You can take a beach vacation and get a pretty good education about investing basics all at the same time.

SMI's executive editor Mark Biller explains on Moody Radio's MoneyWise Live. He also takes caller questions.

To listen, click the play button below. Scroll down for the transcript.

MoneyWise Live with host Rob West airs daily at 4:00 p.m. ET/3:00 CT. 

For more radio appearances by members of the SMI team, visit our Resources page.


Transcript

Rob West:

Summer's officially here. And if your plans include the beach, you might be interested to know that while you're relaxing with your toes in the sand, you can learn a lot about investing. Hi, I'm Rob West.

Yes, it's true. The beach holds some important lessons for making wise decisions about your money investing expert Mark Biller is here to tell us about them. This is MoneyWise Live — where God's financial principles guide our every step.

So our guest today is Mark Biller, executive editor at Sound Mind Investing — where it seems folks think about investing even, Mark, when they're at the beach. Welcome back to the program.

Mark Biller:
Well, thanks, Rob. Glad to be here.

Rob West:
We're talking about an article in the latest Sound Mind Investing newsletter. It's entitled, as you well know, "Everything I Needed to Know About Investing I Learned at the Beach." It's clearly lighthearted, but has some incredibly practical wisdom in it, doesn't it?

Mark Biller:
Yeah, it sure does. You know, this is an article that our founder Austin Pryor wrote several years ago — a few days before heading off for his family's annual vacation at the shore. So the beach was on his brain, and it's a kind of a clever, summertime way to drive home some investing basics. 

Rob West:
Well, we want to meet people where they are, and this certainly does that. Let's walk through some of those practical investing lessons to be learned from going to the beach. Where do we start?

Mark Biller:
Well, the first lesson is to make sure your basics are covered. And so Austin kind of starts this article off by saying you can't just leave for the beach anytime you want if you want your trip to go well. To be able to have a great vacation, some preparation is usually required. So for the beach that might involve finding a place to stay, maybe lining up a house-sitter, getting some extra cash to have on hand, those sorts of things.

And when we translate that over to our investing, there's also some important preparation that we need to do before we just dive right in and start investing in individual stocks or whatever we might do. And specifically there what we're talking about is investors really need to lay a firm foundation. They need to put the groundwork of getting out of debt and saving up an emergency fund in place before they start off on any grand investing adventures.

Rob West:
No question. Obviously, preparation is crucial. Mark, what's the next lesson?

Mark Biller:
Well, it's what most of us would do, Rob, before taking any road trip — and that's figuring out what your travel plan is and then trying to stick closely to that. So for vacation, we'd normally map out the route we're going to take ahead of time. So we know the way, you try to leave on time, you drive safely, you avoid taking unplanned, detours, those sorts of things. And while that might sound a little bit rigid to some people who are, you know, want to "free spirit" at a little bit more, the point here is really to reach the beach safely and on time.

And that's how we think that people ought to think about reaching their retirement goals. It might feel a little rigid, but when it comes to saving for retirement, the goal isn't to have an exciting journey, it's to reach retirement safely and on time with your finances. So when we translate that into practical terms, we're talking about following a personalized stock/bond allocation and long-term plan, plenty of diversification, and trying not to take lots of detours along the way when these exciting new "investing billboards" try to entice us from the side of the investing road.

Rob West:
Which it seems, Mark, has been all too common these days — you know, between some of the high-flying tech stocks and the cryptocurrency fad, it seems like investors are more distracted than ever with get-rich-quick opportunities. Are you seeing that?

Mark Biller:
Oh, for sure. You know, and I think that when you have a run like we've had in so many different areas since last April, and especially since last November, when things really took off, it just, you know, that "fear of missing out" — the FOMO that people talk about — really kicks in, whether it's crypto, even commodities. We've seen these rips in more basic stuff. So, you know, you tend to think of tech stocks and cryptocurrencies and those kinds of things as often being real speculative. But when you're seeing copper and oil and all just kind of regular stuff taking off your lately too, it's really easy for investors to kind of take their eye off the ball as far as their long-term plans and feel like they want to maybe take a little extra risk and go after some quick profits. But as we've seen here in the last couple of months, especially with the crypto, that can really be a dangerous way to go and you can lose a lot of money, just like people can make a lot of money in short periods of time.

