then you’ll end up giving 50% more to charity with this process by giving before you sell.
Bob:
Well, we’ll go through that with you. So if that sounds something that intrigues you to be able to give more, but have the same net effect to yourself, give us a call and we’ll go over that with you. All right. So there, we’ve gone through the 10 strategies for giving, and then we have the 4 giving time periods, and that breaks down into, of course, “you can give it now”, “you can give it later”, like we mentioned a lot of this through your beneficiaries and through your estate plan. There’s a third way. You can “give an asset now, but keep the income”, or “you can keep the asset, but give the income”. So there’s those 4 different ways. Examples of things that you can give right now would be stocks, real estate, collectibles, business interests, precious metals, miscellaneous valuables, and oil and gas interests. Or later would be things like your estate plan, the beneficiary of your IRAs, beneficiary of annuities, beneficiary of life insurance policies, even a donor advised giving fund, which that’s what we’ve done. We’ve got the donor advised giving fund/family fund. It’s 20% of our estate plan. We’ll give later at our death that will go into the donor advised fund, but there’s also the “give now, but keep the income for your lifetime”. And that’s a charitable gift annuity. So I want you to talk a little bit about how a charitable gift annuity and a charitable remainder trust works, where you can give now, but keep the income.
Ryan:
Sure. Yeah. Let me say these two gifts types – the charitable gift annuity and charitable remainder trust – fall into a category of gifts that we refer to as split interest gifts. And what that means is you’re going to make a gift, but the interest flowing from that gift is going to be split between the original donor and charity. And so, a charitable gift annuity works pretty well like any annuity investment would work. You buy an annuity. In this case, you make a gift that purchases an annuity. You receive the income from that annuity for your life or you and your spouse’s life or a set number of years, depending on how you set up the annuity. But you receive an income stream, basically, for the rest of your life. And then charity gets the residual. It gets what’s left over when you pass. So it is a way of generating a bit of a charitable income tax deduction now that’s going to be defined by some actuarial tables and your life expectancy and what the anticipated value going to charity in the future is, but you’ll get an income tax deduction now. You’ll get an income stream flowing from that asset, but you will also know that you are supporting charity at your passing with what is left in that annuity. And that can become a really effective planning strategy for somebody who likes an annuity as an investment, and believes that buying a guaranteed income stream for the rest of their life is a really good thing for them to do, but they want to support charity as well.
Bob:
Why you wouldn’t do this, the charitable gift annuity, over a commercial annuity with an insurance company because the insurance company is going to keep the money or the charitable organization could keep what’s left over, and I’d rather the charity keep it.
Ryan:
I would agree. I think that’s a great way to look at it. And for those of you who work for insurance companies, we still love you, but there are a lot of charities out there that can use that money. And it’s a great way to think about the value that the Lord has allowed you to create and steward over your lifespan and are you really handling it in a way that honors him?
Bob:
Let me ask you something here real quick, the National Christian Foundation, they offer these charitable gift annuities, correct?
Ryan:
We do. We do offer charitable gift annuities, not all charities do, but we offer charitable gift annuities. What’s unique about a CGA at National Christian Foundation is we take the residual value that is, again, an actuarially defined number that will be given to charity upon your death. And we forward that to your giving fund when you buy the annuity so that you can start giving now, and you can actually do that giving while you can be a part of it. And so, that becomes a great thing for our givers who want to give now, but they want the charitable gift annuity to support some of their lifestyle needs.
Bob:
Well, we’re saving some of the best for last as we’re getting near the end of today’s podcast. Your church can be involved in this, correct, with the National Christian Foundation. So what’s left in that charitable gift annuity could go back to your church.
Ryan:
That’s exactly right. That’s exactly right. It’s a great way to support a ministry that’s undoubtedly poured into you all your lifelong.
Bob:
Wow. I’ve always been excited about this, and I’ve always said this needs to be my second calling in life is to go just promote charitable gift annuities, because it’s a way to help yourself, it’s a guaranteed income for life, and then to help what’s ever left in there to go to your church. And like we said, we like insurance companies, but I’d rather it go to my church.
Ryan:
There you go. Charitable remainder trust, the other split interest gift you mentioned, is another vehicle where you could put an asset frequently if it’s a business before a sale or a piece of real estate or something like that. You can put an asset in a trust, receive an income stream off of that trust for a designated period or your lifespan, and then the remaining value that’s left in that charitable trust at the end of the life of the trust goes to the charities that you’ve chosen to support, which can be a donor advised fund, again, for greater flexibility down the road. A charitable remainder trust is something where the charity benefits from the remainder of what’s left over in the trust.
Bob:
But you benefit enormously to yourself by, as I say, you have an enormous capital gain in an asset like real estate or stocks, a gain in the millions. And you could use the charitable remainder trust by giving that to the trust. The trust sells it. There’s no income tax due. You get the income from it for your lifetime, and maybe even a second generation, and then it goes to the charity. So that’s why it’s called charitable remainder trust. And then the last thing for the day is we “keep the asset, but give the income”. And we’re going to go over some of the tools to do this too. So is that what is referred to as a lead trust to do that?
Ryan:
Yes and no. It’s hard to think about it in terms of keep the asset, but give the income. Legally, you transfer the asset, right? So, there is a gift there, but what happens with a lead trust, actually, is you can place an asset in a trust. The charity is going to get the benefit at the front end, meaning for the life of the trust that asset is going to be producing income for charity. But at the end of the lifespan of the trust, the asset’s going to revert back to the family. If you do give now, and you give an income stream to charity, they benefit first, and then the asset reverts to family at the end of the life of the trust. So, it can go to your heirs. It can go back to you. The asset will return to you after the lifespan of the trust.
Bob:
So in a second example, a rental home, you could give the rental home to this trust. The income that’s going to come off of it is going to go to the trust, but at the end of that time period, that rental home actually comes back to you. Is that a way of saying that correctly?
Ryan:
That’s right.
Bob:
Well, we’ve pretty much discussed the 4 giving tools. We’ve gone through the donor advised fund, the family giving fund, the charitable gift annuity. And then, if you want to see some of these examples of this, give us call. There’s really just so many benefits to planned giving. One of the things I always share at the end of the presentation is the benefits of planned giving. There’s income tax advantages. There’s capital gain tax advantages. It helps the charities further their mission. Giving is thought out and intentional. It teaches your family the importance of giving. It releases the stronghold of materialism. It’s scriptural, because it’s more blessed to give than to receive. It’s an excellent estate planning strategy. It helps fulfill the great commission, and the last one is really great. It creates positive change in the lives of others in our society. So, we want to help you in all of these different ways to give. I work with the National Christian Foundation. Ryan, I want to thank you for coming on with your expertise today. You definitely helped me get through this. We need to give this presentation together in front of a church, and I think it would be amazing.
Ryan:
I look forward to it. That’d be fun.
Bob:
All right, well, that’s going to do it for today. Y’all have a great Christmas and Happy New Year and we’ll talk to you next year.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
Charitable Gift Annuities offered by the National Christian Foundation may be re-insured through a fixed insurance annuity product utilizing Charitable Solutions, LLC to obtain competitive quotes through commercial fixed annuity carriers. This re-insurance may be placed directly with the insurance companies or through national annuity brokers. While these annuities provide a lifetime annuity payment, only donors who do not need access to the principal balance being gifted should consider a Charitable Gift Annuity (CGA) since it is irrevocable. The lifetime annuity payment is only guaranteed based on the claims paying ability of the underlying fixed annuity company. When a CGA is executed the rate and income amount are permanently established for life. Donors should be advised that under the terms of a CGA contract this amount may not be changed or renegotiated. All payments are the responsibility of the charitable organization and/or insurance company and care should be taken to ensure the contractual obligation with the Donor is met. Regulation and government oversight of CGA’s varies from state to state. You should consult with legal and tax professionals before entering into a CGA.
The Insurance Agent will ensure that concentration levels in a CGA are appropriate for given objectives and goals.
0 min
December 05, 2020 89 – Traits to Look for in a Financial Advisor
Click below to listen to Episode 89 – Traits to Look for in a Financial Advisor
Traits to Look for in a Financial Advisor

What traits should your financial advisor have?

More episodes >>

Finances have a way of touching every part of our life from the food we eat to the medical care we can receive, from the school we send our children to and to the housing we live in, from the charities we support and to how we can retire, and the list goes on.
With so many important factors that our finances play into, isn’t it just as important to find a financial advisor that has your best interests in mind in order to help you obtain all your financial financial goals? In this episode, Bob and Bailey cover many of the traits you should look for when choosing a financial advisor, especially the importance of choosing a fiduciary, fee based advisor over a commissioned based advisor with a potential conflict of interest.
Before finding a financial advisor, Bailey also came up with a great list based on the “12 Steps Program” used by many organizations.
1. ADMIT that you need help from a financial advisor
2. BELIEVE that getting that help is ok and possible
3. TRUST that there are good fiduciary based, financial advisors
4. INVENTORY your entire financial picture
5. CHANGE the way you think about finances
6. FOLLOW the guidance and wisdom of an experienced, fiduciary based, financial advisor
7. WORK the plan a financial advisor has come up for you
8. COMMIT to operating all of your financial life with integrity from how you give to how you spend to how you save and invest to how you pay people
9. WALK in financial freedom and peace, stewarding your money with wisdom and care

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Bailey Theaker
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Bailey Theaker

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EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bob:
Well, Bailey, do you realize this is our 89th podcast? We’re about to head into number 90. Can you believe that?
Bailey:
Goodness. That’s a lot of different topics we’ve covered.
Bob:
That’s a lot of work. So what are we going to talk about today?
Bailey:
Today, Bob, we’re talking about the traits to look for in a financial advisor.
Bob:
The traits to look for in a financial advisor. That’s going to be a good one. What kind of traits would you look for if you were looking for a financial advisor?
Bailey:
Well, I’ve said this to you before, but I really believe that a financial advisor serves as a shepherd for people to guide them through making wise decisions with their finances. I do think that everything we do is spiritual and everything that we do should have wise counsel speaking into it. So that’s what I would look for in a financial advisor is somebody who’s going to shepherd the finances that we’ve been given by God so that we can steward them really well.
Bob:
That’s beautiful. I tell you, that is awesome the way that you said that. I always tell people, Bailey, that for a Christian especially, financial decisions are spiritual decisions. They need to be prayed about. So stewardship is really a big deal with you. I’m glad that it is because it’s always a good idea to have wise counsel. There was a question I was thinking about when we were going to be doing this podcast today, and I was going to ask you. We’ll put you on the spot here.
Bailey:
Usually I’m the question asker.
Bob:
Yeah, I know. But I’m going to ask you a few in the beginning, if all of the sudden you had a wealthy uncle leave you $300,000 or even 3 million, that’d be quite a bit for you, wouldn’t it?
Bailey:
Be a surprise for sure.
Bob:
What would be some of the first things that would go through your mind?
Bailey:
Well, the first thing that comes to mind is that I would want to share the new found wealth. Like I just immediately have some of the needs of our church family popping into my head. And so, I think I would want to care for those needs first and then probably pay off some debt that we have.
Bob:
You are so different, Bailey. A lot of people what’s going through their head is how big a house can I buy now or how about that new car? And you’re here. You’re thinking about others. That is such a great trait that you have, by the way. That’s awesome just to hear you say that. Wow.
Bailey:
Well, thanks. So everything else is temporary.
Bob:
Oh, wow. So, you wouldn’t be thinking about how can I invest it, huh?
Bailey:
Maybe not right off the bat, but we’d get there pretty quickly, I’m sure.
Bob:
You think about this. If you had never worked for this firm, would you seek out the advice of a financial advisor or would you try to handle some of this wealth on your own? I’m asking this to… I’m sorry. I know you’re a millennial… but I’m asking this to a 26 year old, and I’m just wondering what your age group would do if you came into this kind of newfound wealth.
Bailey:
Hmm. Well, I can only speak for myself, but I know that my husband is a researcher. And so he would, I mean, he would be reading every book he could get his hands on. He would be doing a ton of research trying to find out what the wisest way to handle our finances is, and he already does that. And then I would probably, and my husband might hate me saying this, but I’d probably go to my daddy first because I know my dad just has a lot of experience with finances, and he works in the financial industry. And so, I would go to him for advice and he would probably recommend that I go see a licensed advisor.
Bob:
It’s interesting what you said there, because I believe that’s what most in your age group would do. They would go do the research on their own. They wouldn’t first think of a financial advisor. But then you would go to your dad, which is very wise. And I commend that. That’s a trait, again, that a lot of people your age are not going to do that. They’re not going to go to their parents and ask, but you would do that. And he would give you some, I mean, that’s some wise counsel I think he would give you. So I like the answer, but a lot of people never think about using a financial advisor, or they think they don’t need one. I know along those lines of thinking, maybe I don’t need a financial advisor. I can just go do that research myself.
Bob:
And as you and I were talking about this and putting this podcast together, which we are tackling such hard subjects on this podcast the last few weeks or not last few weeks, last few times, last few months. I know you came up with this idea that you took from the theory of the 12 steps program, like this using AA and it’s using other types of programs. And a lot of people understand that. They’ve heard of the 12 steps program that is used by many organizations, and you actually added a financial twist to this. So I want you to share this because you started listing these down, and I was very impressed with that.
Bailey:
Yeah. So the 12 steps program, which was originally designed for AA and things like that, I actually saw it implemented in a church setting based on the belief that everybody needs help, that everybody needs help all the time in life in all the areas of life, and finances is just one of the areas that we can use the 12 steps in. And so, as I kind of went through these steps, I think it’s important to recognize that these steps also apply to finances. The first one would be to admit that you need help from somebody who knows, from a financial advisor. And so the first step would be to admit that I need help. And I can’t do this on my own.
Bob:
That’s just hard to do by the way. Very hard to do for a lot of people to finally admit it. Yeah, I need help.
Bailey:
And then the second step would be to believe that getting help is okay, and that it’s possible that you can find wise people to ask these questions, and you don’t have to do it alone. The third step would be to trust that there really are good fiduciary based, financial advisors out there that care about the interest of their clients.
Bob:
They don’t realize that, though.
Bailey:
Yeah. I don’t think that’s what we’ve been taught because there’s so many businesses that are going to try and sell you something all the time. And so finding someone who’s really looking out for you.
Bob:
I want to touch on that later about that. There’s good, fiduciary based financial advisors, because there are. There’s a lot out there, but you have to kind of pick through it to find those.
Bailey:
And then step number four would be to take an inventory of your entire financial picture by writing down all your assets, your debts, your income sources, and just the entire picture, getting it down on paper, and then you have to be willing and ready to change the way you think about finances, which should be the fifth step, to change the way you think. And the ways that you do that, number six would be following the guidance and wisdom of an experienced, fiduciary based, financial advisor. So you actually have to be willing to not only go find the help, but then to listen to it, to listen to what they have to say and trust that they’re pointing you in the right direction. Number seven would be to work the plan that the financial advisor has come up with you. That’s something that I didn’t realize about advisors is that they don’t just make a plan and throw it at you and expect you to figure it out. They make it with you based on your life and your picture. It is really personal.
Bob:
It does take work. It’s not something that you just come up with and you say, oh, that’s all well and great, but you have to work it and you have to do what the plan is guiding you to do.
Bailey:
Hmm. And then number eight would be commit to operating all of your financial life with integrity. And that’s from the ways that you spend to the ways that you save or how you give or how you pay people and invest all of those things being done with integrity. And then last would be to walk in freedom and peace in the area of your finances that’s available. It comes through following those steps. So, you can steward your money with wisdom and with care, and then learn to walk in financial peace and freedom.
Bob:
Wow. You just blew me away. Wow. Qe’ll put this on the podcast website, what Bailey has shared that she came up with. I noticed that was 9 that you took out of the 12 steps. And so we’ll make sure and get that on the podcast website. When you go to Christianfinancialpodcast.com, if you’ll scroll down, we always have our script in there. We’ll make sure and have all of those nine steps. That’s really great, Bailey. I’m amazed that you did this and applied it to finances, and I’m so encouraged by the way you’re picking up on all this in such a short period of time. You’re a sharp cookie.
Bailey:
Well, thanks Bob. You’re a good teacher.
Bob:
So, let’s talk about some of those traits to look for in a financial advisor, especially for a Christian. This is Christian Financial Perspectives. That first thing that I think you should do when you’re looking for a financial advisor, as a Christian, is look at scripture. 1 Timothy 3:1-12 is talking about the traits of an elder and a deacon, so a leader within the church. But I like to take these traits, as we’re talking about traits to look for, and these traits are awesome. I’m going to let you read off what I’ve written down here, some of these traits.
Bailey:
Yeah. Traits like they are faithful to their spouse. They’re hospitable. They’re able to teach you. They’re not addicted to wine. They’re gentle. They’re not greedy, which seems like a really big one in this industry. They’re well-respected in their community. They’re a strong believer in truth. And they’re being known as a trustworthy person.
Bob:
Those are incredible traits. We’re going to go through many more traits, but you can just follow these and take the scriptural guidelines and look for an advisor that lives by those characteristics, that lives by those traits. I don’t see how you can go wrong because they’re well-respected. They’re a strong believer. They’re known as being trustworthy. Those are really strong character traits that all of us strive to be like and more. So next, we want to look for a financial advisor that has a lot of experience, that this is a trait you want to look for, experience and longevity. And what I mean by this – first, I don’t want to put down to anyone who’s young and just getting started or only has a few years of experience, but you need to seek financial advice from someone that has roots in the community, that’s put those roots down, so you know they’re not going anywhere, and one who has the experience necessary to give you good sound advice. And if it’s a younger advisor, if he has a mentor over him or her, then that’s good. I say this from an older guy that’s been doing the same thing for many, many years, and that consistency is so important. And when it comes to handling your finances, you don’t want somebody that moves from here to there, to there, to there, to there. You want somebody that has those roots down. I mean, I do. If I had somebody helping me, I would want somebody who has roots down because I’m like, where would they go If they they didn’t? And as an example, I own the building and we’re all from here, and we have our roots in the community.
Bailey:
Right. And how long have you been in this community doing this, Bob?
Bob:
Remember I was in real estate and investing my first four to five years. And so, if you were to count that, it’s coming on 36 years.
Bailey:
Wow. Talk about roots.
Bob:
Yeah, yeah, it is. And then my family goes back many generations back in this area on top of that. When I say roots in the community, because we serve people nationwide, but still they want to know that you’re there and you’re not going anywhere.
Bailey:
And then third would be to look for a financial advisor that is personally, financially successful themselves. And you want to find somebody who has found financial success in their own life and has done it with honesty and integrity, not by selling commission-based products or by kind of sneaking their way into it, but somebody who’s done it well and honestly and honorably,
Bob:
When we talk about this trait that they’ve been personally, financially successful themselves, I want you to think of it totally outside the realm. Think of it a if you’re going to hire a coach. Let’s say you’re a baseball pitcher, and you’re going to hire a coach. You want to hire a coach that knows how to coach you and has been successful himself, maybe been a pitcher himself and was very successful. You want to soar with the eagles, if you catch my drift in there and not hanging out with the turkeys, not that turkey’s bad, especially around this time of year, but anyway, you want to inspire to be those that have done a successful job at what they’re doing.
Bailey:
Somebody who’s walked the road before you. You don’t want to be blindly led down a road that somebody has never walked.
Bob:
Another trait that I have here is to look for a financial advisor that surrounds themselves with a talented team of people, because I just really believe this. No successful person does it by themselves. They have a good team behind them and people around them that are helping them. It’s just so important. And you want to get to know the team members as well, because when you’re looking for that financial advisor, that financial advisor may be on vacation. They may have an illness come up or family that they need to go help. They need that team there. And you need to know that team is there to help in case he or she is not in the office or is unavailable for a couple of weeks because you need answers. In the financial world, answers need to come quickly because things are moving quickly all the time. That’s why I’m just into it all the time. Also, you want to look for a financial advisor, and we talked about this earlier, that acts in a fiduciary capacity.
Bailey:
And what does that mean?
Bob:
What that really means is that the financial advisor is all about making decisions for what is in the best interest of the client, not his own or her own, not their own interests. And that’s what a fiduciary is. That’s why we choose not to be commission-based here. I don’t want to have any conflict of interest. I don’t want a company saying, hey, we’ll pay you a big commission if you’ll sell our product, because that can create a conflict of interest. And that’s not saying that all commission-based financial advisors are not great people, not at all, but I don’t even want that in the way. I don’t want that to get in the way of making a decision about a company having an influence over me.
Bob:
I even know that many companies, if you will sell a lot of their mutual fund or their product will send you on trips or send you big gift baskets, things like that. We don’t get that here because we don’t make a commission by what we sell. We get paid by the client. We’re not paid to sell you something. So if the client is paying us, our allegiance is to the client, not to whatever we may invest in. Does that makes sense?
Bailey:
Because their success is your success.
Bob:
It’s true. And that’s why if we’re paid, as an example, a small percentage, and usually that hangs around the 1% to 0.5% range of what the assets are under management and we’re managing those assets, and I do this very actively around here. I have a very strong vested interest in the assets rising and going up, but I don’t want to take a huge risk to do that either because we have downturns in markets, and it will hurt us as bad as it hurts the clients. So, we’re on the same page as the client.
Bailey:
Sure. And something that I’ve noticed that I think is really unique about that kind of fiduciary based relationship is that it changes the conversation between you and the client because you really are for their best interests. And so, you care about the person. You care about them and their success. And I’ve watched clients walk out of our office kind of surprised by that relationship, “Wow. I just met with an advisor, and they seem to actually care about who I am and how things go for me.” And so, when their success is your success too, the way that you manage their assets change because you think, I know them. I know their family. I know what their life looks like. And I just think that’s really unique and really beautiful.
Bob:
We have to, and we have to know what all the goals are and the dreams and the entire financial picture. It’s like a good doctor that’s going to do surgery on you. He needs to know your entire physical health before he goes in and starts making decisions that are going to affect you for the long-term. And last for today, look for a financial advisor that really does, along those lines, seek to understand you, your background, your personal situation, how you got to where you are today, and then how long that took, then comes with truly an individualized personal solution and advises you and helps guide you through all the financial minefields that life throws at all of us.
Bailey:
Since working here and in my personal life, I’ve noticed that money has a way of touching all the areas of your life. Nothing is safe. Everything is affected by this thing. And that includes your family, your career, where you live, what kind of car you drive, where your kids go to school, how you give, if you want to retire, and how you’re going to do that, just everything that you could possibly think of. It’s touched by money.
Bob:
It really does. I mean, you named so many things. I was just thinking of some others like how you spend your vacations. You said how you give and your tax bracket, even how you vote, how you interact with the world, how you can retire, if you retire all. So yeah, and most people, as we come to the end here, they really feel most comfortable with picking a financial advisor that is as financially successful as themselves, or even a lot more. And that really makes sense. So bottom line, there’s a lot of different kinds of financial advisors with different specialties. And whether that is picking Christian Financial Advisors or another firm, pick one that understands you, that will cater to your best needs and yours best interests from a fiduciary standpoint. Because really, this podcast is about helping you connect with an advisor that will serve you best by asking the right questions and looking at the traits that we’ve talked about today to help you decide.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
0 min
November 20, 2020 88 – Which Investment Models Are Right For You
Click below to listen to Episode 88 – Which Investment Models Are Right For You?
Which Investment Models Are Right For You?

