Everyone makes financial mistakes. Fortunately, there are steps to recovery — steps regularly illustrated in the world of sports.
SMI executive editor Mark Biller discussed those transferable (sports-to-finances) concepts last week on Moody Radio's MoneyWise Live. Mark also answered caller questions.
To listen, click the play button below — or, if you prefer, scroll down for a transcript. (For more radio appearances by members of the SMI team, visit our Resources page.)
MoneyWise Live, with hosts Rob West and Steve Moore, airs daily at 4:00 p.m. ET/3:00 CT.
To ask a question on a future program, call 1-800-525-7000 and mention you have a question for either Mark Biller or Matt Bell of Sound Mind Investing.
Steve Moore: We've all made mistakes with our investments, but achieving victories about perseverance, not perfection. Our host, Rob West welcomes investing expert mark biller today to talk about getting back up, dusting ourselves off and trying once again. Then it's your calls at 800-525-7000. 800-525-7000. Investing calls and questions right now. I'm Steve Moore. This is MoneyWise Live.
Rob, our friend Mark Biller is executive editor at Sound Mind Investing — and maybe, just maybe, a bit of a sports enthusiast it would seem.
Rob West: Yes, it would seem. And the challenge today, Steve, is weaving those two themes together: sports and investing. We're sure Mark is up to the task. Mark, great to have you back on Moneywise Live.
Mark Biller: Thanks guys. Good to be back.
Rob West: We're talking about your latest article from the latest edition of the newsletter and it's really inspiring. Y'know, you talk about investing, like sports, as a game of recovery. So why don't you set the stage for us with some examples you draw from, from the world of sports.
Mark Biller: Sure. This all kind of starts 15 years ago when this movie called Bobby Jones: Stroke of Genius came out — and there's a scene in it where a young Bobby Jones goes up against U.S. Open champ, Walter Hagen. Now, Hagan has this erratic golf swing, e seems really error-prone — and yet he wins the match easily and later Hagen is talking to Jones and he tells them, “I don't always hit the ball straight, but you know what? I've learned three bad shots and one good one still makes par. Golf is a game of recovery.”
Rob West: Yeah. Just thinking about this idea of recovery, of course, Tiger Woods immediately comes to mind. His comeback in this year's Masters Tournament was impressive for even those who aren't golf enthusiasts, wasn't it?
Mark Biller: Yeah, exactly. You know, he won a thriller. But it was really the comeback story around him winning that made it so compelling this year. Most people know Tiger Woods is one of golf all-time greats, but this was his first major tournament victory in over a decade he'd won 14 prior majors, including four Masters. But all of those came before his personal life, his health, and his golf game all crumbled about a decade ago. So it was really the perseverance that he showed and finally making back to the top that made this year's Masters so compelling.
Rob West: Yeah, it was fun to watch. All right, let's go from golf to major league baseball. You've got one more for us that Red Sox fans will love — perhaps Yankees fans and not so much.
Mark Biller: Right! One of the all-time great recovery stories in sports was the 2004 Red Sox who were down 3-0 against the Yankees in the American League championship series. In fact, they were down to their last three outs and yet they came back to win that game. They came back to when the next three games, and then they went on to end their 86-year World Series-less streak by winning the World Series that year.
Rob West: It was incredible to watch. All right. Why don't we begin to talk about how these comebacks relate to the world of investing? Where do you see the similarities?
Mark Biller: Yeah. This idea of recovery applies across a lot of life experiences, maybe especially our finances. You know, stewardship isn't a game. We need to take it seriously because when we handle it well, we further God's kingdom — and victory for us is earning that “Well done!” from the Lord at the end of our lives.
But, well, none of us carry out these duties perfectly and sometimes we fall behind. So being a good steward becomes a "game of recovery." We're gonna make some mistakes, but that's how we learn. And when we do make mistakes, we've got to pick ourselves up and keep going. The key is it's never too late to start or to start over if we've suffered investing or financial setbacks.
Rob West: As we talked about before the break, we often will make mistakes in our financial lives, and many of those will come through our investment mistakes. But we have to get up, dust ourselves off, and move forward. Help us with some steps to do that.
Mark Biller: Yeah, sure. So this is where these athletes can really help us out as investors because every athlete has to learn how to recover from setbacks. And there's a common thread that runs through how these athletes typically overcome a poor start. The first step is they have to let go of the past. So successful athletes have this remarkable ability to put their failures behind them and concentrate on the task immediately at hand. And that's what we need to do as investors too.
So related to that, then the second thing that athletes are able to do is focus and play the next play. So the most important thing is to focus on what they can do. Now they can't make up for the past mistakes all at once, but they can begin to regain ground little by little bit by bit. So it's the birdie on this hole or a single the center to keep the rally alive. And for us, again, we need to put the past behind us and focus on what do I need to do now to get back on track.