Rob West:
Yeah, no doubt. You've got to be on your guard there and stay focused — "steady plodding" is the idea that the Bible uses. And I think that's wise counsel for us.

Mark, give us the next principle from this article — and it has to do with wave patterns, doesn't it?

Mark Biller:
Yeah. So that next investing lesson you can learn at the beach is to ignore the short-term wave patterns. And, you know, maybe like me, like to read at the beach with one of those low-slung chairs right at the edge of the water. And if you've done that before, you know that those waves can be a little unpredictable and got to move your chair from time to time to keep from getting soaked by those waves.

The point we're trying to make here in this article, as it relates to our investing, is while the waves follow a trend, they are unpredictable in the short term. So you might think that they're going to stop a few feet away. And then all of a sudden, a really strong one comes in and gets you. And so short term, they're erratic. Longer term, we can look at tide charts and whatnot and get a pretty predictable idea of where those waves are likely to go. And it's really similar with our investing. So we're trying to avoid trying to predict where each individual wave the real short-term moves of the market are going to come and go. And instead, we're going to try to base things more on these longer-term trends and build in a little bit of a margin of safety. So that those occasional waves that come in strong aren't going to really upset us. And we're not going to overreact either when a short-term wave comes in a little stronger than we anticipate.

Rob West:
Yeah. And that's so important to remember it's all about the long-term. That's easy to say, more difficult to do, and yet so critical to effective investing, which is for sure "over the long haul." All right, Mark, one more, and then we'll get to some phone calls.

Mark Biller:
Okay. Well, this next one is something you really don't want to do at the beach or in your investing. That's comparing yourself to others. You know, that can be hard at the beach. We'd all like to look like a 22-year-old fitness model, but for most of us, that's not really realistic. We've got to tailor our beach prep — our diet and workout strategy — to who we are. And that's usually someone who's a little older trying to balance family work church, and so on.

The point here is very simple, Rob. If a 60-year-old is trying to work out like a 22-year-old, they're probably going to end up getting hurt. And it's the same way with investing. If you're trying to follow an approach, that's really suitable for somebody else, but not for you, you're probably going to get hurt as well. So you want to make sure that your investing approach is tailored to your specific situation, not some unrealistic vision of someone else.

And again, you mentioned just a moment ago, you know, this is the slow and steady plodding that wins the race, not crash diets or their investing equivalents.

Rob West:
Yeah, no doubt about that. All right. Let's get to some phone calls. We do have a couple of more lessons on investing we can learn from the beach, but we want to know what lessons you'd like to learn today.

Let's head to Cleveland, Ohio. Evelyn has been patiently waiting. How can we help you today?

Caller:
Well, thank you for taking my call. I love your show. I have a question. My been retired for about a year. I'm still employed for probably another four or five years. We don't have any investments, but we have all our debt paid off except for our house — no car payments, no credit cards — and we have about $80,000 sitting in our savings account. I'm just wondering if we should just let it sit there or if we should be investing that. What should we do with that money?

Mark Biller:
Yeah. So the trick with that, Evelyn, is that when you start getting closer to retirement age, typically most people are advised to bring the risk level of their investments down. And so normally that means moving away a little bit away from the stock market and more towards bonds and those types of assets. What makes it tricky right now, Evelyn, is that bonds are not yielding a whole lot — interest rates are so low. So it can feel like, you know, "I've got this money and savings. It's not earning a whole lot. But the safer alternatives that you would typically move into — like the bond market — those really aren't yielding a whole lot right now, either. So it's a little bit less of a big step up in anticipated return in moving from the safety of having that money in savings into something like the bond market.

Typically, as you're hitting retirement, it's good to have a couple of years of expenses in very liquid savings anyway. So I wouldn't be rushing to take that savings money and get it into something more aggressive. You could maybe think about taking a portion of that and moving that out into some bond-type investments. But a good portion of that probably it is reasonable to keep that in savings vehicles. Rob, what are your thoughts?

Rob West:
Yeah, I like that advice a lot, Mark. You know, perhaps, Evelyn, think in terms of a year's worth of expenses in savings, and then move beyond that.