Which investment model(s) is right for you based on your risk number?

More episodes >>

We encourage you to listen to episode 87 on “Understanding Investment Risk” before delving into this episode on “Which Investment Models Are Right For You”. Bob discusses how these risks play into picking an investment model(s) to build a complete portfolio that corresponds to your goals, needs, and risk number.
A risk number has a scale of 1 – 100, with 1 being the lowest risk level and 100 representing the highest risk level. Think of these numbers like driving a car. The lower the speed (i.e. risk number), the safer you are, but it will take longer to get to your destination. However, the faster you go, the more risk it carries, but you will get to your destination faster. In other words, are you more comfortable driving slower to be safer, or faster to get to your destination sooner, but it involves more risk?
So, which investment model is right for you?

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Bailey Theaker
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Bailey Theaker

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
SCHEDULE AN APPOINTMENTDid you enjoy this episode? Sign up for email updates and never miss an episode.
EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bob:
In today’s podcast, we’re going to talk about what’s the right investment model for you. This is going to be basically a second part of the first part on what we did on investment risk and all the risks that you need to look for when putting together an investment portfolio that we shared with you a couple of weeks ago on the podcast. I would encourage you to go back and listen to that. Bailey’s going to share a few of these risks for those of you that didn’t get to hear that podcast. I thought a really good scripture for today for this would come from Ecclesiastes 11:2. I quote this scripture a lot, because I really like it, but it really goes with today’s podcast, “What’s the right investment model for you.” It says, “But divide your investments among many places, for you do not know what risk might lie ahead,” and that’s from the New Living Translation. I like the way it says that.
Bailey:
Me too. That’s good. Well, as you mentioned in our last podcast, we discussed understanding all of our investment risks and talked about 15 of the major risks that play into building a model portfolio. And some of those risks were concentration risk, economic risk, political risk, tax risk, and liquidity risk.
Bob:
What about the other 10? Well, you’ll have to go back and listen. You wanted me to say all those. You said, “Bob that’s too much to go through.”
Bailey:
Well, there are a lot of them. Like you said, I would encourage our listeners to go back and listen to that podcast from before where we go into detail about all 15 of them. And today, we’re going to discuss how these risks play into picking an investment model or a group of investment models to build a complete portfolio that corresponds to your individual goals and needs and risk number.
Bob:
One of the things we do here at Christian Financial Advisors is we help our clients first to understand what their risk number is and how that plays into choosing an investment model or even possibly picking a few models that have different risk numbers. And we’re going to go all into this in detail. A risk number, and we try to get everyone here to arrive at what is their risk number. And this is based on a scale from 1 to 100. 1 being the lowest risk. That’s where you’re basically putting your money in your mattress or under your pillow, to the highest risk level. That’s 100. It’s really important that all of us find out what is our risk number, and that 100, that is the riskiest. That’s like putting all your money in one IPO stock that’s just coming out and you really don’t know much about the company, and that’s an extreme amount of risk.
Bob:
There’s that level from 1 to a 100. And you can think of these numbers also like speed, like how fast you’re going. You’re either walking at one or two miles an hour, or you’re driving at 75 or 80 miles hour. We have a little chart. And when you look at the risk number, it looks like a speed limit sign. When we put that risk number up. And of course the lower, the speed, the safer you should be. And the faster you go, you would think more risk in involved with that.
Bailey:
Well, in other words, if you’re more comfortable driving slow, it might take you a little longer to get there, but it certainly feels safer to drive slower, and the faster you’re going, you’ll more quickly get to your destination, but it does involve a little more risk.
Bob:
So, as an example, we’re driving to Amarillo tomorrow. We’re going to go hike Palo Duro Canyon, which most people don’t know about. It’s the second largest Canyon in the United States next to the Grand Canyon. We have that right here in Texas. But I can not imagine driving from New Braunfels, and those of you that listen to our podcast up in the Northeast or on the West Coast, New Braunfels is in between Austin and San Antonio. Amarillo is about 600 miles, 500-600 miles. I can’t imagine driving 20 miles an hour. I’m going to drive the speed limit 70, 75 miles an hour, and I’m going to take that risk of going faster so I can get there in a day and not three days, but all of us have a certain amount of risk that we feel comfortable with and finding that right risk number is important and it’s different for all of us, but most people fall somewhere in the middle for their risk number. And then once you get that risk number, it’s about choosing the right investment model or models that’s right for you. But it it doesn’t always correspond to your risk number because we’ve had some clients here where they’ll take the Riskalyze test that we have, and their portfolio may be at a 50 risk and they’ll come in at a 20, but then once we understand what their goals and objectives are, we can raise that risk because they understand what’s involved with that. Does that make sense?
Bailey:
Yeah, absolutely. Which investment model is right for you? That’s today’s question. That’s today’s subject. And before we get anywhere close to the possible answer, it depends on so many different things that play into that risk number. And so, Bob, what are some examples of the things that play into that?
Bob:
Well, your age, because when you’re younger, you have a lot more years to save and earn. You have more years to come out of downturns in the market. Your health situation. You could be younger, but not have a bad health situation. That’s going to pull your risk number down. How much do you have to invest? How much debt load are you presently carrying, like the mortgages or car loans, personal debt. What are your long-term goals and objectives and what are your short-term goals? Are you wanting growth or income or a combination of the two? And we can do that with these models we’re going to go over. We can use one or two or even three models.
Bailey:
Well I know that at CIS you offer five different, very actively managed, biblically responsible models that you manage for your clients. And they pick from the ones that fit them the best for what they’re trying to accomplish in their life.
Bob:
Yeah. We have five biblically responsible, Christian Financial Advisors, actively managed portfolios. That’s a lot of words in there, but I monitor that daily, these five models, and we’re going to go into these, but the five models consist of an ultra conservative model, and we were talking about that risk number and that’s going to be in a much lower risk number. Matter of fact, our conservative model falls in a risk number around 20, in the low 20’s. And then the next step up, that’s a higher risk, is a conservative model. And that’s a risk number that’s going to fall in the mid to high 20’s. Then you move up to a moderate model, and that’s with a risk number that’s going to be in the low to mid 50’s. think of the speed limits, okay. Started off at 20 kind of ended up going around 25, 30. Now, you’re at 50. Then you have a growth model that we manage actively, and that has a risk number in the mid to high 60’s, and then an aggressive growth model with a risk number in the high 70’s to low 80’s. That’s getting the speed limit pretty high up there with that type of model. I’m going to go into each one of these models in detail so that those that are listening have an idea of these models and how to pick which model is right for you.
Bailey:
Sure. Well, I think that sounds great. Let’s go into some of the details for those five models. Starting with that ultra conservative model that CIS offers with the risk number in the low 20’s, what does that look like, Bob?
Bob:
Ultra conservative model is a model that we have here for those that don’t want to put anything in stocks at all, or maybe you just need some cash reserves. It’s one step away from having a CD at the bank. It carries more risk than what you would have in a CD or a money market at the bank, actually about twice that risk, but it’s still low on the risk scale from 1 to a 100. It comes in, like I say, at about a 20, but it has no stocks in it at all. It consists of fixed income instruments and a lot of treasury bills and very short, short term bonds. It’s highly liquid, very easy to get to, but our risk number, each one of these risk numbers, when you look at a risk number of like 20 and you look forward six months and we use this technology, we can look at that and we can say, okay, we kind of know where this portfolio is going to go in the next six months at any point in time. It could be actually down 1.5% To 2%, but the probability of it being up more 3% or 4% is not high. It’s going to kind of sit in the middle of those two numbers. Average returns, now I got to say, there’s no guarantee of the future. Past performance is not a guarantee of future performance, but average returns here, they’ll be in the 2% to 3% range. They’re low, but this is also your lowest risk portfolio. Like I say, that comes in at about a 20.
Bailey:
Okay. And next would be the Christian Financial Advisors biblically responsible, actively managed, conservative model with a risk number in the high 20’s.
Bob:
I like how you say that. Kind of a tongue twister. Try to say that one fast, right? The conservative model is one notch up, and the risk level really is only going from about a 20 in the ultra conservative, up to about a 26 or 27, but here’s where we start adding stocks to it. Each model that I’m going to be talking about from here going forward, we’re adding more and more stocks to it, a diversified portfolio, across many different sectors. I’m managing this actively on a daily basis. Our conservative portfolio is going to have an exposure of about 20% to stocks, but we pick different kinds of stocks in a conservative model than we would for an aggressive growth model. In a conservative model, we’re going to pick more of your blue chip, well known companies. I can’t mention them because that would be an offer to buy or I’d be saying, go buy that stock. I can’t mention the companies, but just think of your household names and who you do business with. Those are the blue chip companies. You’ll recognize the names of them. In an aggressive growth, the stocks are going to be more your small sized and mid-sized companies that are really growing. The probability of this, looking out six months of being down or up, is down according to our risk models and our technology about 3 or 3.5%, up about 7.5%. It’s going to kind of fall somewhere in the middle there. You can expect from past performances. This has been in the 3% to 5% range of returns. Again, that’s not a guarantee of the future performance.
Bailey:
Okay. And next would be actively managed, moderate model with a risk number in the low to mid 50’s.
Bob:
This falls right in the middle. You think about a scale from 1 to a 100. If you’re at 50, you’re right in the middle. And when you’re driving 50, 55 miles an hour down the road, you feel pretty safe. You’ve got your risk, but it’s not like driving 80 or 85. When I go to Austin and go around on the toll road, that speed limit can get up to 80 and 85. I don’t even feel comfortable going that fast, but the moderate is where a lot of people fit, and that’s a risk, like I say, of about 50, 51. It can get up as high as 56 or 57, but it kind of hangs out right in the middle, and the probability of our technology and what it shows us of a portfolio like this is it’s going to move up and down by as much as down 10% or up as much as 15%.
Bob:
You notice the higher up we’re getting in the risk, the more volatility. It’s going to move around a lot more. And that’s why in a moderate portfolio, that’s not necessarily where you want to put money that you’re going to need in the next year or two. You want to put money that you’re going to need in the next year or two over in the ultra conservative that’s not going to go up and down near as much. I mean, the ultra conservative or the conservative models. The moderate is built – I like to put this around a 5 to even 7 year time horizon when you put money there. Now, all of our models, because we manage them as a fiduciary advisor, they’re all liquid. You’re not stuck in this model, and you can move from one model to another model very easily here at Christian Financial Advisors. Like with the elections that were coming up recently, we’re past that now, but a lot of people were concerned. They moved from a moderate to a conservative model and just asked us to move that down. Or they move from a growth to a moderate or down to a conservative.
Bailey:
And would you say, Bob, that this moderate portfolio is that where most people fall? It’s kind of in that middle range.
Bob:
They do. That’s where the majority of people that I’ve worked with for the last 30 years, they fall right in the middle, but they can also build a portfolio that’s built from aggressive growth and conservative. And that’s kind of like having a moderate portfolio. Building a model with a risk level of 75 and building one with a risk model of 20, you average the two out, and you’re at 45 or 50. Does that make sense? We’re going to talk about how to use these models for your goals and objectives here in a minute, but we just have two more models.
Bailey:
Yeah. And the next one would be our actively managed, growth model with a risk number in the mid to high 60’s.
Bob:
This is where your exposure to stocks is as high as 80%. Now you remember in the moderate model, exposure to stocks is going to be about 40% to 50%, at a high 60%. Now, we’re getting up there. We’re getting a lot of exposure in the stock market. Remember, the way I manage here, I’m moving across many different sectors. I’m also looking at all the different sectors and making sure that we’re not in sectors that are way, what I call, overheated that are overvalued. I’m looking for sectors that are good value. If a sector has been really strong for a long time, many times, it’s time for that sector – to let some air out of the balloon before it breaks. But a growth portfolio has a risk of around 66 to 70. You’re getting your risk higher. Think about it in speed limits again. Now you’re driving 70, and the kind of stocks that we’re picking are more growth based stocks. A growth model has a time horizon of seven, eight, nine years. When you put your money in a growth model, even though the way we’re managing it is liquid, it’s going to have a lot of volatility in it. As much as our probability from our technology down as much as 14%, maybe even more, like when we were going through COVID last year, up as much as 20%. Is it going to fall somewhere in the middle? And it does. Your past returns have shown that, but you gotta be able to stomach the volatility and realize this is a long-term investment. And then we get to our last of our models that we use here at Christian Financial Advisors.
Bailey:
Last, but certainly not least, we have our managed, aggressive growth model with a risk number in the high 70’s to the low 80’s.
Bob:
Yeah. Kind of reminds you of that toll road, right. I’ll be driving on that thing. And the speed limit says 80, and I’m doing 80. Then people pass me doing 90. That’s some risk takers. This is the highest risk portfolio. In a very strong market, we’ll have 100% of this portfolio in stocks. And they’re going to be in your small cap and mid cap type stocks. It’s going to be in those sectors that we really feel are taken off. You’d better be able to stomach it. As an example, back in COVID, even looking forward, this is the kind of portfolio that can be down 20%, 25%, even 30%, right? I see your eyes going, “Whoa,” but it can be up that much too. It’s going to fall somewhere in the middle of that range, but going forward, it can keep you up at night. It can be very scary. That’s why when we build a portfolio, we’ve got to know your goals, and this is a portfolio that’s built for 10 years plus. You’re taking your eyes off of it, and you’re letting the portfolio do what the portfolio is going to do. Volatility is a natural part of an aggressive growth portfolio.
Bailey:
Wow. Well, those are our five major portfolios here that you manage at Christian Financial Advisors. Bob, is it possible that people can kind of figure this out on their own and invest however they think fits into these risk numbers? What would you say about that?
Bob:
Yeah, if they like doing brain surgery on themselves, they can. I mean, I got a torn meniscus on my knee. I can go do a lot of research on the internet, and I could try doing an operation on my knee, I guess. It might not be too wise to do, but you can do that. I would highly suggest you don’t. There’s not been a lot of success, that I’ve seen, in my 30 years. I mean, it’s taken me this many years to understand all this, and I’m still learning. I mean, I learn every single day. So yes, you can do it yourself, but be very, very careful of that. You’ve got to monitor it to really stay on track. I like the scripture from Ecclesiastes 4:9-10 that says, “Two people are better off than one, for they can help each other succeed.” And this is from the New Living Translation again. If one person falls, the other can reach out and help. And that’s really what we are about here is helping our brothers and sisters in Christ manage this minefield of all this risk and investing and the right models to pick from and how it’s all going to correspond to a detailed financial plan, and that’s going to change. You just don’t set something in place and forget about it. Everything’s in motion and changing. These models, we have many people that are using all three or four or five of these models, but we put a different amount in each one and it all has to do with what fits them individually. There is no right answer for everybody. Everybody’s different.
Bailey:
For our listeners, if you’re interested in learning more about that, or you want to connect with us here at Christian Financial Advisors, you can give us a call at (830) 609-6986 during our business hours or you can visit us on the web at ciswealth.com.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
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November 06, 202087 – Understanding Investment Risk
Click below to listen to Episode 87 – Understanding Investment Risk
Understanding Investment Risk

How much are you willing to risk when it comes to investing?