Rob West: I love that. "Play the next play" — we're focused on singles and doubles. Because when we try to swing for the fences mark in our investments, try to recover all of that lost ground at once, we can take on more risk than we should otherwise. And certainly, that's affirmed in scripture. Proverbs 21:5 — you know it well — “Steady plodding brings prosperity.”
Mark Biller: Yeah. You've never seen somebody hit the eight-run home run in one swing! But you see people try to do that sometimes in their investing, and it never ends well for them when they try and do that.
So, moving along — the third thing that we can learn from these athletes and how they go about a comeback is they follow their training. So athletes spend an endless amount of time learning to execute the task at hand so they know when the pressure's on, they can just stay faithful to that training. That's not a time to be improvising, y'know, when they're under pressure in a game situation. Instead, they just focus on those same simple things they do over and over again and practice over and over again.
We can apply that kind of thinking to our investing strategies as well. Don't be overly creative, just stick with what your plan says to do. And the last step of four that we have in this article is successful athletes persevere. And essentially this just means simply repeating these first three steps over and over, which isn't easy. It requires “a long obedience in the same direction.” It's called being faithful.
Steve Moore: I like that. We're chatting about investing today for the first half hour or so with Mark Biller from Sound Mind Investing. He's here, helping us take your calls at 800-525-7000. Scottsdale, Arizona. Hi, Wes. How can we help you, sir?
Caller: Well, I appreciate you guys having me a today and I love listening to your show when I get a chance to.
Steve Moore: Thank you.
Caller: I was one of those people that did fairly well in business early on but I had holes in my pockets, and so now I feel like I'm late and saving money. I'm 49, my wife's 50, and I own a small business and it's fairly cash heavy and I'm putting it into the bank. We own a couple of homes or a few homes, one is paid off. The second one is almost paid off, but the money that's sitting in the bank has about $100,000 in it — about $115,000. About $115,000 in a 401(k), and $75,000 sitting in a checking account.
Well, when I receive the bank statements, we're receiving $4 on $120,000, I know that's not right and not compounding. And I don't know the gains, and I'm a little risk averse of about who to talk to from a financial planner. Do they know as much as I know and is it the right investment? Will they lose that money? Because I made mistakes early on. What do I do?
Rob West: Sure. Well, let me just start by encouraging you, Wes. you know, one of the most common questions we get here on moneywise live is folks calling saying just what you're saying, I feel like I'm behind. And the bottom line is part of that faithfulness as a steward that Mark was talking about a moment ago is saying, "What is the next best step? How do I move forward from here? Whatever I've done in the past is behind us. How can I live as a faithful steward and honor God, follow his principles with his money that he's entrusted to me?" And I'm delighted you've called today and I'm sure we can help you.
Let me just ask you a question and then I'll have mark way in a, is this money still in a business account, titled in the business name, or this already been paid out to you as a distribution of some kind and it's held personally?
Caller: This is held personally, outside of tithing, quarterly taxes, everything else. I just put it into that.
Rob West: Got It. All right, Mark, your thoughts on getting yield up and staying a conservative on the risk side?
Mark Biller: Yeah, absolutely. A couple of things. Wes, one that's going to be applicable to anybody with savings. That is an earning much right now for many years after the financial crisis, it really didn't matter where you had your savings, you weren't going to earn much interest on it at all. Now that we've had nine interest rate hikes by the Federal Reserve, that's not entirely the case anymore.
Rates are still low, but you can definitely do better than most local banks, which still aren't paying much, even by just taking a simple a step as going online and looking at online savings accounts like — Capital One offers one that's at about 2%. Uh, there are many others online. But even just getting that yield up to say 2% can add significantly if you've got big cash balances like you mentioned.
The other thing I would mention, Wes, as a small business owner, you may have some pretty attractive options as far as tax-advantaged savings. There's several different kinds of plans from a Solo 401(k) and several other types. That's probably a little beyond the scope of this call. But if you go to our site at soundmindinvesting.org and simply type in the search engine "small business," you'll find an article that breaks down all these different small business retirement-type plans. And those can be a great way to accelerate your saving if you're feeling behind and need to put some money away over these next several years.
Rob West: Great counsel there, Mark. Wes, just in conclusion: three of the online banks that I like right now are Marcus, Ally Bank, and Capital One 360 — you're gonna find greater than 2% on their online savings account with those. And then Mark offered some other great suggestions.
You mentioned an investment or financial planning professional, let me just mention, we recommend the Certified Kingdom Advisor designation. You can find a CKA in your area there in Scottsdale by going to moneywiselive.org and click on "Find a CKA." This is going to be an investment or financial planning professional that's achieved significant competency, experience, and character requirements in addition to being trained as a specialist and biblically wise financial advice. And thanks for your call today, my friend.
