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What to do in a Booming Stock Market

Originally posted on the Christian Post on March 3

To learn Biblical answers to your financial questions, you can #AskChuck @AskCrown your questions by clicking here. Questions used may be lightly edited for length or clarity.

 

Dear Chuck,

Every time I turn on the news, I hear reports about new record highs in the stock market. I have some stock investment, but wondering if I should go bigger. Is there something I should be doing to take advantage of the energy in the stock market?

Stock Market Newbie

Dear Newbie,  

Great question! With a recent report in The Balance noting that the Dow Stock Market “has set 24 new record closing highs since the 2016 Presidential election,” many people are wondering the same thing.  No doubt, the market is riding a surge in optimism at the moment! The Goldman Sachs Risk Appetite Indicator hit its historic high in early 2017.

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Satchel Paige once asked, “How old would you be if you didn’t know how old you was?”

That’s a good question. Age sneaks up on us, and retirement is a chapter in life that many are unprepared for.

People in the world believe retirement is the time in life to withdraw from the demands of work and labor to pursue enjoyment free of obligations, commitments or worries. Fulfilling their desires is a reward for how hard they’ve worked. But, Hugh Welchel, Executive Director of the Institute for Faith, Work and Economics strongly disagrees. Welchel explains that the only thing looking like retirement in the Bible is found in Numbers 8:23-26. Here, God told Moses, that the Levites were allowed to work from 25 until mandatory retirement at the age of 50.

After their temple service, they were expected to mentor the younger men by providing wisdom and leadership gained through their experience. They were available to advise and counsel the younger generation.

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Do you worry about outliving your retirement funds?

If you’re worried, you are not alone. Maurie Backman with the Motley Fool says retirement tops the list of Americans’ financial concerns.

In 2016, 64% of the population admitted fear in not having enough funds to cover living expenses in retirement. An estimated 33% have no retirement savings at all, and those who are relying on Social Security need to realize that it replaces just 40% of the average worker’s pre-retirement income. An Allianz study reveals that 60% of baby boomers fear running out of money in retirement more than dying.

Analyze your living situation. It may be worth downsizing to a smaller home. Less square footage and acreage may ease pressure on the budget and the stress of maintenance. By downsizing, you have the  opportunity to earn money by selling items you no longer need. You also may be able to get by with just one car to further cut your expenses.

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Are you confused by retirement accounts and investments?

Christine wrote me with this question:

I have worked several different jobs. I have retirement money affiliated with each employer. I am considering consolidating to one new account, but I am confused on who to invest with and what type of account to open? Your suggestions would be greatly appreciated.

Christine, you have a few basic options to consider:

  1. Leave your money in your former employer's plan, if your former employer permits it.
  2. Roll over your money to a new 401(k) plan, if this option is available.
  3. Roll over your money to a Traditional IRA.
  4. Roll over your money to a Roth IRA.
  5. Take a cash distribution.

First, be sure it is to your advantage to move the money from your former employer’s 401(k) plan. It you are allowed the same options and controls over the account as an existing employee, it may be to your benefit to leave the money where it is. Ask a professional financial advisor to help you analyze this option.

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Have you thought about purchasing an annuity?

Chuck Bentley on 8/15/16 8:00 AM

1 comments

If you are 66 years old and someone offered to sell you an annuity with these terms: For $260,000, you will receive back $1,300/month for the rest of your life. Would you take it? 

Far too many decide for this option without doing the math. David Marotta had an excellent article in Forbes Magazine examining this very scenario.  Careful analysis reveals that the insurance company will be paying you back the money you gave them for the next 16 years and 8 months or until you are nearly 83 years old. Only then will you begin earning anything over and above what you originally handed over to them.  If you live to be 100, your return on investment will equal about 4.5%.  But remember, at age 66, life expectancy is only to age 85.  So the odds are greatly in favor of the insurance company that they will only be paying you back the money you gave them in the first place.

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Ready to learn how to be a better investor?

Matt Bell, a friend and financial author has written an excellent article called The Essentials of Investing on his blog, Matt About Money.  It is a very helpful, basic guide for those who need to know how and where to get started.

Matt says that to lower the fear and confusion follow five simple recommendations:

First, Get in the Game. Allow money to multiple for you. A long-term investment strategy allows us to earn compound interest. In essence, compound interest is interest earning interest.

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Want to make a great impression and a great investment? Landscape your home.

A 2013 National Association of Realtors survey revealed that curb appeal is important to 71% of homebuyers. If a customer doesn’t like the front of the house, which includes landscaping, they may not go inside.

Homeguides’ Cam Merritt says landscaping is one of the few home improvements you can make that not only adds instant impact but also increases in value as the years go by. Interior decor and design go out of style, appliances wear out, but quality plants grow fuller each year.

A well landscaped home has a significant price advantage over a home without. That advantage ranges from 5.5% to 12.7% translating into an extra $16K to $38K in value on a $300,000 home.

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Are retirement accounts and investments confusing to you?

Christine wrote me with this question:

I have worked several different jobs. I have retirement money affiliated with each employer. I am considering consolidating to one new account, but I am confused on who to invest with and what type of account to open? Your suggestions would be greatly appreciated.

Christine, you have a few basic options to consider:

  1. Leave your money in your former employer's plan, if your former employer permits it.
  2. Roll over your money to a new 401(k) plan, if this option is available.
  3. Roll over your money to a Traditional IRA.
  4. Roll over your money to a Roth IRA.
  5. Take a cash distribution.

First, be sure it is to your advantage to move the money from your former employer’s 401K plan.  It you are allowed the same options and controls over the account as an existing employee, it may be to your benefit to leave the money where it is.  Ask a professional financial advisor to help you analyze this option.

Read More...

Did you realize that you are God’s investment manager?

 Wherever we find ourselves financially, we are all called to be risk managers on God’s behalf.  Investing is a means of multiplying our resources to give more, to meet future family needs, to further the Gospel, and to fund special needs.

Some people want to know if investing is scripturally legitimate.  I’d like to show you 3 scripturally sound reasons to invest and then I’ll caution you against an unsound reason for investing.

  1. Multiply to give more. Jesus’ parable of the talents (see Luke 19:12-26) tells us that God entrusts wealth to some of His stewards so that it will be available to Him at a later date.  Wealth management requires that it be invested or multiplied.
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Understanding the difference between gambling and investing...

I was recently asked in my article at the Christian Post, “What is your take on ‘investing’ in money market funds? Is this not a different way of gambling which is forbidden by the Bible? “

I have no problems with money market funds or other legitimate means of investing. The real need is to understand the difference between gambling and investing.

The difference between these two is vast but can be confusing, especially for those who don’t regularly engage in either, because there is risk in both. At the heart of it, gambling is based upon chance, and all must lose for one to gain.  But investing is based upon knowledge and all have the opportunity to win. Both involve risk, but only investing allows everyone to benefit.

And investing also provides an opportunity to contribute to a larger good – an enterprise that can benefit many, while games of chance are a pastime that contributes nothing. No product is created and no real investment in the economy necessarily occurs. Gambling does not create a growing enterprise that can provide value; it consumes money in a moment in time and it too often snares the hearts of men and women in an addiction that robs them of their resources.

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