More episodes >>

Life is full of risk. Everytime we get into a car, move to a different city, get on a plane, or start a new job, there is a RISK, and the list goes on and on. What if the human race decided to never take any risks? Risk is not a bad thing because a life completely void of risk would be very boring.
In this episode, Bob and Bailey discuss 15 types of investment risks, because when you know what the risks are, you can make better educated decisions. These 15 risks include:
Concentration Risk
Economic Risk
Political Risk
Tax Risk
Liquidity Risk
Interest Rate Risk
Inflation Risk
Longevity Risk
Emotional Risk
Expense Risk
Short Term Risk
Long Term Risk
Health Risk
Overall Market Risk
Not Taking Risk

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Bailey Theaker
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Bailey Theaker

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
SCHEDULE AN APPOINTMENTDid you enjoy this episode? Sign up for email updates and never miss an episode.
EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bob:
2 Timothy 1:7, “For God did not give us a spirit of fear, but of power and love and self control.” Today, we’re going to cover investment risk, but first we’re going to cover just risk because life is full of risk. When I got in my car this morning and came to work, I was taking a risk, but I put my seatbelt on. That was a calculated risk. I stayed the speed limit. I wasn’t reckless. Everywhere we go, there’s risk. Changing a job or a better one, there’s a risk in that. Getting on a plane or boat, there’s risk, starting a business, and the list goes on and on. But we as humans, we need to take risk because think about what the human race would be if we never took any risk. Hello, Bailey. We are tackling a hard subject today, and we prayed about this. And I was thinking, man, do I bring this to the podcast? And I thought, yes, I am. Because I’m just wanting to be transparent. I have fears in risk, and our listeners – everyone has fears in risk.
Bailey:
And even doing this podcast is a risk, even talking about this subject.
Bob:
Today’s subject is a risk and doing a podcast like that.
Bailey:
Yeah. But how boring would our lives be if we didn’t ever take any risks? Right. I mean, life is, that’s all life is. Every decision we make, every move we make, is risky. And I love this John F. Kennedy quote that says, “There are costs and risks to a program of action, but they are far less than the long range risk and costs of comfortable inaction.” I just love that. The idea that that it is risky to not take any risk, like never having to risk. I know a conflict that I’ve run into in my life at this stage of life is the world is a crazy place right now. There’s so much going on. There’s so much instability. And what about having kids or going outside or living life at all? All of it seems really risky.
Bob:
Oh, with COVID, with the Coronavirus.
Bailey:
Absolutely.
Bob:
Yeah. I don’t want to go out because I’m scared I’ll get it, and you can take calculated risks when you do that. Wear a mask. Keep your hands clean. Don’t talk to someone five inches away from them. You know that you’re taking the risk when you go out, but you’re also taking a risk if you don’t go out.
Bailey:
Right.
Bob:
I mean, depression is very high today. And the riots in the streets could just be caused by just pushing people down so much and saying, you’ve got to stay in this box and you can’t move outside of this little 10 foot by 10 foot shell. And it makes you crazy. There’s a risk in that.
Bailey:
And I think life is a bit weighing risks. You’re saying which risk am I willing to take? Which one is more important? Which one brings more meaning to my life? But the risk of staying home cause I’m afraid to go outside. That’s a risk that has a million consequences for it, but going outside has consequences too.
Bob:
I want grandkids. I got one, and I want a lot more. And you know what I hear, like you said, it’s a crazy world. Why would I want to have more kids? What if every single person in the world today said, I don’t want to risk having more children because of the crazy world we’re in. What would happen to mankind?
Bailey:
I mean, it would cease to exist. It wouldn’t exist at all.
Bob:
Just a couple of generations.
Bailey:
What a crazy thing. And even, I mean, if you think about our country and what a risk it was to come to America, right?
Bob:
They came in such small ships. Have you ever seen how small those ships were?
Bailey:
Oh, it’s insane.
Bob:
Yeah, but I’ve been to the Northeast and the historical places, and the ships were small.
Bailey:
That was a long way to go, too.
Bob:
Huge risk. Yeah. You’re going out in this ocean, just like you’re this little dot in the ocean and there’s no radar. You don’t know what the weather is bringing. That was a risk. Our ancestors, they risked everything by getting on that boat and crossing the ocean to come to the greatest country in the world.
Bailey:
Absolutely. Because all action has risks, but so does inaction.
Bob:
I think about our inventors and all the things that they risked from electricity to the telephone to the automobile, to the technology we use today. It all involved risk. And what if they were just so fearful? “I’m not going to take that risk.” And they just stayed in their comfort zones. What would life be like today? We wouldn’t even be recording this podcast because it’s electronic. And so, there’s calculated risk. And what we want to talk about today, we are going to get to the 15 different types of investment risk. And because this is a financial show, but before we get to that, we have to kind of tackle the risk. And risk, as I was mentioning earlier, kind of goes hand in hand with fear – fear and risk – and fear is not a bad thing. I am fearful, too. We had a leak in our roof, and I’m fearful to get up on that roof and that’s wisdom. I was thinking, and we paid somebody like a thousand dollars to come fix that. But paying a thousand is a lot cheaper than me falling off the roof and going into the emergency room and all the pain and the $5,000 bill I would have. So, that’s wisdom. And I’m glad that I don’t want to take that risk to get on the roof. Because like I say, that’s wisdom. So, calculated risk, I believe in calculated risk. I think that what we’re going to share today is calculated risk. If you know all the different types of investment risks, you can take a calculated risk, and I’ve taken calculated risks for many, many years and it’s paid off.
Bailey:
Absolutely. So what do you think it is that stops people from taking those calculated risks?
Bob:
I think it’s it’s a fear. It’s a lack of knowledge that just stifles you. They just don’t know what to do. But I think it really comes down, a lot, to fear and lack of knowledge. What do you think?
Bailey:
Yeah, I agree. I think that it’s fear. But there’s a healthy fear. I think that you learn that if you touch a hot pan on a stove, you learn, Hey, that burns. I don’t want to do that again. And so there’s something that keeps you from making that decision again, or fearing the Lord is a good thing. The scripture says that the beginning of knowledge starts at fear of the Lord. And so having a healthy understanding of risk and of what could go wrong, like you said, it’s a calculated risk, but I think not knowing what those things are, it just makes people totally freeze.
Bob:
I think about the risk of the servants and the parable of the talents and their master. He gave one of them 1, and the other one 3, and the other one 5. And it was interesting that the one that had the least to lose was scared to take the risk. And in my years and years of being a financial advisor and investment advisor, I’m amazed that it’s the wealthiest clients I have that will take the most risk. I don’t know why it is that way, but I know somebody who’s listening to this might be thinking, well, they have so much, they can gamble. Look at the scriptural example. In the scriptural example, he took his 5 talents and invested all 5 or the 3 and invested all 3, but we don’t want to take scripture out of context, too. So, we want to go back over to Ecclesiastes that says, “Give your portions to seven or eight because you do not know what disaster may come upon the land.” That was Solomon that said that. So, that’s going to be 1 of our 15 investment risks.
Bailey:
Hmm. So good. And in Philippians, it says, “Do not be anxious about anything, but in everything by prayer and supplication with Thanksgiving, let your request be made known to God, and the peace of God, which surpasses all understanding, will guard your hearts and your minds in Christ Jesus.” I love that because it’s almost saying the opposite of that fear is trust and to put your trust in something. That’s what changes the game. And so, let’s get into those 15 types of investment risks. What do those look like, Bob? What does it look like to be educated in our risks and to make some calculated risks?
Bob:
Well, risk number 1 is what I call concentration risk. And this is where you’re investing in only one category of all the different types of investments. As an example, you’re investing all in real estate, which is where most realtors think you should invest. I suppose that’s because of what they do, but you invest it all in real estate, or you invested all in stocks or you invest it all in bonds or all in CDs or all in gold or just one sector of the economy when it comes to investing. And maybe just energy or just industrial or just utilities. That’s called a concentration risk. And you have to be very careful of concentrating all of your wealth into one basket. Again, that goes back to Ecclesiastes 11:2, “Give your portions to eight, yes to seven, because you do not know what disaster may come upon one of these.” Real estate has been hot so long here in the Austin, San Antonio area, where we are right in between those two towns. It’s been so hot for so long that there’s this mentality around here that no matter what you invest in in real estate and no matter what the price is, just pay it because somebody else is going to come along and pay a higher price. At one point, that’s going to stop. And as we’re starting to approach California prices in certain areas in like downtown Austin are now here in downtown New Braunfels, they’re asking $400 to $425, $450 a square foot. Several years ago, it was $100 a square foot. Before that it was, I remember when it was $60, but it just continues to go up, up, and up. So that’s an example of concentration risk and being extremely careful of the risk of getting caught up into is never going to end. There’s a certain point that you can blow the air into the balloon before it pops. And the balloon needs to be, it needs to come back. And I’m not saying that all real estate is bad, but don’t put all your eggs there. It’s the same with stocks and a sector. In a certain sector, if everyone’s going to that sector, that sector could get overvalued. And you need to look at that and pull back from that. So be careful of concentration risk. That’s risk number one.
Bailey:
That’s something that I’ve never even thought about before. And so, like you said, I think what drives people’s fear is that they’re not educated on what the risks could be. And so it just causes us to freeze, right? And so the first risk, concentration risk, is one that I haven’t even thought about.
Bob:
And most people don’t think about it if they have all their money in CDs. They are not thinking about concentration risks, but having all that money in CDs is a concentration risk because with CDs, they’re not even keeping rate with inflation. So you’re going broke safely.
Bailey:
Wow. Okay. So, risk Number 2 would be economic risk. What does that look like?
Bob:
That’s about investing in investments that are only going to do well when that part of the economy is doing well. So there is economic risk in investing. You have to know where that is and underweight or overweight to that particular sector where the economy is. And one of the things is, is that as a certain part of the economy gets overheated, when that starts happening, nobody’s thinking about getting out of that part of the economy because everyone wants to go where everyone’s going. It’s that follow the herd mentality. So as you’re looking at that, look at that from an economic standpoint and pull back on things that have been doing well for so long that it’s time for it to take a breather, kind of like what we just spoke of under that concentration risk.
Bailey:
Wow. And then number 3 is political risk. What is the political risk?
Bob:
Political risk has to do with where we are politically, who we put as our leaders, and are our leaders free enterprise driven or are they socialistic driven? Because that’s a major risk that if they want to stifle free enterprise, imagine what that can do to the economy over the long term? So there is political risk. Look at who is being elected and which side do they bend to – the wrong side or the right side.
Bailey:
And you’ve talked a lot about investing one way and voting a different way. And I think that’s really interesting that you can vote for someone who isn’t going to line up with the way that you’re investing your money or the way that you’re taking risks.
Bob:
I see it all the time. And I see it even with Christians in the form of they want to be diversified. So, they’ll have half their investments with us that are biblically responsible and the other half supporting the left, and I don’t get it. So yeah, you gotta be careful about dividing against yourself because a kingdom divided cannot stand.
Bailey:
Amen. Amen. Okay. Number 4 is tax risk.
Bob:
Oh, taxes can really eat into your returns. I’m dealing with this right now from some property that we sold. It has enormous capital gain in it. And I can either 1031 exchange that piece of real estate into another piece of real estate or pay the tax on it. And I’m going back and forth. And I’m in that point right now, there’s a 45 day period where I have to identify a property. If I don’t, then I’ll have to pay all the tax. And that tax can be enormous for the amount that we sold the property for. So, that’s tax risk. Other risk would be being careful of moving a portfolio around too much and buying and selling too much, creating short term gains that are taxed at income tax rates versus long-term capital gain tax rates, and using the tax deferral as much as you possibly can. But also, you’ve got to look at it from the perspective of are taxes going to be higher in the future than they are today? And most people believe that they will be higher in the future. So, this all plays into how you’re investing in that tax risk.
Bailey:
Wow, what’s number 5. What’s our fifth investment risk?
Bob:
Liquidity risk, and how liquid is the investment? So back when we were talking about real estate, real estate is not a liquid investment unless you’re investing in a publicly traded real estate investment trust, but you own a home or you own some land. You have to put that up for sale, and in a hot market like we live in, they may sell in five days, and that’s what’s happening around here. But in other parts of the country, that’s not the case. So, you have a liquidity risk. Each time you do an investment, you have to look at that liquidity risk and what will it cost you to get rid of that quickly? I have a lot of people, they’re always calling and saying, Hey, well, let’s invest in some gold. Gold, there’s liquidity risk. You’re not going to take gold coins and go down to the local grocery store and liquidate them. So, you also have the cost of commissions in that, because many of those that buy and sell gold, there’s a high markup on the gold, or they’ll give you less than it’s worth because they have to make the profit.
Bailey:
And other tax penalties that come along with that?
Bob:
With gold and silver. Yeah, there is. There sure is. And the taxes are not the same as they would be on other investments that you would hold long-term. Income tax.
Bailey:
And number 6 would be interest rate risk. What does that look like?
Bob:
That depends on where the interest rates are and how the interest rates are going to affect sectors. As an example, right now where bonds are, if you want to buy long-term bonds if interest rates start going up, the bond value will drop. It’s called bond duration. So if you’re buying a 15 year bond, as an example, can you see interest rates going down anymore? They’re at rock bottom. We’re at the lowest point we’ve been in years and years and years. So when these rates start to go back up, as an example, with interest rate risk, if you have a 15 year bond and interest rates were to go up by just 1%, the value of those bonds would drop by 15%. That’s called bond duration. Also, the interest rate risk is in real estate. If interest rates start to go up, real estate doesn’t sell as easy, and the price of real estate will have to go down to compensate for people that are buying real estate at a higher rate, because they’re not going to be able to afford as much house as they can at a lower rate. So, that will affect the housing market. That will affect the overall real estate market. Interest rate risk also affects companies because a lot of companies, they borrow money. The money is a floating rate. If the rate goes up, the company can’t make as much profit. There’s a lot of risk there.
Bailey:
So we’re not even halfway through our 15 risks.
Bob:
We’re at number 6, right?
Bailey:
We’re at number 6. And I don’t know about our listeners. I know I’m a rookie investor. And so, this all just feels like, like new information to me. And I think it’s a big point of why having an advisor is really important because these are things that I wouldn’t think about just going straight into investing on my own.
Bob:
No, you wouldn’t. And I think about all of this just from experience. By the way, I came up with this list in about 15 minutes. It wasn’t hard because I look at these risks on a daily basis, but people don’t know what risks to look at when they’re investing if they’re not real experienced in it. Because of that, what happens is, is fear sets in, and I’m not going to make that investment because I don’t know what the risks are in that investment. But if you have a real experienced advisor that knows all the risks going in and knows how to compensate for that risk. As an example, we were just talking about investment risk. I’m not going to go out and buy long-term bonds today. I’m staying in all very short-term money, short-Term bonds, because if interest rates go up, those bonds are not going to be affected nearly like a 15 year bond. I’m looking at three month bonds – three month, six month bonds, bonds that are very close to maturity for that very reason of the interest rate risk. And that’s why I’m very cautious about real estate right now. Very cautious. Rates start going back up, prices are going to have to come down to compensate.
Bailey:
And that’s so helpful. I mean, even just thinking back to that passage of scripture that we read with, don’t be anxious about anything, but instead in everything, go to God in prayer. There’s something so comforting in knowing that somebody like an advisor, who’s walked this road before you, that you can say, Oh, I’m not alone. I’m not just walking into a dark tunnel. There’s somebody that can kind of walk me through it in the same way that we can put our faith in God and say, oh, he’s been there. I’m not going into this by myself completely blind.
Bob:
That’s right.
Bailey:
Okay. So number 7 would be inflation risk. What is that?
Bob:
Inflation risk is where it gets ahead, and that’s the example of a CD. Rates are so low in CDs. If your CD is paying 1% or 2% in today’s overall inflation, and I know exactly where it is because we use e-money with our online financial planning system. It keeps up with where interest rates are. 2.8% is right where inflation rate is. Okay. So the inflation rate is right at 2.8%. If you’re making less than 2.8% on your investment, you’re losing money. You’re losing the value of your money. So you think about that. If you’re making 2% in a CD, you’re losing 0.8% of purchasing power every single year, but CDs are one of the safest places to put your investment dollars, but don’t put them all there. That’s money for when you’re going to need something in an emergency and be careful of going long-term, especially today, because long-term rates are so low, but that inflation risk is really there because the value of your dollar of your investment is actually going down if inflation is higher than what it’s making.
Bailey:
And number 8 is longevity risk.
Bob:
Longevity risk is is a big one with retirees. And this is why when we do financial planning, we have to figure in how long are they going to live? What is the rate of return? What are their living expenses? And will they be able to live on what they need for their lifetime? I say what they need. Hopefully, they have enough to live on what they need. Will they be able to live on what they want? Let me say it that way, okay. Because you may want to live and retire on $200,000 a year, but what you can retire on is $80,000 a year or $50,000 a year. So, there’s longevity risk. That’s not a bad thing. We all want to live long, but you could outlive your savings if you’re retired and you don’t compensate for your expenses and your rate of return. You’ve got to know what your rate of returns are. So, as an example, if you had all your money just sitting in CDs and you’re losing money slowly, but every single year, everything’s getting a little bit more expensive, right? Because it’s 2.8%. Inflation in some places is even higher than that. If you look around here in places, it’s much higher in the Central Texas region because of how we’re growing so fast.
Bailey:
Wow. And number 9 would be emotional risk.
Bob:
We’ve made an entire podcast on this and emotional risk has to do with allowing your emotions to get in the way of making sound, long-term investment decisions. And that’s when the markets – like when they drop dramatically – and you see your portfolio drop dramatically with the markets. That’s called volatility. But so many times, people associate volatility and account value with loss. As an example, we have a $500,000 portfolio, and it’s a growth portfolio. And back in March, when COVID knocked the market’s down 20-25%, that $500,000 portfolio they could see a statement the next month of where it dropped by 20%. That’s $100,000 on that portfolio. So, it drops down to a hundred. You’ll have this conversation, they’ll say, hey, we’ve lost $100,000. You’ve had volatility. It’s moving up and down. But if you have a well-diversified portfolio and that’s letting your emotions get caught in that, because emotions would say, I’m selling out right now.
Bob:
Now you’ve declared a real loss. You’ve made the loss real if you sell while you’re down. Now, this is why I always believe be careful of concentration risk, that very first one that we talked about. Stay away from concentration. If you stay away from concentration and you have a well-diversified portfolio, historically, it’s always rebounding. Now, I have to make the statement here for compliance reasons that past performance is no guarantee of future performance. I can’t make the statement that it’s always going to rebound. I can make a statement based on history that it always has in the past – a well-diversified portfolio. I can make a statement that in a concentrated portfolio like I saw back in 2000, I saw people that invested all in technology during the internet bubble. It went down, and many of those companies went broke. It was not coming back, no matter how long you held on, the companies ceased to exist, but that’s the emotional risk.
Bob:
Be careful of allowing that emotional risk, and emotional risk also always wants to get in when everything’s going great. I noticed that if the stock market has been fantastic for five years in a row, everybody wants to get into the stock market. And then we have a downturn, which is normal. We have downturns and then nobody wants to get in anymore. So, they want to get in after everybody else has already gotten in. And then, they want to get out when the market drops, when that’s the time you should be getting in. That’s your emotion.
Bailey:
And that could be said for, for all of life, too, I suppose. Everybody loves sailing on smooth seas, huh? All right. Risk number 10 is expense risk.
Bob:
This has to do with how much does the investment cost. I was just having a conversation this morning with an individual. They put all of their money, 100% of their money, in an annuity. And because of the high fees and expenses of that annuity, it’s eating into the return. So, we’re looking at that and how’s that going to affect this person over the longterm? And this was an annuity that didn’t even have any guarantees with it. That’s what I mean by high fees and expenses. I mean, if you’re making a gross 10% return and your fees and expenses, like in some of these annuities could be 2% or 3%, you’re giving up 20% of your return or 30% of your return to expenses, where you can now move into investments where the expenses are 1% or less or half a percent or less. So you keep more of the return. I mean, if you’re making 10%, but you see 7%, you’ve given up a lot of return, but if you’re making 10% and you see 9.7%, you’re keeping a lot more of your return. That’s what I mean by expense risk. So now we’ve gone through 10 of them. We’re down to the last third of the risks.
Bailey:
Yeah. So our next two are short-term and long-term risk. So, what does short-term risk look like?
Bob:
Short-Term risk are allowing short-term thinking to get in the way of long-term results. So if you have a well-diversified portfolio and you can see historically how that portfolio has done, but you have those short-term fluctuations. That’s what I mean by that. The next one, the long-term risk, though, is an unwillingness to change a mapped out plan when newer roads are ahead. Right now, there’s a newer road ahead. And that is how we are moving more and more to electric vehicles, as an example. Now I’m not saying that oil and gas is dead by any means. I mean, we’re still going to be using oil and gas in this country for a good 15, 20, maybe 25 years. We need our natural gas plants that make the electricity that the cars are gonna run on, but you need to be willing to change with the times and not just say, “I’ve got this plan and I’m just going to stick to it no matter what.” Well, what if things are changing? So that’s what I mean by the longterm risk.
Bailey:
Okay. Number 13 is health risk.
Bob:
Well, we’ve seen that this year, haven’t we? There’s health risk individually, but then there’s also health risk like the pandemic that we’ve had and how that’s going to affect the economy. There has been a lot of money made, though, this year, even while the economy shrunk, because there were sectors that took off and did well. And the big box stores did very, very well. We’ve seen a whole new sector of delivery people now. Now, everything is being bought to us, but there’s health risk that can affect the economy. I wouldn’t have put this in there normally, well I would have, but it would just be our own health, but this year it’s been the whole globe.
Bailey:
And like you said before, things have changed. The world looks different than it did a year ago. And so that longevity risk comes in here, too.
Bob:
So we just got two more risks now.
Bailey:
All right. Number 14 is overall market risk.
Bob:
This is a lot of what I’ve referred to earlier that the trends and sectors are going to rotate every few years. As some sectors become overvalued and others become undervalued, you need to see the risk in that and make the changes to your portfolio as they come about. And then our last risk is not taking any risk at all. I mean, that can be risky as well because of what not taking risk can do to you. Does that make sense?
Bailey:
Yeah. It’s similar to that quote that we mentioned earlier that comfortable inaction is a risk all in itself.
Bob:
Yes. That’s correct. That’s the 15 investment risks that I see. And if someone wants to go to our podcast website, they can see all this. It’s all laid out for them there, and these are all the risks that you need to look at if you’re going to manage your own portfolio, or you can hire an experienced advisor that knows how to put together a portfolio compensating for these risks,
Bailey:
That’s so helpful in being able to make educated, calculated risks because they’re necessary in all of life. And so, how do you understand your personal investment risk tolerance?
Bob:
We use a computer program that’s called Riskalyze. I want you to think of risk as a scale from 1 to 100. And 1 is the least amount of risk. That’s like putting money, I guess, under your pillow and you’re sleeping on it. And then think of 100 as investing in one stock in one sector and putting everything there. That would be the highest risk. So, risk runs from a scale from 1 to 100. 1 is basically zero risk. 100 is the most aggressive. And then there’s everything in between there. Also, think of risk like a speed limit and getting to a destination. We all have a choice. For example, every year – we’ve been doing it for about 30 years – we either fly or we drive, but we like to drive many times all the way to Colorado from Central Texas. That’s a thousand mile trip. I can choose to drive 30 miles an hour, or I can choose to drive 65 or 70 miles an hour, which is the speed limit, 75 in some places. And so I choose that calculated risk and think about where you choose along the spectrum between 1 and 100. Do you want to be going 30 miles an hour? Do you want to be going 50? Or do you want to be going to 80? Do you know where most people fall? Most people fall in that mid range. They’re comfortable with that 45, 55, 60 on a risk scale. But then sometimes, people will surprise me, even my retirees will surprise me. I had one yesterday, they’re in their eighties, and they have plenty from their pension plans and they had this large portfolio and they came in at a risk measurement of like 91. I’m like, what? So that was because that was money they wanted to give to their grandkids 10 or 15 years from now.
Bailey:
So does all risk equal some kind of reward?
Bob:
Normally it does, but not always. I mean, the more risk you take doesn’t necessarily mean you’re going to get reward if it’s not calculated. So you must calculate it. And there’s no guarantees in life. I’ll just say it right now. There are no guarantees. We don’t know if we’re going to make it home safe today. None of us do, but we’re going to get in that car and we’re going to go back home. We’re going to get in the car and come back to work. We’re going to take vacations. We’re going to do things in life. So, there’s risk, but there’s no guarantee. So with that, when you look at all 15 of these and you put these into a portfolio and compensating for everyone, there’s still no guarantee, but at least it’s calculated. The longterm results have been much, much better than uncalculated risk. So, what is your risk number? Do you know what your risk number is?
Bailey:
I have no idea.
Bob:
Well, you need to take your risk number. We need to know your risk around here. I know what mine is. And my risk number is actually pretty high, but you know why it’s high? It’s because I know how to calculate it. Okay. And we have five different values based portfolios that can correspond to where you fall on the risk scale.
Bailey:
And the first of those would be an ultra conservative. What would an ultra conservative look like?
Bob:
Well, an ultra conservative portfolio is one that has no stocks in it at all. It’s kind of a CD alternative. We’re investing in treasury bills and US treasuries and some real short-term bonds. So, on a scale from 1 to 100, that’s going to fall at about a 20 when you look at that on our risk program.
Bailey:
And the next would be conservative.
Bob:
Conservative is where you add a little bit of equities to it. That’s going to be a risk scale of about 25 to 27. It’s going to boost those returns a little bit over the longterm, but it’s also going to give that portfolio a little bit more volatility.
Bailey:
Okay. And what about moderate?
Bob:
Moderate’s where most people, like I say, lie. Not everyone, but most, and that’s going to fall in that, that 45 to 55 range category on the risk scale, depending on where the markets are and the sectors are. That will have as much as a 60% exposure to equities and stocks, or as low as a 40 or 30, even 35% exposure, but it has to do with where the economy is and where the different sectors are, and are they getting overheated or not? That’s what we do here at Christian Financial Advisors is we move back and forth depending on where the risk is and where I feel it is and applying again all those risk strategies.
Bailey:
And the next would be growth. Where does that fall on the risk scale?
Bob:
Growth is getting up there. That’s getting up there on the risk scale of 70, 75. It’s really a longer term portfolio in a normal market. That will be as much as 80% invested in equities, 20% in the bond side, short-term treasuries and short term money to give it a little bit of stability. But like I say, that is a portfolio that’s going to be much more volatile, and you need to understand the risk associated with that. And that’s where on our risk scale, we’ll show you what to expect in volatility, how much down you should expect that to go, or how much up over time.
Bailey:
And then the last kind would be an aggressive growth portfolio.
Bob:
That’s putting the pedal to the metal. That’s like getting on our toll road between Austin and San Antonio. And the speed limit goes up to 80 and 85. That’s where that’s going to fall. That’s going to fall at a risk measurement of about 85. It’s 100% equities. Normally, historically over time, that’s been our greatest returns, but it has the greatest risk. It’s going to have a lot of volatility in. You’ve got to be careful of the emotional risk in that type of portfolio, because it’s really going to move up and down a lot. And like I said, everybody wants to be aggressive growth when the market’s been great for five or six years, little do they know it’s starting to get very overvalued at that point, and it’s time for a break.
Bailey:
Sure. They’re going to have to buckle up. So Bob, you as a wealth advisor, you’re here to help guide people and walk beside them through the mine fields of risk and investments and help them build a portfolio that fits their risk tolerance, right? So what would be the steps to do that?
Bob:
Well, the way you get started is it usually just starts with a phone call. And then from there, we take it with our emails that go out and we do the risk assessment, and we look at the full financial picture and see how is this going to fit into your long-term goals. How’s it going to fit with your family? How’s it going to fit with your age and what age you are and when are you going to retire? So, we’ve got to look at all of that and put all that together before we start making recommendations about which portfolio or portfolios, because many people will use a combination of the different portfolios we havd for different investment objectives.
Bailey:
Wow. Well, this has been super educational and helpful, Bob. Thanks for taking some time to answer some questions and to help us figure out how to make some calculated risks.
Bob:
You’re welcome.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
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October 09, 2020 86 – Voting Right Investing Left
Click below to listen to Episode 86 – Voting Right, Investing Left
Voting Right, Investing Left