Mark, just a quick follow-up for you on that. What would you be looking for in terms of the market conditions and the economic environment for Evelyn to decide it's time to move toward those more traditional retirement income-based investment options?

Mark Biller:
Yeah, I think that right now we've had such a big run in all of the more aggressive parts of the market, the stock market, and so forth, that I would at a minimum probably be looking to be a little bit more opportunistic if you are going to put some of that into a little bit more risky stock market type investments — you know, maybe looking to do that on a pullback. As far as the bond side, it probably isn't necessary to be looking for any big cues at this point. You know, I would probably tend towards shorter-term maybe stretching out into intermediate-term bonds, but long-term bonds are going to come with quite a bit of risk, so I would probably avoid those at this point. Yeah.

Rob West:
On to Bentonville, Arkansas. Patty, thank you for calling today. How can we help?

Caller:
Hi. Thank you so much for taking my call. I just happened to be flipping the channels and heard the message and thought, "I need to talk to you."

Rob West:
Okay, great.

Caller:
So I'm a recent widow — unexpectedly. My husband developed brain cancer and died after just three months. I have his retirement in a cash account with TD Ameritrade, and then I've got a little bit of life insurance. I don't intend to go back to work now or maybe ever — have his Social Security coming in. And I've literally been wondering, "What do I do?" And so, I have an advisor through TD Ameritrade I can speak to. I'm very cautious.

He always handled all this. He had basically gained a lot with our small retirement and I don't want to make any disastrous mistakes. I just don't know who do I go to the trust — and I'm 64. So I'm looking at how do I, what do I do?

Rob West:
Well, I'm so sorry to hear about your husband's passing. You obviously want to be a careful steward of what God has entrusted to you. I want to affirm this idea that you're not making any quick decisions. You want to go slow, be methodical, get wise counsel. And I love the fact that you want to honor the Lord and all of this. Patty, am I hearing correctly? You're debt-free and your expenses are covered through Social Security?

Caller:
Yeah, pretty much.

Rob West:
Okay, let's do this. We're going to pause for a brief break. I'm going to get Mark Biller to stay with us for one more segment, which he is always glad to do. And when we come back from this break, we're going to get him to weigh in on your next step. So you hold the line, we'll be right back with you.

This is MoneyWise Live. Stay with us. More to come just after this.


Rob West:
Holding the line is Patty, who we were speaking to just before the break. Patty unexpectedly lost her husband after a battle with cancer and is now really just trying to navigate where she goes from here financially.

And Patty, as you shared before we went to a break and as we talked a little bit off the air, you've got about $409,000 available, plus $50,000 in an emergency fund. You're looking how to manage that. On the horizon are a couple of things. Number one, you may need to supplement your income, which is largely covered by Social Security benefits with this investment account. You may, at some point, not now, want to buy a home that down payment would come out of this. And obviously, any mortgage that you'd take on, you'd have to be able to cover in your expenses. And then beyond that, too, you mentioned not having any health insurance to speak of.

Let me tackle a few of these first, and we'll talk to Mark about the investing side. I think it's really critical that you hang on to that $50,000 in a liquid savings account. I'd love for you to have at least a year's worth of expenses there just for peace of mind. Number two is I'd contact our friends at Christian Healthcare Ministries for a non-insurance healthcare solution that's budget-friendly. They've shared literally over $5 billion with Christians over the last 40 years. And it would really provide that peace of mind to know that your healthcare was covered per incident over $500. You'll find them at chministries.org.

I agree it's not the time to buy a home because A) this housing market is red hot. I don't want you to buy at the top, so to speak. The other issue is, with the uncertainties about where you find yourself wanting to land in terms of location, would I think prohibits you or really should give you some caution about buying right now, because in this housing market, I'm encouraging people not to think about staying at least five years, but really 10 years just because we could see a dip in the housing market, you know, in the next one to two years. So I think I would sit tight.

The question is how to invest this money in the meantime, given your need to preserve it, so you have it for the future, but also to be able to generate some income that could help to cover any remaining bills not covered by Social Security.

And, Mark, what are your thoughts on that piece?