Steve Moore: Rob West here, of course, and Mark Biller from soundmindinvesting.org our special guest. 800-525-7000. Call right now.
Steve Moore: Myakka City, Florida. Cody, thanks for holding. And what's your question?
Caller: Hi, just a quick question — maybe a little advice. I've always tried to invest my money in things that I knew I could get money back out of. Me, me knowing what I can do, that's cattle and horses. But I've started to swing towards kinda other things to invest in, and I just, maybe, pick your brain on advice on the best thing to invest.
Rob West: Yeah. Cody, I appreciate that. I like that you're thinking about putting your money to work, uh, clearly in your, your work, you're doing that and things, you know. But I also liked the idea that till you would put some money toward long-term investments and certainly the stock market in a properly diversified portfolio has been the best place to build wealth over the last hundred years in this country. Uh, Mark, what questions would you ask to be able to help Cody make some decisions here?
Mark Biller: Yeah. You know, I think that what Cody's driving at is something that's really important and that is "How do I get broad exposure to other types of investments, maybe with a small amount of, of money to start with?" And, really, Rob, that's why at Sound Mind Investing, we have always focused on mutual funds because that's a very easy way to have a liquid investment — meaning that you can get your money out at any time — that you can put a little bit of money in, sometimes as little as maybe $250 or even $100 sometimes with certain funds, and you get broad diversification, either of the stock market or certain aspects of the stock market, or the bond market. So for maybe even just a couple hundred bucks, you can have broad exposure to both the stock and bond market. And so that's why we focus primarily on mutual funds at Sound Mind Investing. So that would be the place that I would steer Cody.
We've got a ton of articles on mutual funds on our website for people that want to learn more about those and how to get started with those. So that would be a great place to start.
Steve Moore: So when it comes to, Mark, bovine or equine, do you have a recommendation or preference?
Mark Biller: No, I think I'll leave that to the cattle expert. It sounded like Cody knows what he's doing on that part.
Steve Moore: Well, I heard you say you wanted to "steer" him in some direction.
Mark Biller: Oh, dear.
Steve Moore: Beachwood, Ohio. Roy, what's on your mind today, sir?
Caller: Yes, thanks for taking my call. I would like to enlist your guest. Uh, what advice would he give to someone who was trying to give advice to a young investor? I've already indicated that I think that they should invest in mutual funds, which is — it's not a no-brainer way of investing, but it's, as you were saying earlier, it gives you some diversity and if it's a good quality fund, it should do pretty well for you. But any other advice? I've also suggested that this person put money into a mutual fund with a low cost structure. Something maybe under, you know, under 1%. But any other advice that you, you would care to share?
Rob West: Yeah. Well, I really appreciate you trying to help out a new investor and, Mark, as you said, being properly diversified through mutual funds is a great way to go. But also being a systematic investor where you can invest in dollar-cost average, your investments, right?
Mark Biller: Yeah, absolutely. And that just means putting the same amount of money, even if it's a small amount to work, say every month or at the same interval every month. I guess, Roy, the one big thing that I would maybe add on as something to look at — not gonna apply to every young investor, but it can sure help for many young investors — is to think about a Roth IRA.
We talk about them a lot here on Moneywise Live and they really are great for young folks because they give you that tax-advantaged way to start building wealth. But with the Roth, you can always take your investment capital out if you need it. So if plans change, if you find yourself in a bind several years down the road and you need that money, you can take the contributions back out without paying penalties. So it can kind of double as a second layer of emergency savings — you're not tying that money up forever by putting it into the Roth. So that would be something to look at as well.
I don't know guys, maybe that's a place where The SMI Handbook could come in handy for this person?
Rob West: Absolutely. Roy wanted you hold on the line and we'll get you a copy of The Sound Mind Investing Handbook, which is a fabulous resource that you and this a friend of yours could avail yourself of the wisdom there. Thanks for your call today.
Mark, just about 45 seconds left. Let's finish where we started today. You were talking about perseverance and faithfulness and that's really where we have an advantage as godly stewards, right?
Mark Biller: Yeah. And looking to the Bible — in Philippians 3 Paul says, “I'm still not all I should be, but I'm focusing all my energies on this one thing. Forgetting the past. Looking forward to what lies ahead. I strained to reach the end of the race and to receive the prize.” And that's what we need to be looking at as investors as well.
Steve Moore: Mark Biller always a real blessing to have you with us. Thanks so much. Check ‘em out online: soundmindinvesting.org. The article we've been discussing today, the title is “A Game of Recovery.” You'll find it right there on the front page. Thanks again, Mark. We'll be right back.