Do your investment choices line up with your values?

More episodes >>

With the presidential election right around the corner, have you ever really asked yourself, “Why do you vote?” Is it because of your values and what you believe?
Did you ever stop to think that you could be Voting Right, but Investing Left in your retirement and brokerage accounts, making your vote counterproductive? Most conservatives have never thought about this and how they are supporting the liberal agenda by how they invest and who they do business with daily.
In this podcast, we cover how millions of conservative voters are unintentionally supporting the leftest agenda every day, week, month, and year in their various types of retirement and investment accounts and then we give you an alternative to Invest Right.
Listen to learn more about Values Based investing, its immense growth over the past several decades, and how you can Vote Right and Invest Right to make a positive change, instead of Voting Right and Investing Left for a negative one.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Bailey Theaker
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Bailey Theaker

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EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bob:
Hi Bailey.
Bailey:
Hi, Bob. Today, we’re talking about voting and investing.
Bob:
Voting and investing, huh? Well, I’d like to ask a few people with the elections coming up, why they vote?
Bailey:
Well, we have Abby Forton here and she works in our building as well here at Christian Financial Advisors. She works for a company called Sperry CGA, which is a commercial real estate group. Abby loves the Lord and she loves our country and she is going to vote. And so in this podcast that we’re calling “Voting Right, Investing Left”, we’ve asked a handful of people, why do you vote? And so Abby, we would love to know why do you vote?
Abby:
Well, thanks for asking me. Personally, I found really early on that my vote and the things that I’m voting for do actually affect my life through taxes, through policy, and especially through the culture, because we do know that policies tend to follow the culture and those things really can bleed into your everyday. And so even as just one small voice, along with the other voices that agree with us, we really can make a difference and it matters. It’s our world that we’re talking about. It’s the people around us and how we treat each other a lot.
Bailey:
Amen. Amen and well said. And thanks for taking some time to talk to us.
Abby:
No problem. Thanks.
Bailey:
Well, I have Shawn Peters here who’s one of our wealth advisors here at Christian Financial Advisors. He’s also Bob Barber’s son-in-law and I’m excited to ask him this question of why does he vote, for our podcast “Voting Right, Investing Left”. And so hi Shawn.
Shawn:
Hi Bailey. Glad to be here.
Bailey:
So, why do you vote?
Shawn:
That’s a great question. And I know there’s probably a lot of people listening to this right now that ask the question sometimes themselves of, “Yeah. Why do I vote? Because it doesn’t seem like it makes a difference sometimes,” but at the end of the day, it’s not just one of our civic duties, but it’s also a privilege. We live in a country where we have the right to vote. We have the right to affect how we’re governed through the people that we elect that represent us. So with that in mind, for me, regardless of where I might live or where someone listening might be living, regardless of what you think the sway of your area might be to one particular candidate or the other and whatever the election is, you should always vote with your values and your conscience. So every time you vote, choose someone that aligns with what you believe and someone that fits that as much as possible. And unfortunately, as many people probably think in modern politics is that there isn’t ever anyone that actually fits with everything you believe. So sometimes, you have to choose who is it that fits the most? And there might be certain things that I refuse to stand down on. And so I might go with someone who only fits 5 out of 10 instead of 7 out of 10, but it’s the non-negotiables. Hopefully, that kind of helps and maybe helps people out there who are wondering the same thing of Why do I vote? Why do I continue to vote?
Bailey:
Okay, absolutely. Well thanks for taking some time to sit with us and I appreciate it.
Shawn:
Absolutely.
Bailey:
Well, I have with us Ron First, who’s a dear friend and Christian brother who works in the office here at Christian Financial Advisors, doing Christian Insurance Services. And Ron, we would love to hear you speak into this podcast as we talk about “Voting Right, Investing Left”. And I would love to just hear, why do you vote?
Ron:
Love requires it. Choice is what God gives us. Whether we accept Jesus or we don’t. The government that we have right now has been given to us by the Lord. Scripture is very clear that all municipalities and governments, Paul spoke to that, were put here for the purpose of doing God’s will. So when I have a choice to choose the leader that will govern our nation and will, in essence, set the rules and legislation and laws that will affect me, my family, my children, my children’s children. Love requires me to take advantage of that incredible gift of choice to choose to vote. America has always been a staunch helper, supporter of Israel. I’m also very, very keen on that. I realize that the day that our nation turns its back on Israel, I also realize that’s the day that will be our downfall as a nation. And that’s about it. I just think it’s an incredible opportunity. I think it’s every American’s, especially every Christian American’s, obligation to do that. I also feel very strongly not to vote is a vote in itself as well.
Bailey:
Wow. Couldn’t agree more. Well said. Well, thanks. Thanks for being a part of this, Ron, and well said. I appreciate you.
Ron:
Thank you.
Bob:
So Bailey, thank you for doing those interviews with some of the folks in our office about why they vote. So Bailey, why do you vote?
Bailey:
I vote because I think that the freedom to vote is a gift from the Lord. And I think that voting is the fabric of our democracy and it’s a privilege and I want to be able to say that I stood up for the things that I believed in and stood against the things that I didn’t believe in. That’s why I vote. What about you Bob? We’ve heard from all these people. So why do you vote?
Bob:
Well, I vote because I love this country too, and I really want it to be run by those with pro-family, pro-life, pro-marriage values and Christian values. I truly believe in freedom and free enterprise and limited government and limited taxation and abiding by the constitution. So, I want to vote for those that believe that way. My voting is an extension of my Christian beliefs. I’d like to ask our listeners the same question. I want you to think about why do you vote? Is it for many of the same reasons that you’ve heard, not just from myself and Bailey, but some of the other folks that are in my office complex, and is voting important to you? Because I believe that voting is extremely important.
Bailey:
Absolutely. Edmund Burke said the only thing necessary for the triumph of evil is for good men to do nothing. And so today’s podcast is about voting right and unintentionally investing left because millions of conservative voters are unknowingly supporting the leftist liberal agenda by how they’re investing every day, week, month, and year in their IRAs, company and government retirement plans, and brokerage accounts. Remember I said, unknowingly. I don’t believe any real conservatives would ever unintentionally invest to support that liberal leftist agenda while voting right. But unfortunately millions are.
Bob:
There was an article that really spurred me. I mean, I’ve been involved in values based investing, which we’ll be getting to, about how one way that you vote. But what spurred me to think about voting right and investing left was this article I saw that appeared on cnbc.com over the 4th of July weekend this summer. So, I’m going to read some of this article to you. I don’t mean to just read to you, but I want you to listen to this because this was very powerful. I remember seeing this article and we even put it in our last newsletter about voting right and investing left. So here’s what it says. “Tech workers are opening their wallets to beat conservative, pro-life, free enterprise candidates, even with stock prices soaring and profit at near records, among political donations from employees at the top five tech companies.” I’m not going to mention any, but come on, y’all. You know who the top five tech companies are in America. “84% of their money has gone to Democrats, up from 68% just four years ago in 2016. Biden has received almost 12 times the amount from tech firms as has Trump and democratic Senate candidates for competitive seats are also getting the high tech money. Even while these tech companies’ stock prices soar to record levels, as well as our profits. But while the world’s most comfortable tech companies have expanded their dominance into three and a half years during Trump’s pro-business, free enterprise presidency with an assist from corporate tax breaks, employees at those same companies are more adamant than ever about unseating him.” This is crazy. “A lot of people have been making a lot of money in Silicon Valley while watching the world fall apart. And they’ve seen their fortunes rise as the rest of the country’s fortunes fall.” During this COVID. “So for decades, the tech industry has leaned left, particularly in the hotbeds of Silicon Valley and Seattle and heading into this November’s contest. The partisan disparity has never been so lopped sided.” Man, when I read this, I just think to myself, how counterproductive when it’s free enterprise and it’s freedom that has gotten these tech companies to where they are today, yet they want to vote for candidates that don’t believe that way. It doesn’t make any sense to me.
Bailey:
Wow, Bob, I wonder how many conservatives own these high tech companies that this article is referring to, in their IRAs, their 401ks, retirement plans, and brokerage accounts.
Bob:
Huh? You wonder that, huh? Well, my opinion is it’s in the millions, and it’s maybe not just an opinion. It’s a fact, that it’s in the millions of dollars, if not billions of dollars, when you look at the entire market about how many conservatives own these high tech companies that are funding the leftist agenda.
Bailey:
Wow. Yeah. I wonder how many conservatives are also unknowingly investing in all kinds of other companies, besides tech companies, that are also funding those leftist agendas that they would be voting against.
Bob:
Again, that’s probably in the millions, but today more than ever, there are so many alternatives for conservative voters that vote right. So they can invest right if they want to. They don’t have to vote right and invest left. They can vote right and invest right. But this takes a conscious effort. It doesn’t just happen on its own.
Bailey:
So Bob, how do we do that? How do we vote right and invest right?
Bob:
Well, it’s utilizing a values based investing methodology. And what this does is it avoids companies that give money and support liberal causes, like we were talking about earlier, that want to take away our freedoms. It avoids companies that support destructive behaviors and lifestyles, companies that make money on gambling, tobacco, alcohol, pornography, and abortion, and it avoids those companies that give their money and support organizations like Planned Parenthood that takes away human lives in their most vulnerable state, and companies that are also pushing the LGBTQ agenda to our youth. So values based investing avoids that, but at the same time, it supports. So it supports companies that are pro-family and those with pro-family values, companies that want to make the world a better place, ones that treat their employees well with fair pay and good health insurance benefits or retirement plan and time off for family, companies that provide a safe working environment, companies with good employee training programs, companies that are compassionate toward their employees’ needs, and companies that care about the environment and God’s creation. So values based investing started over 25 years ago. In the beginning, it was called morally responsible investing. And then there was a phrase that was added to that by the Christian community that was called biblically responsible investing. And today, many refer to it as values based investing. I’ve heard people even say faith based investing, but the one thing through it all is how important this is aligning to your values.
Bailey:
And so this has been helping conservatives and those that still believe in conservative, pro-family, pro-life values align their investments with how they vote and how they believe, but will the returns be the same? I mean, are they just going to lose out on a bunch of money if they’re investing in a way that’s biblically responsible or values-based?
Bob:
People would think that because you just think, well, I’m avoiding a lot of companies, but if you compare like kinds of values based ETFs today, mutual funds, and stocks against the ones that are not values-based, the past returns have been very comparable and in some cases even better. But I have got to say that past performance is no guarantee of future performance. It also goes with your conscious that you’re doing the right thing.
Bailey:
Hmm. Wow. So Bob, how long have you been involved with values based investing?
Bob:
Over 25 years, even before the first values-based, morally responsible mutual fund started. When I started, the choices, too, were so limited. They were very limited. But over the years, the choices have expanded, Bailey, to include nearly every asset class out there. The same asset classes that are available in the non values based space. So you can build a very diversified portfolio today of values based ETFs, mutual funds, and stocks, and the technology we also use today helps us enormously with finding values based, morally responsible companies, ETFs, and mutual funds. When I first started, it was just very, very limited. So I’ve watched this thing just grow and grow and grow. And it’s been really neat to watch it grow. I was one of the first three to five people in the country to start this type of investing.
Bailey:
Wow. So you’ve been doing it for over 25 years. And so instead of voting right and investing left, you can vote right and invest right, and it’s easier now than it’s ever been, right?
Bob:
Yes. You got it. And at Christian Financial Advisors, we’ve been dedicated, like I said, to these conservative values so that those with those values and Christian values, they can align it, line up, vote right and invest right. Like I said, I’m one of the first three to five pioneers that started this. It started with just a few thousand dollars back then. And today, values based investment choices are in the many billions and billions of dollars. So, it’s really great that you can do this. It’s a positive thing. We’re making a positive difference. This type of investing is starting to really catch hold. I mean, it’s been featured several times in the Wall Street Journal and in some major financial publications, and even some of the the ETF values based companies and mutual fund values based companies have even opened up the opening bell on the New York Stock Exchange. So, it is really catching hold, and I just want people to think about why do you vote? Well, don’t vote right and then go invest left. Let me show you how you can vote right and invest right. And that’s my goal.
Bailey:
Wow. Well, you make it sound easy. I mean, I’m encouraged. It sounds a lot easier than I would think it would be. And so, where would someone get started with aligning their conservative vote with their investments?
Bob:
Well, there’s several ways. And one of the ways is I would like to help you get that started. You don’t have to use Christian Financial Advisors that I’m the founder of. My goal is just to watch this movement grow and I’ll help you get started. I’ll help you find other advisors. There’s many other advisors across the country now that can help you with this. Thank goodness. It’s gone from, like I said, a handful of us in the beginning to now there’s hundreds and hundreds that love this movement, but start with a visit by going to our website first to christianfinancialadvisors.com and clicking on “Values Based Investing”. Or you can start with a phone call during business hours by giving us a call at (830) 609-6986 or email [email protected]. We want to make it easy for you. We don’t want to make this difficult. We want to educate you about how you can vote right and invest right. We have been serving conservative Christian clients all over the United States for many years that want to align how they invest with how they vote.
Bailey:
Wow. Well, thanks Bob. This is a lot of really good information and I’m hopeful. It sounds a lot easier than I thought it would seem. And so thanks for your time today.
Bob:
You’re welcome.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
19 min
September 25, 2020 85 – How The Rule of 72 Affects Your Financial Future
Click below to listen to Episode 85 – How The Rule of 72 Affects Your Financial Future
How The Rule of 72 Affects Your Financial Future