Mark Biller:
 I would just, first of all, affirm that advice you just gave, Rob, that, waiting a little bit of time before making really big financial decisions is really a wise idea after the death of a spouse. It's not unusual at all that in those first six-to-12 months that things that seemed like a really good idea right away, maybe you're getting a little different perspective. The idea of maybe wanting to be in a different location, close with other parts of family or any number of things can enter in there. So I would just affirm that — to try to hold off on making any really big financial decisions right away.

But as far as trying to supplement that income, there are a number of different ways that you could approach that. And some of that will depend on exactly how much you need.

There are some safe ways to do that with fixed income, with things like BulletShares — one thing that we wrote an article on not long ago that is a fixed way to know exactly how your bond investments are going to pay off over set intervals of time without much risk at all. So there are a lot of different ways you can approach that. And certainly, we cover a lot of those in our Sound Mind Investing newsletter.

But, you know, in a situation like this, I'm particularly inclined to encourage people like yourself, Patty, to talk to a couple of advisors and maybe get some input from those folks that have helped other people through similar situations.

You've got a couple of really good resources available to you through the MoneyWise Live website. The Kingdom Advisors group — you might be able to find somebody who's right in your local area. You could also go to the soundmindinvesting.org site, and you can follow a link there to talk to one of our SMI Advisory stewardship advisors. We help people in similar situations quite often.

But again, I would encourage you to talk to maybe two or three different people and just explain your situation, talk to them, get a comfort level. It may be that you really click with somebody that you think can help you put together a little bit more detailed plan. And it's not that you couldn't do this on your own with the type of information we have in our Sound Mind Investing newsletter. But when you've got so much going on after the passing of a spouse, it can be really helpful to just have an expert come alongside you and be able to walk you through methodically and give you that counsel. And even sometimes just as a sounding board of the ideas that you're thinking about.

So I'd hesitate to give you real specific ideas here in a conversation like this. I would really encourage you to maybe make a couple of calls and talk to a few folks and maybe get a few different ideas — and then be able to sift through those ideas and see what seems right to you there.

Rob, any other thoughts?

Rob West:
No, I completely concur with that. You need some wise counsel here, but you're on the right track, Patty. So be encouraged, trust the Lord in all of this, be prayerful, but seek out some folks who can assist you. So next steps for you: MoneyWiseLive.org, search for a CKA — a Certified Kingdom Advisor in your area. Also avail yourself of soundmindinvesting.org.

And if you hold the line, Patty, we'll send you as our gift today The Sound Mind Investing Handbook, which will get you up to speed on a lot of what Mark was talking about, and some biblical principles related to investing. We appreciate your call.

Mark, back to our topic that we started with today. We were having some fun looking at investing principles we can take away from summertime fund at the beach. And I know we had one more we hadn't covered. What is that idea that you'd like to share with us?

Mark Biller:
Yeah, well, Rob, just like as you would, with any trip to the beach with investing, you've got to expect a few rainy days to be mixed in. If you go to the beach for a week or two, if you get a thunderstorm or a rainy day, you don't just pack up and head for home. You stick it out. Hopefully, you've prepared and planned for that possibility — got some books and board games, whatever you like to do on a rainy day. You also don't panic that that thunderstorm is going to turn into another Noah's Ark-type flood. You recognize it for what it is. Rainstorms come and go. They're a part of going to the beach.

And there's the obvious parallel — hopefully, it's obvious — with our investing, where if we're going to be investing for decades, we're going to encounter multiple bear markets and market corrections along the way. They're part of the journey. We need to have a long-term investing plan that can handle those types of downturns and stick to our plan even when the market is in one of those periodic "rainy days." And hopefully, that will help keep us from panicking every time the market takes a dip.

Rob West:
Yeah, no doubt about that. Well, Mark, it has been fun, but incredibly practical. appreciate you stopping by as always, And I know we'll have you back real soon. I'll look forward to that. Thanks for being here.

Mark Biller:
I'll be looking forward to it too, Rob. Thanks so much.

Rob West:
Absolutely. Our guest today has been Mark Biller, executive editor at Sound Mind Investing. If you're headed to the beach, or already there, perhaps you can check out this article at soundmindinvesting.org. It's called "Everything I Needed to Know About Investing I Learned at the Beach."