Learn about the amazing compounding effect behind the rule of 72.

More episodes >>

What if we told you that taking out $30,000 from your investments to buy a new car today could end up costing you upwards of $115,000 in your financial future? How is this possible, you might ask. It’s called the Rule of 72. The Rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors obtain a rough estimate of how many years it will take for the initial investment to duplicate itself.
Learn how the Rule of 72 affects everything from savings to withdrawing money from an investment portfolio. You can also use this rule to figure out how much it is costing you if you wait to start saving for retirement or even when you withdraw from savings.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Bailey Theaker
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Bailey Theaker

The Rule of 72
Website

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EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bob:
Proverbs 21:5, “The plans of the diligent lead to profit, as surely as haste leads to poverty.” Well, hello, Bailey. You ready for an incredible show today?
Bailey:
I’m excited.
Bob:
As we were talking about doing this program on the Rule of 72, I think my nerdiness totally came out.
Bailey:
A little bit, a little bit.
Bob:
Just slightly. We were like, how can you get so excited about the Rule of 72?
Bailey:
Yeah. I’ve never seen someone so enthusiastic about math.
Bob:
Well, I’ll tell ya, you hear me talk a lot on the podcast about understanding how money works and the money game and the Rule of 72. It’s interesting that we’re making a whole, entire program on the Rule of 72. And I remember the first time I heard this was in high school in a math course I was taking on business math and the explanation of the Rule of 72. And it was like a light went on. I was like, wow, this can really be applied towards becoming that millionaire someday. I also heard it again when I started in the financial services business and saw a guy that got a chart and he said the Rule of 72, and he starts doing this math in front of me and in front of the entire audience. I wanted to grab this and really understand how this rule works and investing and making money and having enough money for the rest of your life without running out and how it can apply. I thought let’s bring this to the podcast.
Bailey:
I’m excited to learn about it. I’d never heard of this before working here, and you’ve been learning about it since high school. We won’t say how long ago that was.
Bob:
That’s okay. I don’t mind saying I’m 58 years old and hopefully I’ll get to do this another 20 or 25 years. It’s not like I’m out in the fields. I’m here in a nice, comfortable place. And I think I can sit at a desk when I’m 70 years old. And the wisdom that comes from doing this for so many years. I’m going to be the first to raise my hand. Hey, I’ve made a lot of mistakes in life to learn from those mistakes. I want to teach you how to not make those same mistakes. And the Rule of 72, thank goodness, that’s not a mistake I’ve made, but I see a lot of people making mathematical mistakes with their investments by not understanding this Rule of 72.
Bailey:
Sure, sure. Well, will you tell us what this magic rule is?
Bob:
Well, if you go look it up on the internet, the Rule of 72 is a simple way to determine how long an investment will take to double giving a fixed annual rate of interest. All right, let’s just think about this. We know right now, the bank is paying about 1%, if you’re lucky, in interest. Whatever you have in that bank, if you just were to let that sit there and didn’t pull anything out at all and if you’re making 1%, by the Rule of 72, it would take 72 years for that money to double if you never touched it. Compounding plays into the Rule of 72. So what I mean is is when you’re making a rate of return, whether you’re making 1%, 5%, or 10%, when you’re applying the Rule of 72, that mathematical formula works when you’re reinvesting the interest that you’re making. So, let’s take a simple amount of money. Let’s take a $10,000 investment. And a simple whole number is 10%. If you were to make 10% on that money in one year, 10% of $10,000 is how much? $1,000. Okay. So it means the next year, so you make that 10% and then by the way, when I’m talking about rate of returns, I’m not going to go beyond 10% or 12% today. I want to make sure that everyone understands when I speak of these rates of returns, these are not guarantees. Nothing is guaranteed in life, except our salvation, but nothing is guaranteed in life. But when I’m talking rate of returns here, I’m going to use some whole numbers like 5% or 6% or 10%, but that’s taking that number and you made money on your $10,000. You made a $1,000, you add it to that $10,000. Now, you have $11,000, and the next year that’s going to make 10%. So that’d be $1,100. And then the next year you’ve got $12,100 making 10%. So, it’s constantly adding that back in and the Rule of 72, when we talk about this, is always compounding. But to understand how this Rule of 72 works can mean the difference between having $500,000 or a million or 2 million. Did you notice I doubled every time there? I went from $500,000 to a million to 2 million. And it’s really important that you understand compound interest or compounding returns and how the Rule of 72 works with it. They go hand in hand with one another. And this is when I was speaking with you earlier today, when I was driving into the office, about how much it can cost you by waiting to save money, because it all is about doubles. It’s all about doubling from a $1 to $2, from $2 to $4, from $4 to $8, from $8 to $16. I’m going to ask you a really simple math question. I know you’re not really a big mathematician. If you have a certain rate of interest, and it’s a trick question I’m going to ask you. How long does it take for a dollar, and you’re making the same rate of interest, for a dollar to double to $2 versus $8 to double to $16?
Bailey:
The same amount of time.
Bob:
Exactly the same amount of time. Now, if you go from a $1 to $2 or you go from $8 to $16, have you made more money from the 8 to 16 than the 1 to 1?
Bailey:
Yeah.
Bob:
That’s exactly right, but you’re never going to get to the 8 to 16 or the 16 to 32 until you start and get from the 1 to the 2, and the 2 to the 4, and the 4 to the 8, and the 8 to the 16, and so forth. You’ve got to start. So when you look at how much it costs you for procrastinating to start saving, and I was pointing this example out to you this morning, it’s not the first double that’s hurting you. It’s the last double. It’s the double down the line of going from 8 to 16 or 16 to 32. And you look at that last double that you’re not getting for every single year that you wait to save, and it’s costing you hundreds, if not thousands of dollars on a monthly basis because you’re not getting that last double. That last double where it goes from $500,000 to a million or where it goes from a million to 2 million. You think about the last double and you go from $500,000 to a million, and now you’re not going to get to $500,000. It’s going to take you 20 years to get to that point or 25 years saving over and over. But I see this all the time. I have people retiring from the big Fortune 500 companies. They’ve been putting money into their 401k. They walk in with $500,000 to a million dollars, and say I’m retiring. This is what I’m going to retire on. So they’re there, but that last $500,000 double where it goes from 500k to a million, or it goes from 250k to 500k, but we’re going to use the 500k to a million. That’s $500,000. I’m going to divide that. Let’s say you were making an average rate of return of 6%. How many times does 6 go into 72? So get your calculator over there.
Bailey:
12.
Bob:
12 times. So in 12 years, it would take, at a 6% return, for the $500,000 to double to a million. So, if you take 500,000 and divide it by 12. Okay, I’m doing that on my calculator right here. I’ve got an unfair advantage to those that are listening, but divided by 12, that’s $41,000 every year. You divide that by 12 months in the year. Every month, that’s $3,472. Now, if you wait 12 years to start investing, it’s costing you $3,472 a month by waiting.
Bailey:
Wow.
Bob:
Procrastination is the most costly thing out there, and understanding how the Rule of 72 and compounding work hand in hand. If I could just drill it into people your age, Bailey. You’re 26. We were talking about how many doubles that you think you have between 26 and your life expectancy. And you told me, well, I didn’t think I’d make it this far. You know what? I’m at 58. I didn’t think I’d make it this far either. And by the way, you will always hear an older person tell you this. If I’d have known I was going to live this long, I’d have taken better care of myself. But the life expectancy of people today is 80 and 90 years. I mean, our life expectancy has increased dramatically. It used to be 65 years. But even if you make it to 65, and you’re just 26, you’ve got three or four doubles depending on your rate of return between now and then. But every year you wait, you’re not going to have that last double.
Bailey:
Wow. That’s amazing. That’s amazing. I think for people my age, I know for me, it feels like we have forever to think about things like that. We have so much time before we retire so we can wait, right. But that puts things in perspective very differently.
Bob:
Yeah. Cause it’s the last double that matters. It’s not the first one. And this Rule of 72 can be applied not only to investing and saving, but it can also be applied to withdrawals. You remember the example I was giving you this morning? What was that example?
Bailey:
About buying a car?
Bob:
Yeah.
Bailey:
And how much that can cost you.
Bob:
Well, so let’s use the Rule of 72. Let’s say somebody is taking out, and we’re going to use the 6% example. Again, remember, that’s not a guarantee, but if we look at past performance, which is no guarantee of future performance. If we look at past performance, a moderate portfolio average is 5% to 6% a year. So let’s just use 6%, and that’s in a very diversified portfolio of stocks and bonds and cash and maybe gold or silver, real estate, et cetera. So let’s start with somebody that has a $100,000 portfolio, Bailey. An example I was giving you this morning was a $30,000 car because cars are quite expensive today. They don’t have cash reserves. They want to buy this nice, shiny new car. It’s $30,000. By the way, I guess, good luck with that. A lot of them are even more expensive than that today. So, it’s $30,000. They’re going to withdraw $30,000 from their $100,000 portfolio that is in a moderate portfolio making a 5% to 6% average return. Now, I’ve got to say again, that’s not guaranteed, but that’s what our average has been, and that’s what an average balanced portfolio is. You can go to any online brokerage firm or any online mutual fund that’s a balanced fund. You’re going to see that’s kind of the average rate of return. So what happens Bailey, if you would draw $30,000 from a $100,000 portfolio, or even in this case from $500,000 portfolio or $200,000. It doesn’t matter. You’re withdrawing $30,000 to go buy a car. And you were making an average rate of return of 5% or 6% on that. So let’s say 6% because that goes into 72, 12 times. Right? Alright, so here we go. We’ve got our formula 12 times. What would the $30,000 have doubled to in 12 years? 30,000 times 2 is what?
Bailey:
60,000.
Bob:
Okay. What would it have doubled to in another 12 years? 60,000 times 2 is?
Bailey:
120,000.
Bob:
Correct. So let’s look at you’ve withdrawn $30,000 from a portfolio to go buy a $30,000 car. Had you kept that $30,000 in the portfolio, it would have grown to $120,000. Now, I’m going to ask a trick question of you. Hopefully, you’ll get it right because we’re recording. What’s that $30,000 car going to be worth in 24 years?
Bailey:
Not $120,000.
Bob:
Exactly. Now remember, cars depreciate. It might be worth $5,000 or $6,000. So what has that car cost you? You withdrew $30,000 from your portfolio to go buy that new car. What was the true cost of that car over say a 24 year period.
Bailey:
I mean, at least $115,000.
Bob:
That’s right. You got it. So the Rule of 72 works not only on saving and doubling money, but you’ve got to think about the Rule of 72 anytime you want to withdraw money in a large lump sum amount from a portfolio and what that’s costing you over the years, and is that a wise choice because of how it’s compounding on itself?
Bailey:
Wow. I had never even thought about that because again, I’m 26, I’ve plenty of time to save, but also I can make this big expenditure right now because it won’t affect me 10 years from now.
Bob:
Yeah. So even if you don’t have the $30,000, but you’d go borrow the $30,000 to go buy that vehicle. Now, you’re having to pay money for that vehicle. Now I’m not saying you don’t need a car. Everybody needs a vehicle, but you’re paying money towards that vehicle when you could have been doing what?
Bailey:
Saving.
Bob:
You could have been saving. You got it. So that’s why when I heard about the Rule of 72 so many years ago, a light went on inside of my head. Hopefully, that’s going to happen with somebody listening today that every single month or year they procrastinate and wait to start saving, it’s costing them this much. Also, rate of returns. When when you figure in rate of returns, like I mentioned in the beginning, you’re lucky today if you can go to the bank and get 1% on your money in a CD. Maybe 2%. At 1-2%, how many times does 1 go into 72? That’s a simple one.
Bailey:
72.
Bob:
How many times does 2 go into 72? 36. I can do all this stuff in my head. I don’t even need a calculator. Okay. So when you have money in the bank, now I understand it’s good to have some there for emergency reserves, but not too much. You want to get that money invested, because at a 1% rate of return, it’s going to take 72 years for that money to double versus if you’re making a 6% rate of return, it’s going to take it 12 years to double. Now, there is risk and reward, and you’re taking more risk. And we were talking about a scriptural principle behind that earlier, and it’s called the parable of the talents. It’s over in Matthew 25:14-30. And it talks about a master and he gives one talent to one servant, three talents to another servant, and five talents to another servant. Okay. Now remember one gets five, one gets three, one gets one. Who has the most to lose of these three servants?
Bailey:
The one with five talents.
Bob:
Yeah. The one with five. But what is the one with five talents do?
Bailey:
He invests.
Bob:
He invests it. And when his master comes back, he says to him, master you’ve given me five talents. Here is another five. And the master says, well done good and faithful servant. You did something with what I gave you. The one with two had more to lose than the one with one, he does the same thing. But what does the one that was given the one talent do with it? He had the least amount to lose, and then what does he do with it? Nothing. He does nothing with it. And the master is so upset with him. He says, give it to the guy with five who did something with it, which goes back to the story of what are we doing with what God has given us. I understand risk and reward. The lower the return, the least amount of risk, the higher the risk, hopefully more return. Now that’s not always the case because higher risk is higher risk, right? But in this biblical example that’s been given to us, you take this scripture. You don’t want to take scripture out of context. So you also want to look at other scriptures and how that plays into this scripture and investing. And you come over to Ecclesiastes 2 and Solomon’s talking about – one of the wealthiest men that ever lived in the world – he said, give your portions to seven, even to eight because you do not know what disaster may come upon the land. So Solomon, the wealthiest man in the world did not go put it all in the ground and bury it. He did not go put it all in some high risk venture, he diversified amongst six to seven different ventures. So, diversification is extremely important when we talk about rates of return and the Rule of 72s and compounding and how all this works together. It’s mind boggling. It’s hard to know what to do. This is why I come back to scripture that says plans fell from lack of counsel, but with many advisors, they succeed. That’s in Proverbs 15. And then you come over to Ecclesiastes and it says, pity the man that has no one to watch his back. Two or three are better than one. So as believers, it’s good for us to come together and help one another with this money game and investing and using biblical principles and the Rule of 72 and understanding how that applies. I know not everybody’s going to be a nerd like Bob Barber and love these mathematical formulas. You’ve got other things you’d rather do and you love to do, but understanding the Rule of 72s and how it applies to investing and compounding and saving money, as well as withdrawing money, is very important to understand. We’re going to put this all on the podcast website so that you can go to it. You can see the definition of the Rule of 72s. You can understand compounding. Then just get yourself out a piece of paper and a calculator. All of us have that on our phone, and start figuring how the Rule of 72s can apply to investing. Every time you want to withdraw money from a portfolio that’s clicking along and doing a good 5% or 6% return, think about what are you withdrawing that money for and where’s it going? And wherever it’s going, is that going to be compounding upward or is it going to be losing value? And that’s what I’ve done in my own life over the years. And what this old guy now wants to teach others about how money works and this applies right into that formula.
Bailey:
Amen. Amen. Well, I think that’s one of the reasons that I love this podcast is I know that not everybody looks at the world through the lens of math and the lens of money, and money can feel, or saving or investing can feel, really overwhelming. I know it does to me. It feels like this big formula that I cannot figure out, but this just simplifies it. This just simplifies it so much so that it feels tangible to a 26 year old or to somebody who hasn’t started yet, but could start today instead of waiting another month to start.
Bob:
And it applies not only to a 26 year old, it applies to a 56 year old and even a 76 year old because it all has to do with how often money’s going to double and don’t think it doesn’t apply to everyone. It applies to everyone. It does really apply. The younger, you are, the more important it is to understand the Rule of 72. And we have definitely gone over how this thing works. So we’re not going to spend another hour on this. I hope that this helps everyone in the future. Hey, give me a call if you don’t really understand what I’m talking about, and we can go through some mathematical formulas and I’ll show you how this works. I’ve done it right in my office. I get a big white pad, that kind that you stand up in front of. I take the dry erase marker or whatever, and I can draw on it and I can show you how this is so powerful.
Bailey:
Yeah. So if you want to give us a call at the office, the number is 830-609-6986, and Bob can walk you through all those things.
Bob:
Sounds great.
Bailey:
Alright. Thanks Bob.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
25 min
September 11, 202084 – The Life Stages of Financial Planning Part 2
Click below to listen to Episode 84 – The Life Stages of Financial Planning Part 2
The Life Stages of Financial Planning Part 2

Tune in to the Part 2 of The Life Stages of Financial Planning.

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In Part 1 of The Life Stages of Financial Planning, Bob and Bailey speak about the 4 financial life stages: Beginner; Intermediate; Graduate; and Handoff to the Next Generation. In Part 2, they discuss how the different elements of financial planning fit into each life stage.
Financial planning should be living, breathing, and changing as you do throughout all the stages of your life. Bob educates you in this podcast about many of the various pieces of the financial planning puzzle and how they should all fit together for a successful outcome. Some of the topics of the 20 pieces of Financial Planning that we discuss include:
The Christian Financial Advisors Online Financial Planning Portal
Retirement Planning
Social Security planning
Life Insurance planning
Educational Funding
Estate planning
Major Purchases
Cash flow and budgeting

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Bailey Theaker
Mentioned In This Episode

Christian Financial Advisors
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Bob Barber, CWS®, CKA®

Bailey Theaker

The Life Stages of Financial Planning Part 1
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EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bailey:
Well, welcome to our podcast today, where we will be talking about part two of the life stages of financial planning. I’m Bailey Theaker. I am Bob Barber’s assistant and professional question asker.
Bob:
That’s what we kind of put you at, ain’t it, Bailey?
Bailey:
Our last podcast, we went over the four major stages of financial planning. Bob, you want to give us a quick recap of some of those things?
Bob:
I sure do, Bailey. One of the things too is we started off the last podcast and if you haven’t had a chance to listen to it, we really get in deeply into the life phases or stages of financial planning. But I like these two scriptures that go with it. And it’s from Ecclesiastics 3:1-2, and James 1:5. And Ecclesiastes 3:1-2 says, “There is a time for everything and a season for every activity under the heavens, a time to be born and a time to die, a time to plant and a time to uproot.” That really goes well, I think, with the different phases of life because there is a time for everything, a time to tear down, a time to mend, a time for war, or a time for peace. There’s good times. There’s bad times. So there’s all these different times. James 1:5 is a scripture I really rely on a lot, “If any of you lacks wisdom, you should ask God who gives generously to all without finding fault and it will be given to you.” So our wisdom should come from God and his word. My old favorite that I’ve mentioned many times, Proverbs 15:22 that, “Plans fail for lack of counsel, but with many advisors they succeed. And when it comes to financial planning and the phases that we go through of our lives in financial planning and what is required, we need counsel.
Bailey:
Hmm. Yeah, those are good. Those are so good. And I feel like that’s what I love about the Bible is that at every season of life, those scriptures are applicable. And so last year, especially that one on seasons, I mean, obviously it meant something to me last year, but now this year with everything that’s changed and everything that’s happening, it’s a whole new thing.
Bob:
Oh, it is. We really have to rely those scriptures right now because with COVID and stuff we hear about all the riots on the news, and it’s heartbreaking. 2020 has been a tough year.
Bailey:
2020 has been a crazy time. Yeah.
Bob:
It has, and we have the up and coming elections and somebody might hear this podcast next year after the elections, but we really just don’t know, but we have to put our faith in God and we can not walk around with a spirit of fear. God is not about fear. We have to walk around with our heads up as Christians, and realize that God’s in control. He’s got it. So when we talked about the phases of the last podcast, there’s basically four phases that I’ve seen during my years. I’m not going to get into that real deep because the last podcast did that. But the first phase is the beginner and that’s where I see starting to build a foundation, getting out of college debt, building cash reserves, and the normal age for that is between 20 and 39 years old. So it’s a 19 year phase.
Bailey:
That’s a big space.
Bob:
Exactly. And a lot happens in that. You’re going to college, you’re getting out of college. You’re getting married. Usually, you’re having your first child by the time you’re 39 years old, at least I hope you are. You’re starting that family. But then we talked about last week in last week’s podcast is the second phase is what we call the intermediate phase. You think it’s tough in the first phase? The second phase is, by far, the most expensive time of a person’s life. And that’s between the ages of 40 and 62. The good thing is while it’s the most expensive time of a person’s life, it’s also the highest income earning years. Maybe not when you’re 40, but by the time you’re about 50 or 55, your income has risen pretty much to its peak, right around 60, it’s going to peak. And during that time, too, you’re accumulating wealth. You’re having more children, you’re buying larger homes. And in my case, we had three. We’re getting the suburban, the bigger cars, but then that’s in the beginning of that phase or right in the middle of it. Then towards the end of it, you’re downsizing because as your children get older, during that phase of, like I say, 40 to 62 years old, which is 22 years, your children will go to college. Most of them will be out by then. You start handing them off and they start getting married. You start, maybe you have your first or second grandchild. I know we’ve got one and I’m 58, and many my age have more. They have already three or four and some don’t have any. It’s a time where you buy that larger home in the beginning years. Then, you start to kind of come over a hump and then you start to move into a smaller home and start to think about downsizing. And towards the end of that phase is where you go into retirement. Then we have phase three, that is your graduate. I call that the normal age, about 62 to 87. That’s a 25 year phase. And this is where you’re actually retiring. You’re graduating from your main job. You have more and more grandkids that can do no wrong at all. They’re all perfect. You’re no longer in that accumulation stage, but instead you’re in the withdrawal stage. You’re living off your assets. And there’s a lot of travel in those beginning years. And like Mary Jo, who used to do the podcast, I was just talking to her last week and they’re in their RV up in Colorado. It’s the dream and you were talking about your own parents, right? They’re looking at an RV or do they already have one?
Bailey:
They have one, but they’re looking at traveling a lot more in this season of life.
Bob:
It’s kind of that phase. And then you have that last phase, which I call the handoff. It’s like a baton and you’re in the relay race and you’re handing off. And that’s where you’re handing off to the next generation. Healthcare expenses get pretty high. That lasts between 88 and 100 years old. A lot of people are living that long. I mean, most of the time, both spouses don’t live that long, but one does. And so there’s a possible loss of spouse by that time. Usually, that happens in phase three. Unfortunately, I’ve seen that a lot. It’s a very important time to think about estate planning and handing off the wealth to the next generation efficiently. And usually during that last phase of that handoff, that’s a time where you sell off everything and you may be moving to a guest house that you’ve built for yourself on your children’s property. I’m seeing that a whole, whole lot with the folks that I work with.
Bailey:
In your experience, Bob, would you say, just out of curiosity, is there usually like a joint effort between spouses in that stage of life? Do they both usually know everything that’s going on with their finances or is it usually one or the other? What does that look like?
Bob:
It’s usually one or the other. Today, unfortunately, I’m meeting with a woman that lost her husband. And she was in the younger years, actually, but I will meet with so many and it’s not always one way or the other, by the way. I mean, sometimes it’s the woman that knows all the finances and sometimes it’s the husband that knows all the finances, but usually both are not on the same page and I wish they were. And that’s why I emphasize so much that when we’re working with someone during these phases and we’re working on financial planning, that’s what we’re going to get into today is all the different points of financial planning that go into these different phases. I want to be working with both husband and wife during this time, but most of the time, one of the spouses is just not interested in the financial side of it. And that’s opposites attract. I will say that it was kind of that way with Rachael and I, but now Rachel pays all the bills. She does all the budgeting and you know me, I’m Mr. Finance. But she has really learned well. She knows our budget hands down and where everything is going. I’m glad of that because if anything ever were to happen to me, I want Rachael to be able to come in and understand the finances. And this kind of brings us to our financial planning system because today the way the financial planning systems work and the one that we use here at Christian Financial Advisors is a complete cloud based, online, technology based, financial planning program that, as long as both spouses have the username and password, they can see their complete financial picture if they want to use this system for what it’s meant to be used for. And basically, it is a system that you can integrate all of your financial life into one place. And it’s very secure along with what we refer to as a vault with numerous folders where you can store your estate planning, documents, your insurance documents, your marriage certificates, everything can be stored inside of there. It’s so much easier today. And you take it with you. It’s on the go. I mean you have an app in your smartphone, your iPhone, or your Google phone, whatever type of phone you have today, you have the app and you can pull up all your finances at any point in time and see here’s what my investments are worth. Here’s my cash flow. Here’s all of my bank accounts, and you can really keep a strong eye on it. And you want to do that with all the fraud that happens today. You want to be able to see everything instantly at any point in time to see if anybody has gotten into any of those accounts. Because many people they’ll have a bank account. They’ll have some investment accounts. They’ll have a credit card account. Maybe they’ll have that 401k over here on the side. You should be able to see everything at once instead of having to go all of these different logins to different accounts.
Bailey:
Sure. And you’ve been in the business for some time now.
Bob:
About 30 years.
Bailey:
So now it’s all online. How have you seen that change? What did it used to look like compared to what it looks like now?
Bob:
Oh, what it used to look like was we gathered all of this information. It was done through paper. We still used computers, but we would enter all of this financial data into a financial plan. We would print out this beautiful one inch thick financial plan, put it in a nice binder, and say, here, it’s yours now. And let’s go over this and let’s try to stay on track. The problem is is that finances are constantly changing. Markets are constantly changing. So that financial plan was only really good that day that we made it. Now, we want to stay on track. But today with technology, the financial planning process is very interactive and it’s integrated all together so that it’s being updated daily. And if you have an expenditure that was unexpected, or maybe you want to take $30,000 out of your retirement account, we can go on and look at the plan and say, okay, how’s this going to affect the plan over time in literally seconds. I mean, within a minute, we’ll know how’s that going to affect the longterm time horizon? We do that through a system that actually goes under plans. It’s called the decision center. I was trying to get to that word. It’s called a decision center. I’m looking at this online. So it helps you to make that decision. Should I take that money out?
Bailey:
Wow. We are living in the future. That’s amazing. Yeah. I love on our financial planning website that the first thing it says is we believe a financial plan should be living, breathing, and changing as you do while you’re in control with an experienced financial advisor, guiding you through the changes of life, and that’s so true. I mean, I can only imagine how much in just my life, and we don’t have a lot of different things moving around, but things are moving all the time. And so, that’s amazing.
Bob:
We have a video that is on our website for CISwealth.com, and it’s actually narrated by Tom Selleck. And it says, you remember when, when life was simple and everything that you had could fit in a box, a little box, but then you grew and you had children and you grew your assets. And now there’s many, many boxes. And how do you keep all those boxes knowing what they’re doing. And that’s where today, technology can help with that. Really true what we say on our website that it’s living, it’s breathing, it’s changing, and you’re in control with the financial advisor helping and walking beside you. So, it’s not all the financial advisor builds a financial plan. We hand that plan off, and then you can go online and even put in different scenarios to see how it’s going to affect your plan.
Bailey:
Well, on that same website, we have a little over 20 different financial planning aspects. Would you walk us through those?
Bob:
I sure will. So the first one that we have, by the way, you can go to CISwealth.com. And if you want to follow along with this, now, most of you, I know that listen to podcast while you’re driving or while you’re jogging or working out. But if you want to follow along with this, you can actually go to CISwealth.com and go into the financial planning area on the website. That’s what we’re going to be going over, under what we offer. So that first thing is setting up that financial planning portal. And that’s where we’re going to set up all of your different accounts and integrate everything. Now, some people will say, well, that’s scary. What if somebody hacks into this program, they’re going to see everything, and aren’t they going to be able to move money around? And the answer is no. Through technology, it’s all scattered by bits and pieces. It’s over 180,000 to 256,000 different pieces. It’d be very hard to see. Even if you were able to get in, you can’t move any money around. Let’s say you have an account, and I’m just going to mention some banks. Say you have an account at Randolph Brooks, or you have an account at Frost Bank. These are banks that are here in Texas, or you have an account at Wells Fargo, a national bank or Chase Bank. If someone were to hack the system, they can’t move money around. They would have to go directly to that site, and they can’t go directly to that site through this site. And by the way, all the banks are online anyway. So this way allows you to see what’s going on without having to go to each individual site. So that’s the first thing we do is we set up the financial planning portal, and then we have the different areas of financial planning that we work on. Now, what done on our website is we have put this in the order of what’s most important to most people. And quite frankly, what’s most important to most people is retirement planning. They think about the future, and this is understanding their financial needs when it comes to planning and what are they going to need, and to guide you through all of life’s obstacles and victories. Whether you’re 25 or 55 or 70, retirement planning is a very integrated part of the wealth management and financial planning process. This is a very important tool that’s part of our financial planning system. Another thing that people like and is probably our second most popular part of the program is social security planning. And we have a lot of retirees and they’re not real sure about when to take social security. Should I take it at 62, should I take it at 65? For myself, at age 58, my full retirement age is 67. Should I wait to 70, which is the max age to take it out? And a lot of that comes into your family genetics and how long you’re going to live. And usually the break even point, for if you take social security earlier than later, is about 18 years. So what I mean by this is if you take it at 65 versus say 68 or 70, that extra three years is going to take you about 15 to 18 years to break, even because you’ll get a higher amount at a later age, but there’s three years that you’re not getting social security. So we put that in our system and look at it and see what’s the best plan. And also if somebody has genetics and their parents both passed away in their seventies, well it may be better to take that social security earlier. But if they have parents that are both living in their nineties, it would be better to wait until the later years to take social security if you can. But we always look at that and say, well, you’re either going to take from more from your retirement plan from yourself, or you’re going to take the government’s plan. I’d rather take from my social security than take from myself. But we always play that and we can show that. Another one that’s really big for our younger folks is a company retirement plan review. And with our system, we can integrate their 401k and we can look at the asset allocation. And then when we act as a financial advisor, and we have to have an advisor agreement to give advice on what to pick in that 401k, we can integrate that. We can see how you’re invested. We can look at the asset allocation model because our system will integrate with your 401k plan, wherever that may be. If you have a username and password, you can move into it. We can integrate it. Wow. And people do not know what to invest in today. I just had a client in their mid thirties. And when I looked at the choices that they had, they had about 15 different choices in their 401k, but none of them had any sector funds to it. And then at the very, very bottom, it said brokerage account choices, which meant in that 401k, you could actually open up into a brokerage account that would open up the whole world. And that would give this individual biblically responsible choices along with different sectors. Because right now, some sectors are so hot, I feel like they’re way overvalued. I’ve not seen technology this high up in value in this, times the PE ratio, since the late 1990s, 2000, when we had the internet bubble. I’m not saying the technology is going to break, but it’s just been driven so hard by this COVID. And just, the rally that we’ve seen in technology where the other sectors have been totally left behind, like energy has been left behind. Financials have been left behind. Banks have been left behind. That is really important because you want to invest in the right thing. And this is where we can help you with your 401k, with this financial planning system. And how much should you invest in the 401k? And that’s where the retirement planning will come in. If you’ll notice down there, we have educational planning. Somebody has got younger children. They want to maybe start putting money aside for an educational fund for that child. How much should they put aside? What college does that child want to attend or do you want your child to attend? This is Aggie land, you’ll notice around here. And we have a few that would like to send in their children to A&M or maybe you have some that want to send your child to UT or even Texas State down the road. Or, I know we have a lot of listeners up in New York state, by the way, they’re probably not going to send them down here to a Texas school, but they want to send them to a state school. We can put that information in the system and tell them what they need to be saving on a monthly basis for that child or grandchild. A lot of times the grandparents will like to help that grandchild.
Bailey:
Hmm. So Bob, you said earlier that whether you’re 25, 55, or 70, that this is all important and you should be thinking about it. Do people usually start thinking about this before they need to? Cause I know I’m 26. I just started thinking about these things.
Bob:
It’s usually after they meet.
Bailey:
So what would you say is a good time to really start considering your financial plan and getting an advisor and things like that?
Bob:
About 20? When you’re born. Yeah, no. The earlier the better, because you have what we call compound interest working on your side. Benjamin Franklin said that compound interest was one of the main wonders of the world. Because the earlier you start, the more doubles you have, and there’s a rule called the rule of 72. You take your interest rate or whatever you’re making, let’s say your average return is 6% a year. 6 goes into 72, 12 times. That means in 12 years, if you put a dollar in, it will double to $2. If you put $10,000 at a double to $20,000. If you put $30,000, it will double to $60,000 at a 6% rate of return, but it takes 12 years for it to double. So the earlier you can start, if you wait until you’re in your late fifties to start saving, you don’t have many doubles, but the earlier you are, you have more times your money can double. Plus, when you’re younger, you can usually be more aggressive. So you can get beyond that return, a higher return. Now there are no guarantees, we always have to put the disclaimer in here that past performance is no guarantee of future performance, but over time an aggressive growth portfolio has done much better than a conservative portfolio, but an aggressive growth portfolio is going to have a lot more up and downs when you’re younger and you’re putting money in, though. We call that dollar cost averaging. When the market’s down, you just put more in. You’re buying cheaper shares. You’re buying things on sale. So, start as early as you can, but it’s never too late to do financial planning either. I mean, even if somebody is in their 70’s and they’ve never done any planning, they need to do some planning because you can be 70 years old and have another 20, 25, years to go. So it’s really important that you look at where you are today and are you going to make it? Are you going to have enough to get through? Sometimes I don’t know where people come up with this math, but they’ll say, well, I’m going to retire. I say, well, how much do you have? Well, I’ve got $200,000 to retire on. I want to retire on $50,000 a year. Well, today’s rate of returns are 4% and 5%. You can’t retire on $50,000 a year on $200,000. You need more like a million or a million plus to be able to do that. And your generation, you’re 26, right, Bailey?
Bailey:
I am.
Bob:
Okay. Your generation is going to need between 2 and 3 million to retire on on a normal middle income lifestyle.
Bailey:
That’s a lot.
Bob:
I don’t know if everything’s going to be around for your generation, all the government help. You might be on your own. The pension plans are not around anymore like they were for my generation and older. Pension plans are coming to an end even right now, where you used to work for a big company like an Exxon mobile, and you’d retire with that great retirement plan. On top of that, you’d have a 401k. And on top of that, you’re getting your social security. Your generation, it’s whatever you save up. That’s what you’re going to live on. Probably.
Bailey:
That makes me want to take a nap. That’s a lot. That’s a lot. Okay. So that’s the retirement planning kind of side of things at the beginning. So what would be the next step?
Bob:
I’m just going to go through the last 14 or 15 of these and for time’s sake, we’re not going to go through all these, but I’m going to list for you all of the financial planning modules, like I would call them, that go with the different stages. Again it’s setting up the portal, retirement planning, social security planning, retirement plan review. Then we get into values based investment planning. What’s your risk assessment? This goes along with planning. How do you feel about risk, tax planning, educational planning, life insurance planning. How much life insurance do you need? Life insurance is really important in those younger years, especially when you start having children. Cheap term life insurance, estate planning, longterm care planning, real estate planning. Should you buy a rental home? We’ve done a whole program on the pluses and minuses of rental properties. All we hear is the pluses, but not many people talk about the negative side of that as well. Planning for major expenditures, gifting strategies, sales of major assets, planning for possible incapacity, multigenerational planning, asset protection. As you get in the higher up years, you want to protect your assets. I’m always seeing those commercials by these lawyers on TV. Call me. We’ll win. Our last case, we won $25 million or whatever. So you want to protect your assets. Cashflow is a really big one, especially among the younger, those in their thirties and forties. Of course, I’ve seen it in their fifties, too. Somehow, they’re not able to live on $300,000 a year. I’m not sure why they’re not able to, but it has to do with budgeting, cashflow, and debt planning. There’s a lot of different planning here. So I’m just going to touch on a few more. We could just go on for hours about this, but the bottom line that you’re hearing me say is how important all of these pieces are. It’s like a big gigantic puzzle that goes into the financial planning process. Think of this puzzle. We know there’s 20 pieces. There’s more actually, but we’re hitting on the main ones, but out of those 20 pieces for those different stages of life that we talked about, there’s going to be five or six or seven of those pieces during each stage that are the most important. Does that make sense?
Bailey:
Yeah, absolutely.
Bob:
So, let’s touch on another one. Life insurance planning, like I mentioned, I’m amazed at how many under-insured breadwinners I see when term insurance is so cheap. My goodness. I think you can get a hundred thousand or a couple of hundred thousand dollar policy in your twenties, $10 to $15 a month. So I really emphasize that. Especially during those younger years, you usually have more debt because you’re buying the larger home. And if something were to happen to either one of the breadwinners, what would the remaining spouse do with all that debt? Bottom line, sometimes I’ll ask a spouse and maybe a husband will say, well, I don’t need any more than a couple hundred thousand dollars of life insurance, even though his salary is a hundred thousand a year, and I’ll say, well, something happens to you. So how long do you want your wife to be able to sustain the same living lifestyle or just have to go get remarried? Well, I don’t want her doing that. Then you need to increase it. If you’re making a hundred thousand dollars a year, you really need about a million dollars of coverage because that’s going to get you through for 10 to 15 years to replace that income. Major purchases are a big deal, too. And understand how is this going to work within your plan before you go buy a new home, before you buy a new boat. I had one client. He was retired and he wanted to go buy a really nice tractor that was about $40,000 or $50,000. Should he be doing that or just go rent one for a while? All that’s going to play into the financial plan.
Bailey:
That just popped into my head as you’re talking about this. And I don’t know which category would fall into, but like for you, Bob, you have three daughters. And so did it occur to you in your financial planning to prepare to pay for their wedding?
Bob:
Yes, it did. And thank goodness when the the second one got married, she got married out in the field, in the backyard, on the grass. It wasn’t near as much, but yeah, you gotta prepare for those. If you have daughters, you definitely have to prepare for those weddings. Just had a good friend whose daughter got married. He’s so glad the wedding’s over now, but preparing for the college education and the weddings. A lot of our clients – not a lot – but I mean a few, they’ll have maybe a child if they have three or four, one might have a handicap. You may need to set up a special needs trust so if anything were to happen to the parents, that child is taken care of. So there’s all these issues that go into financial planning, and my goal with today’s podcast and the podcast from last week – and if you didn’t hear it, I would encourage you to go back and listen to that podcast – is to realize just how important financial planning is. But to also know that it’s really cool today. Unlike any time in history with all the integrative and technology driven tools that we have, financial planning becomes a living and breathing process. So I’d like to leave kind of on that note today, and to encourage you to go to our website, to CISwealth.com. On the very front, it’s got who we are and it says what we offer. There’s a little drop down menu. And under that dropdown menu, you can click on financial planning, and then under all of these 20 areas of financial planning, there’s a little dropdown menus that tells you what that means as part of the process. And don’t delay. You know what the number one reason for financial failure is? It’s procrastination. By far, the number one reason for financial failure is procrastination. Procrastinating to start saving. Procrastinating to get that estate plan done. Procrastinating to get that life insurance plan in place. It just goes on and on and on. We procrastinate. As human beings, it’s in our nature. I see four or five phases of procrastination during the year. People say, well, right now, Thanksgiving’s coming up. Well, can we talk after that? Well then Christmas comes up. Can we talk after that? Then the first of the year comes up. Well, we’re just getting over Christmas. Now we’ve got to think about taxes. There’s never going to be a convenient time for financial planning. Ever, ever. You’re always going to be able to procrastinate about it. Go against that tendency because you’ll be so much happier if you start early instead of later.
Bailey:
Yeah. Bob, I know for me, when I first took a look at this financial planning website, there’s so many things and they’re all so valuable, but it did feel like a mountain to me. It felt like, there’s all these things that I haven’t thought about and all the areas of my life. And so, me being at 26 or for the person who hasn’t started and they’re 50 or 75, what would be a word of encouragement that you would say, here’s the first step. Just take just one foot in front of the other. Here’s the first step.
Bob:
I’m glad you mentioned that because it is like an elephant, and you don’t eat an elephant all at one time. You break it down into pieces. We don’t do this all at one time. We break it down into pieces. The first place that I would start would be to write down all of your assets. That’s all your bank accounts, your housing, your cars. Write down all of your assets and the value and write down all of your liabilities, your debts. Add up all of your assets. You’re going to add up your liabilities, and hopefully your liabilities are less than your assets, not more than your assets. But that’s the starting point that we always start with. And we have an online system that’s called our confidential profile. You can do it all online. You don’t have to fill out the whole thing, but getting started. When someone decides they would like to work with us, we’ll send them a link to that. And that’s where we start.
Bailey:
Yeah. This helps get all the cards on the table.
Bob:
Exactly. Remember you do not have to eat the elephant all at one time, but we do want you to eat the elephant over the next three or four years, because there’s many of these areas we need to focus on and we’ll eventually get to, but don’t let it scare you. The first place might just be making a phone call or shooting over an email. If you don’t want to use us as your financial advisor or planner, then find one. But by the way, you want to use a financial planner and advisor that is fiduciary driven and does not sell any commission-based products. Because if they sell commission-based products, there’s a conflict of interest. So look for an advisor that’s paid on a fee, like we are. We’re fiduciary based. We do not sell any commission based products. Nobody’s pushing us to sell you something. We’re paid by the customer, so our allegiance is to them, not some big company.
Bailey:
Hmm. So fiduciary, meaning like it’s always their interest first, not your’s.
Bob:
That’s correct. That’s correct. And on our website, we have that meaning of what a fiduciary is.
Bailey:
That was super helpful, Bob. Thanks for answering all the questions.
Bob:
That’s going to do it for today. Again, you can go to Christianfinancialpodcast.com or CISwealth.com and we’ll be glad to help you. That’s all for today.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
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August 29, 2020 83 – The Life Stages of Financial Planning Part 1
Click below to listen to Episode 83 – The Life Stages of Financial Planning Part 1
The Life Stages of Financial Planning Part 1

Discover the 4 life stages of financial planning.

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We all have different phases of our lives that demand unique financial requirements. Financial planning is definitely not a “one size fits all” or even a “one size fits most” type of solution. We each fall into separate categories when it comes to income, expenditures, debt, and savings. However, most of us can divide our lives up into 4 different stages, which Bob and Bailey discuss in part 1 of our episode on “The Life Stages of Financial Planning”.
Phase 1: Beginner – Normal age 20-39 (19 Years) – graduate college and debt, first real job, marriage, start having children, purchase first home, starting to pay off college debt, rising incomes
Phase 2: Intermediate – Normal age 40- 62 (22 years) – most expensive time of life, second or third child, larger homes and cars, major career advancement, teenagers, college cost, kids get married, accumulation years for retirement, possible early retirement in later years
Phase 3: Graduate – Normal age is 62-87 (25 years) – retirement years, downsizing to smaller home, no longer accumulating but withdrawing, Recreational vehicle and travel, grandkids, and possible loss of spouse and health issues in later years as well.
Phase 4: Handoff to Next Generation – Normal age 88-100 (12 Years) – thinking about the next generation, great grandchildren, and selling of all assets including home and giving to children; very expensive health care costs.

HOSTED BY: Bob Barber, CWS®, CKA®
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Bailey Theaker

Ep 82 – Are Rental Homes a Good Investment?
Website

Ep 16 – Procrastination
Website

Ep 56 – The Loss of a Spouse
Website

Ep 76 – Inheritolatry
Website

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EPISODE TRANSCRIPT

[INTRODUCTION]
Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.
Bob:
Welcome to today’s podcast. This is Bob Barber, along with my helper,
Bailey:
Bailey Theaker.
Bob:
Alright. Hi, Bailey. How are you today?
Bailey:
Doing well. How are you, Bob?
Bob:
Well, it was fun. This is the second podcast you’re going to help me with. I’m trying to figure out exactly what we call you. You’re like the person that is listening and thinking, “Okay, I got this question I want to ask.” So we do we call you the question person?
Bailey:
I’m a professional question asker.
Bob:
And so again, if you didn’t hear the last podcast, I’d invite you to go back and listen to that one. By the way, that was a really interesting podcast I made that was on residential real estate and is it really the great investment we all think it is. I want you to say what you did in the last one because somebody might not have heard that. What was the reason you thought that we ought to just make them right here instead of me always interviewing somebody else?
Bailey:
Yeah. Well, since coming onto the team, I’ve had the chance to listen to several of your podcasts. I mean, you have what, over 80 out now. And so I’ve listened to a lot of them. And after listening to them, there’s so much good content on there, but then just being around the office with you, I hear you come up with ideas all the time. I hear you talk about things and I feel like I’m just a sponge, just absorbing all this information and things I didn’t know.
Bob:
Don’t absorb too much cause there’s a lot of craziness up here too.
Bailey:
And so yeah, take it with a grain of salt, but as I was listening when we were trying to schedule some more people, I just thought, “Bob, why are you asking so many people all these questions? Why isn’t somebody sitting down and asking you these questions?” I mean, you’ve been in the finance business for how long now?
Bob:
Over 30 years.
Bailey:
For 30 years.
Bob:
I mean, I started with real estate investing from 1984 to 1992. And then entered into the full financial services in 1992 because, quite frankly, I got bored with real estate. So, I love the finance side of things. And it’s really interesting, before we get into today’s topic, which this has to do with today’s topic. Learning about money and how money operates is kind of a game and learning how to play that game properly because money is a tool. Like a game or a tool, you’ve gotta learn how to use money. As a kid, can you guess what my favorite game was? It was monopoly. I loved monopoly. I would usually just whip up on my competition. People were like, what are you doing to me? But I guess it was just a knack I had. I always understood how money worked, even from the time I was 14 to 15 years old. My brother and I were buying a few homes and fixing them up back then. We didn’t realize fixer uppers were big back then. This is before HGTV or anything. So, I’ve always been of the entrepreneurial spirit, and I believe strongly in free enterprise and understanding how money works. That’s what this podcast is about. It’s teaching people how money works. And today we’re going to talk about all the phases, the life phases, of financial planning, which is really taking the tools, because there’s a lot of tools available, to see how that works, and how does that apply to these different phases of life? You know me, I love God’s Word. Most people don’t realize that Jesus spoke more on stewardship and how we handle money than he did on heaven and hell combined. And all you gotta do is just open up and just start looking at from how the widow gave her last mite, that’d be maybe pennies today, but it was everything she had and how that meant more than a rich ruler just giving a small percentage, to the parable of the talents to the way you hire somebody. He hired the three people, and the guy that came in at the end of the day got the same pay as the guy at the beginning of the day. So, there’s just so much in God’s word. I am a Proverbs nut, as you know, too. I love the book of Proverbs.
Bailey:
Yeah. And I think that that’s something that makes us really unique is that I’ve heard a lot of people talk about money throughout the years, but you bring in this perspective of not only having been in the financial business for 30 plus years, but having done it from the wisdom of God’s word, and that’s a really unique place to look at the world around us and look at money and our finances. I mean, I don’t feel like most of us that’s the approach we take, and so I’m just excited to learn from that perspective.
Bob:
The book of Proverbs, if you just follow the book of Proverbs, and do everything that says, your financial world will be in order. I’m not a big prosperity theologist guy. Okay. I mean, I don’t claim it and speak it and all that, but if you follow it, you will be financially secure and safe because it has given us wisdom and how to operate our finances. It’s just all through Proverbs. “Consider the ant. It stores its provisions in summer and he gathers his food at harvest.” That’s what it says in Proverbs. By the way, it says, “Consider the ant you sluggard.” It’s kind of funny how it says that, but it’s really about building cash reserves. In Genesis 41, when Joseph came to Pharaoh and Pharoah said, “Hey, interpret these dreams for me. What does this mean?” He said, “Take a fifth of the harvest and save it up for seven years.” That’s 20%, by the way. A fifth is 20%. So take 20% of what you’re making and save it up for the famine when it comes about. So that’s talking all about cash reserves and then the parable of the talents is talking about investing. And then debt, “If you lack the means to pay, your very bed will be snatched out from under you.” Not saying debts bad, all bad, but if you lack the means to pay, your bed will be snatched out from under you. So throughout scripture is written about how to handle money wisely, and it has been proven over thousands and thousands and thousands of years.
Bailey:
Wow. We could talk all day just about that.
Bob:
We could. We could. We got this subject we want to get to today. And it’s really about the life phases that all of us go through. I took some scriptures. You can say, Hey Bob, what are some good scriptures to start today with it. If you’ve been listening to my podcast, you’ve heard me say this, especially during COVID time, there’s a time for everything. There’s a time to tear down, time to build up, et cetera, because what we’re going through right now, we will come out of it. There’s always going to be tough times. And then there’s going to be good times and will be tough times again. But Ecclesiastes 3:1-2 said, “There’s a time for everything and a season for every activity under the heavens, a time to be born and a time to die, a time to plant and a time to uproot.” James 1:5 says, “If any of you lacks wisdom, you should ask God who gives generously to all without finding fault and it will be given to you.” Now, see, this is the foundation for today because the foundation for today, when we talk about the phases of life, is there is different seasons in life. And you need wisdom to get through these different phases. Proverbs 15:22 is one of my favorite scriptures in the entire Bible that plans fail for lack of counsel, but with many advisors they succeed. And that really speaks to that we need one another. We are not to go this alone. Over in Ecclesiastes, it talks about how a cord of three strands is not easily broken. Pity the man that has no one to watch his back. So, we need one another, which really speaks into these phases that we’re going to talk about and financial planning and seeking good advice.
Bailey:
Yeah. So as an advisor, Bob, I have said this to you before, but you really do serve as a shepherd to the people that you are an advisor to. I mean, you really are walking with them really closely through kind of all the stages of life and of financial planning. And so I just feel like you have a really unique perspective as you’ve walked with them and shepherded them. And like I said, it’s unique also in that you’re not just guiding them to making good financial decisions. You’re guiding them to make biblically wise and God honoring financial decisions. I just think that’s awe inspiring to me. That that’s a possibility that we can make decisions in our finances that do honor the Lord at every stage of life. And so I’m excited to hear as you just go over what each stage of life looks like, and then how do we do that? How do we honor the Lord in each stage of life, and how do we walk in biblical wisdom in all of those stages, too?
Bob:
I’m so honored when you told me that the other day. I heard you say that, and it really hit me deep in my soul. When you said Bob, you’re like a shepherd to so many of your clients. You consider them more like your congregation, don’t you and like your family? And I said, I do. When I was 14 years old, I had a calling on my life that I thought God was going to make me into a pastor. I mean, I thought I was going to become a pastor for awhile. I really did. I remember my dad taking me up to Tulsa, Oklahoma, and sitting on the Oral Robert University campus and talking to my dad. My dad was like, if you want to be a minister, I’m fully behind you. But for some reason, God did not take me. I was so close on that path, but everybody has ever known me, knows I love the Lord. So, he kept me in the financial realm for a reason. And yes, I do consider this as a ministry. It’s a calling in prayer. I feel like all financial decisions for a Christian are also spiritual decisions and that every financial decision needs to be prayed about. Psalms 24:1 says, “The earth is the Lord’s and everything in it.” Therefore, if he says everything, that means my vehicle belongs to God. That means our home belongs to God. That means my investment accounts belong to God. My bank accounts belong to God. How am I taking care of it? Where am I putting it? So, that’s where we get into the values based investing.
Bailey:
Yeah, that’s so good. And you are a pastor. I mean, and I love that because I think that when God gave people the call of being a pastor, that takes so many different shapes and forms. I mean, even just as a father, fathers are the shepherds and pastors within their families. Having come on this team just two months ago, I’ve watched the way that you engage our clients and the way that the whole team engages our clients that when there’s a loss in their family, we’re there. I mean, we show up for those people because they are considered family to you. Or when there’s a new baby in the family, or when there’s a marriage happening or something exciting, you’re all in. You’re there. And so in every way, I feel like you just get to walk alongside people the way that Jesus did, like you get to walk with people and guide them through all the stages of life.
Bob:
Well, that’s why at 58 years old, I’ve been doing this for 30 years. I’ve had people say, are you ever going to retire? I don’t retire from ministry. So, as long as the Lord allows me to do this, and I know old financial guys, they just keep going and going. There’s that famous guy named Warren Buffet that everybody knows. I don’t know how old Warren is. He’s got to be 85 or 90 years old, and he’s still going. And so I want to keep doing this. Ron Blue, who I’ve had him interviewed on the podcast many times, I think he’s 78 now is what he said the other day. He started Kingdom Advisors about 12 or 13 years ago and announced the fastest growing Christian organization for joining Christian and financial planners together around the nation. I can’t wait to take you to one of them, you and some of the new staff have come on and some of the old staff, cause it’s amazing. We’ve got to get to today’s subject. So, there are phases, there’s many different phases in financial planning. You’ll notice what I did here is I broke this down by phase one, phase two, phase three, and phase four. Phase one. I think that kind of fits you, doesn’t it?
Bailey:
Yeah. Well, I’m about 26. So, I think I’m at the beginner stage of almost everything in life, but for sure. What does that look like for the beginners in their financial planning life?
Bob:
Well, phase one, I put in the bracket of 20 to 39 years old, but there’s so many things that change, so that’s 19 years in these phases. The first phase is 19 years. The next one’s 22. And then the next one is 25 years, and the last phase is 12. During that first phase, like where you are right now in the beginning, is you’re really about building the foundation. If you have college debt, a lot in between your age and 35-36 years old, they’ve got a lot of college debt. They’ve got to get out of that debt, and many of them want to get out of that debt before they start families. So, we’ve got to look at that. We’ve got to come up with a plan to remove that college debt as quickly as possible and then start building cash reserves at the same time and savings. Because if you don’t build the cash reserves and savings and you don’t start that, you know what’s going to happen? You’re going to get stuff in credit card debt. I’ve seen younger people in this beginning phase, they’ll get in credit card debt. They can get all kinds of credit card debt in just six months, and it takes them six years to get out of it. So don’t buy today what you can’t pay in the next 45 days because the credit card is going to come in. They used to ask me, I remember all the time, do you want to apply for our credit card so that you can get a 10% discount? Don’t ask Bob Barber that because you might get a little bit of a sermon, not too much. And later, let’s say around 30-35 is that once you’ve gotten out of that college debt and you’re starting to build that foundation in cash reserves, you want to start thinking about investing, actually, at this age. There’s what’s called the rule of 72. And the rule of 72 is you divide the rate of return into it, and that’s how often something will double in value. So as an example, if you’re making 6% on average return in say a balanced growth fund. In 12 years, if you put a $1000 in, that’s going to double to $2000 and in another 12, it would double to $4,000 and in another 12, it will double to $8000. If you’re putting a lot more than a $1000, say $10,000. $10,000 goes to 20k. 20k goes to 40k. 40k to 80k. 80k to 160k. 160k to 320k. So, the earlier you start with that, think of the double at the end, when you go from $160,000 to $320,000 or $320,000 to $640,000 or $640,000 to $1,280,000. I know you’re going, how are you doing this in your head? It’s math, but it’s those last doubles. The last doubles will come sooner if you start sooner. So the later you wait, procrastination is extremely expensive. It’s costly to the tune of thousands and thousands of dollars per month. And that’s that beginning stage, even if you’re just investing $25 a week. You know me, I love Dave Ramsey, too. I’ve taught Dave Ramsey a lot. He talks about that. At this beginner stage, I would encourage everybody to go through a Dave Ramsey course. I’ve taught that many times at my church and that’s a great, great course. And he’s a good Christian brother. By the way, I’ve met him several times. He comes to our Kingdom Advisors conferences. But along with this phase, you’re getting out of college. You’re building your foundation. You’re building your cash reserves. You start investing in retirement plans. You get married. Now, how long have y’all been married?
Bailey:
We’re going on five years.
Bob:
Five years. You started younger, then, than most people today. I have three daughters, and one is married and the youngest is 26. So during that, between 20 and 39, you’re seeing the marriage happen. You’re seeing the start of a family, usually during that point. Everybody starts later now. I mean, Rachael and I, we had all three of our daughters by the time we were 31.
Bailey:
I’m late. I better, I get going.
Bob:
Yeah, no, well you do what you need to do, but I sure do need you here as an office manager to help me with the podcast. During that time, too, is when you’re going to usually buy your first home between that 20 and 39 phase.
Bailey:
Yeah. Wow. Well, I know that I’m in this stage of life that I’m in, that can feel like a lot. That can feel like a mountain of things that we kind of have to get going. And for me, that can feel kind of overwhelming. And so I would imagine for a lot of our listeners who are in that first beginner stage, they might feel a little overwhelmed too. And so Bob, from your years in the business and also from having three kids who are now all adults, what is the piece of advice or encouragement that you would give to that beginner stage of life?
Bob:
You don’t eat an elephant all at one time, so start with one small thing. Start with $10. Start with $25. Don’t think that you have to start with $150 or $200, little bits at a time, little pieces. Eventually, those pieces will add up. I encourage everyone that if you’re not saving anything towards cash reserves and you say, well, I just don’t have any money to do that. Well, try saving $15 a week. And then once you get used to that and set that up systematically, then go to $25 and then go to $35 and you’ll start saying, I’m saving, but I’ve also noticed I’m not going to Starbucks anymore and having that $4 or $5 cup of coffee that I can make it home for 30 cents. So, it’s things like that.
Bailey:
Yeah. That’s so encouraging and helpful. And as soon as I came here, I felt like a guppy in the ocean in the financial world because they really just don’t teach you this kind of thing in school growing up. Now, I’m 26. I wish that I would have heard these kinds of things when I was 18 so that I could prepare. But I’m excited that I get to hear about the next stage of life, now, when I’m 26. So, what is the next stage?
Bob:
And you’re so young. I’m sorry, but you are. I mean, our listening audience is going. Yeah. She’s 26. So it’s good you’re hearing that now because you’re going to be so far ahead of somebody that just waited and they started when they were 40 or 45, because the number one reason for financial failure, the number one reason is procrastination. I have done an entire podcast on procrastinating because you can put it off. It’s so easy to put it off, but phase two. So, you think phase one is hard. You wait to phase two because you think it’s going to get better. Well, I’m going to start saving when I’m older and things open up. All right. So then what happens in phase two is you think you can save because your income is going up, but phase two is at that point from 40 to 62 years old, that’s 22 years. And so much is happening during that time. This is the most expensive time of your life, without a doubt. The kids are coming on board. During this time, the kids are getting older. You’re needing a larger home. I remember us, we had the suburban and the minivan and we had the larger cars. And now, we’re driving little bitty sport utility vehicles. You can’t get more than four people in our car now, but in the suburban, you could put nine. And I remember the family trips, and we sent our kids to Christian schools. So, you had mortgage debt. You had a larger home. You had larger cars. The babies turn into toddlers, and the toddlers into children, and the children into teenagers. Teenagers start getting 16, 17 years old. We have three. Get the one that turned 16 or 17. Hey, it’d be nice to get another car, and she can help cart around the other two because Rachel was acting as taxi mom. So, we have them in private school. Now, we’re buying another car. Now, we’re paying for insurance. And then, the 16 gets 18-19. Then what happens? And we wanted to send ours to college, and we wanted to send them to good Christian schools. So, I sent Jenna all the way up to Liberty University. And Jerelyn’s two years, two and a half years behind her, I sent her to Biola. I’ve got one on the East coast, one on the West coast, and then Jaeci our youngest, she’s going to San Antonio Christian School. So, I’ve got all this going on. There’s three cars at one point, each one in college, and I’m like, how am I going to pay for this? Somehow, the Lord helped me pay for it. And we were able to pay for a 100% of our oldest two. The third one didn’t want to go through college, and that’s okay. College is not for everybody, but we got them through without any debt because I did not want them having any college debt, but that is such an expensive time of your life. And remember those daughters, what do they do? They go get married. We had Jenna get married during that time. So, we’re paying for college. We’re paying for weddings. They’re starting to leave the home. Now, during that phase when they all leave the home and you’re done with college, there’s a huge pay raise. So, you start saying, I have got to catch up on retirement now and I’m going to plug it in. So, you’re really accumulating. That is the accumulation stage. I’m 58 now. And I can tell you, I have a lot of energy. A lot of people say at 58, I have more energy than a 20 year old, but you should have seen me when I was 20. But you start getting tired, and your friends start retiring around 55, 56, 57. They’ve been working for maybe some oil companies. I’ve got some friends that worked for DOW chemical during my junior high and high school years when I was down in Lake Jackson. They’re all getting these pensions, and they’re retiring at 55, 56, 57 years old. You’re like, huh? So, that’s phase two. So, we’ve got phase one and phase two. And then we go into the third one.
Bailey:
Wow. That is a lot of things in that one stage of life. That’s a lot of things. I wonder, because in that first stage of life, it felt like, I know it feels like, all your friends get married kind of at the same time. And then everybody starts having kids right around the same time. So, I would imagine in that second stage of life, as you see people start to retire, is there a little bit of like retirement envy of, “Oh, I want to be there.”
Bob:
What am I doing with my head right now? There is retirement envy, except I feel such a calling, like we talked about at the beginning of the program, in my life to do this. I know this is where God wants me. I wake up every day with a lot of energy because this is what God wants me to do. I feel like he wants me to do this to the day I die. You tell everybody. What you say to me all the time?
Bailey:
I say go home, take a nap.
Bob:
And what do I tell ya?
Bailey:
You say I’ll rest when I’m dead. Every time.
Bob:
Don’t worry. Don’t worry. I’m fixing to go to Colorado for two or three weeks, and I do that every summer. We go up there and see our clients up there. I’ll take some rest, but you saw my schedule this morning. You’re like, what are you doing? We go hiking constantly.
Bailey:
It’s just packed full completely. So Bob, in that second stage of life, there are so many things. What would you say is the number one thing that gets neglected by people, that they just kind of forget to do that thing in that second stage of life?
Bob:
Hmm. Wow. That is a really good question, and you threw me on that one. The number one thing that gets neglected during that phase is probably thinking about themselves. I mean, I don’t want to think selfishly, but they’re thinking so much about the kids that they forget that you’ve got to think about yourselves as well. And you’ve got to recharge. You think about, it’s hard to continually give, give, give when you don’t recharge some yourself. That’s why we need a Sabbath, right? We need sabbaticals to recharge. In that phase, I don’t see that. They’re paying so much towards wanting to give their children that college education and wanting to give their children everything that they forget about themselves. I also see – a number one thing during this phase from the beginning of having children even all the way through – I’m amazed at how many people don’t have their estate plan in order. We’re going to get into all the financial phases. We may have to do a second part of this or else somebody’s going to have to listen to this podcast over two or three days because there’s so much just talking about the phases. And then we’re going to get into talking about all the different pieces of financial planning that fits into all these phases. There’s about 20 different pieces, which is so exciting today because with technology, and we use it here, financial planning is different than I’ve ever seen it. It’s technology run. It’s very integrative, interactive, and constantly being updated. It’s not like the old plan where we gathered information, generated the plan, printed out the plan, put it in a nice binder, and say, here, this is your plan. You’ve got to follow it. Now, it’s living and breathing. So, financial planning has totally changed over the past five to six years. I mean 100% changed. And I love the change today.
Bailey:
Wow. Well, so those two first stages of life, I love the scripture that you read at the very beginning in Ecclesiastes that says there’s a time for everything and a season for every activity under the heavens, a time to be born and a time to die, a time to plant and a time to uproot. I feel like that first stage of life is really just like, you’re barely getting roots. And then the second stage of life is like you’re growing. This is the planting stage, the planning stage, and so you’re planning a lot for these last two stages of life. So, what do those look like?
Bob:
If you don’t plant, you’re not going to have anything to harvest, are you? The third phase is between the ages of 62 and 87 is where I’ve seen this. And you realize I’ve worked with all these phases of people? I understand these phases so well after doing this for 30 years, you understand what they’re going through in these phases. And this is where I call it “the graduate”. You’re graduating from your main job, and you’re either going back as part time, maybe as a consultant. I’ve seen this a lot or you’re totally retiring. We call this the retirement years. This is when the grandkids come along, which can, by the way, can do no wrong, but when they do wrong, you just hand them back and say, okay, you go back to mom and dad. You know my little grandson, he gets anything he wants because I loved my grandparents. They did the same thing with me. I know. We spoil him, but like we always said, if we knew grandkids were this great, we’d have had them first, but probably because we have wisdom there. And in this phase, you’re no longer planting. You’re no longer in the accumulation stage. Now, you may still be in that accumulation stage from 62 to 70, but somewhere in here, you’re no longer accumulating, but instead you’re in the harvest. You’re in the withdrawal stage. You’re taking money from what you’ve built up. Because quite frankly, you get pretty tired. You want to have time for the grandkids. This is also a time of life where you may be looking at the larger home you had when all the family was there and say we want to travel. In the beginning years of retirement, I call those the “go-go years”. You’re go, go, go, go, go. You want to travel. You want to get the RV. Mary Jo, that was doing my podcast with me before, she retired. They bought the RV, and they’re in that RV right now, touring Colorado, Wyoming, South Dakota, and all that area. They’re living the dream. They are. That’s during that go-go phase, and that’s the beginning phase of retirement. And then there’s the next phase called the “slow go”. You slow down. You’re like, I’ve done it all. I just kinda want to stay home. And then the last one is “no go”, but you’ve got to have those assets to live on. You’re possibly downsizing to a smaller home. I’ve seen that a lot because you’re not going to be there as much, or you just don’t want the maintenance and the cost associated with the big home. Another thing that happens, though, during this phase, this graduate phase of 62 to 87, I’ve seen this a lot unfortunately, is this is where the loss of a spouse many times comes along. Now, during any of these phases, the loss of a spouse can come along, but this is the phase where I see it the most and many times it’s sudden. I’ve done a whole podcast on the loss of a spouse. I understand what you’re going through from the perspective of. I’ve seen others. I have not lost my spouse. My spouse did have cancer a couple years ago, and it was a pretty scary time, but we put our faith in God. And right now she’s all clear, but I would praise God either way because God is on the throne, and I love him in the good times and bad times. But during this time when a husband or wife loses their spouse, it can be so difficult because this is in the middle of time where they wanted to do so many things together. And many times you’ve been married, like Rachel and I, I’m 58, we’ve been married 35 years. We’re like two peas in a pod. We do everything together. We understand each other, and we really are looking forward to that phase. Except Rachael is saying, Bob, you’re not going to retire because you would drive me crazy. Anyways, I will slow down some, though. Okay, so that’s phase three.
Bailey:
Sure. Yeah. I know my parents bought an RV too, and they’re just getting to that stage of life. My mom is retired, but my dad hasn’t, and they bought an RV and they’re starting to travel around and things too. They’re considering moving into the RV and I said, you can’t sell our family house. They said, but you’re never here.
Bob:
Our children are grown adults now. We we moved from the home that they were raised in. We didn’t downsize much, though.
Bailey:
Yeah. I’ve seen your house. It’s beautiful.
Bob:
But we do have less bedrooms. The way that we structured it was like, Rachael’s got her own office. I have my own office and things like that. But yeah, they’re like, you can’t sell that house, but we did, but they’re getting over it.
Bailey:
Okay. So what’s that last final stage of life?
Bob:
That last final stage is what I call the handoff. And that’s normally, from what I’m seeing today, because people are living longer, and that’s normally between 88 and 100.
Bailey:
Wow.
Bob:
I know. People are living a lot longer. It could be 85 to 100, but this is when you start thinking about the next generation, but your healthcare expenses really can rise during this time as you get older and you need more healthcare. Here’s where you possibly sell your home completely. I’m seeing this a whole lot with the clientele that we serve, the Christian clientele. They’re selling, and they’re moving in with the children, not necessarily moving into their house, but they’re taking the money from their sale and they’re building a little guest house in back or something like that, or moving into a small, luxurious apartment. Okay. So they don’t have any of the maintenance or expenses. I mean, they know this is what I have to pay, and everything’s going to be taken care of during this phase. Estate planning is important for all phases, extremely important. I mean, I’m amazed. I was talking to one just yesterday. I said, have you done your estate planning yet? They have children that are like 3, 6, and 9, and they still don’t have an estate plan. I said, what are you going to do if something happens to you? You need to have the guardianship set up. But estate planning during this last phase is the most important time. Estate planning is always important, but you want to hand off that wealth efficiently to the next generation. The next generation is not ready to get that wealth either, unless they have wisdom. And I’ve done a lot of great podcasts on inheritolatry and on passing wealth to the next generation. If you pass wealth and they don’t have wisdom, you’re hurting them more than you’re helping them. You also have the longterm care costs. So, it can be expensive during, what we call, the no-go years. You’re not traveling and you’re not spending money there, but you’re spending money on all the healthcare costs.
Bailey:
Sure, sure. I know that you mentioned earlier that one of the most neglected points is that people often don’t think about themselves. I’ve heard that a lot where people won’t think about estate planning for themselves because they’re, I don’t care what happens to me. I don’t care what happens to my money. I only care about my family, but really that is taking care of your family to plan ahead and do those things. It is considering your family, because I know that we’ve had people call up here before who have a spouse pass away unexpectedly or something like that, and they just say, I’m so overwhelmed. I don’t know what to do. They’re grieving, and there’s all the things that come with that. But now they also have to think, how do I put all this together? Because I’m at a loss. And so, it really is taking care of those around you.
Bob:
We know how to do all that by the way, too. We have all the packets we can give you and written information, along with just advice of helping somebody like that. They’ve lost their spouse. Now, what do I do? I don’t even know where to start. And sometimes, the best place is just not to start anywhere for awhile because there’s just so many emotions that are going high at that point. Just let things calm down for several months. It’s going to be okay. You don’t have to make those financial decisions right now. You can wait until the storms calm a little bit. As we know, time heals wounds, at least it’s supposed to. Sometimes it doesn’t. I’ve seen where somebody lost their spouse 15 years ago, and they’re still grieving. And I pray and pray for them. One of my best friends that’s happened to. And so, it could take time, a long, long time, but we’re here to walk beside you. Well, I’m thinking we’re going to go into all the parts about financial planning. I don’t even know where we are. Where are we at? 45 minutes or an hour today, already? So, why don’t we do that on the next podcast. Let’s make this part one and part two, and we’ll come back on the next podcast now that we know all about the life phases. We’ll go into the 20 to 25 pieces of the financial planning puzzle that fits within all of these life phases. So, you can see how this integrates so that you’re operating efficiently and you’re doing things with wisdom and you’ll have a bright financial future right now and in the future in putting everything together. Does that sound good? Do you think we ought to do that?
Bailey:
That sounds good, and you are not going to want to miss that podcast. I mean, I could just spend hours looking at our website, reading about them, because there’s so many great resources on there. I’m excited to do that.
Bob:
And let’s put this all on our website about the phases. We’ll make sure and do that. Go to the website, to christianfinancialpodcast.com. You can also go to CISwealth.com and go under financial planning. That’s what we’re going to be discussing next week and see all the areas of financial planning. People are amazed that there’s that many pieces of financial planning. A lot of them would just think of it as getting out of debt and doing some retirement planning. There’s a whole lot more than that. But today, like I said, with technology, it integrates it all. It’s just, it’s a beautiful thing. I know I get excited about some things and people are like, you’re weird, but I do know finances. By the way, if you asked me who the hottest entertainer is or what movies playing, I don’t know that, but you ask me about finances, I know that. I know about finances and the word of God. Those are the two things that I know a lot about.
Bailey:
That’s a good thing to know. Well thanks, Bob. Thanks for your time.
Bob:
We’ll talk to you all later, and then we’ll catch you on next week’s podcast.
[CONCLUSION]
That’s all for now.
We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.
[DISCLOSURES]
Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber. Bob does not provide tax advice and encourages you to seek guidance from a tax professional.
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Biblical wisdom for financial decisions and goals. Conversations about managing money according to Christian principles, featuring expert insights on budgeting, investing, giving, and building wealth…