Family and Finances: Episode 8, Part 1

Welcome to the Family and Finances podcast. I'm Chuck Bentley, and normally my wife, Anne, is with me, but today a different family member, a member of the Crown family, Calvin Dillinger. Calvin, you are going to help me with this investing podcast because you're probably representative of the age and demographic of people that we want to help get started on the right foot. So tell us a little bit about yourself and where you are in life. Yeah, thank you, Chuck, for having me on. I'm really excited to be here. I know I have a lot to learn when it comes to investing. So my name is Calvin Dillinger. I'm on staff with Crown, like Chuck mentioned. I've been married for two years now. My wife, Brady, and I are considering kids, and so we're kind of at that stage in life where we're just really thinking about the future and prayerfully considering, what do we do with our money? How do we invest? How do we set up the future well for our children, hopefully? And so just being here today, I'm really excited, Chuck, to learn about some of the blocking and tackling, just some of the basics of investing. And we also have some great questions from others that have sent them in to create kind of just a baseline for, what is investing? How do you invest? What's the purpose of it? And what are some practical things to do to get started? Well, we're going to set that up, Calvin, but let me ask you a question before we do. Are you investing now? Yeah, so I am investing. I'm invested in a 403B, which is similar to a 401K. And my wife and I are grateful to be able to do a full match on that, which is a huge blessing. My wife, Brady, works for a for-profit, and I work for a nonprofit, and we both do that. We do some single stock investing as well, just based on companies that we know well or that we trust. And then we have some index fund investments as well, just kind of tracking along with the stock market. So some basics, for sure. Still have a lot to learn. We've made a few mistakes already, unfortunately, and those were good learning experiences, for sure. Well, I'm going to lay out what I think are the basics of investing to help people to understand how to be prepared to invest, how to get started investing. And then I want you to help me fill in the blanks. Yeah, that's great.

So if you don't mind, if I'm going off track, pull me back, or I'm not scratching the itch of what you think other people want to hear today. It's a big topic, but I want to give some really some biblical basics. First of all, to me, we have a mandate to invest. When the scripture says to be fruitful and multiply, I think it means everything. We multiply resources, which enable us to have something to share with others. I think it means to multiply your talents, your gifts, and to bring God's blessing into the world for the benefit of others, so they know and experience and see that the Lord is good. So investing is a good thing. It's intimidating for people because there's a risk in investing. But if you follow God's principles, it takes a lot of the uncertainty out of it because you really understand what you're doing and why you're doing it. So just like anything else we do with money in God's economy, we want to glorify the Lord by how we do it. So let me just start with some real simple basics. To get prepared to invest, I believe the first thing you need to do is to have an emergency savings account. That way you're not putting money at risk that you're going to need to survive. And what I've seen over and over and over, Calvin, with the people I've talked to, is they get a job like you and Brady have, and they open the 401K or the 403B in our case, and they start contributing to it. And that really is a long-term retirement fund. And if you don't have an emergency savings and you suddenly need something, the car breaks or a baby comes or something interrupts your normal budget, you need to go back to your 401K. And so that's going to come with a penalty. And it's really not a savings account. So I want to define the differences. A savings account, especially emergency saving, is money that's available for you to use right now today, like 24 hours. You can get your hands on the money without penalty. And I think as a minimum, I don't think you should invest if you only have $1,000 in an emergency savings account. You're not ready. You need at least three months of your annual savings. expenses set aside just for the savings. Then your 401k or your 403b, that's a long-term savings approach that is really for your retirement. And so it's good to have that as I think the next step in your investment plan, and you want to maximize your match as you're able to do that in any company, that only makes sense. But then there's sort of a third step to it. And that step is once you've met all of your emergency savings goals, and you've got a 401k started or a retirement plan started, I think it's good to have some amount of money

set aside for individual investment gains that's not set aside for the long-term, but it's for the short-term. And so that's sort of the way we've set up our plan. Got an emergency savings account, we have a long-term retirement plan, and then we have what we call our investment account. And those are three separate accounts. The difference between saving and retirement and investing to me is the level of risk. So saving is almost no risk. Your long-term retirement should have very minimal risk. And then you have an investment account that you recognize that you can take risk with that because you're not dependent on it. So that's sort of the three buckets of how I look at it. It all works together. You really can't separate them into just I'm only going to do one and not the others in terms of if you want to become an investor. So that's sort of the foundational level. Yeah. Well, that's super helpful, Chuck. And I think just putting it into those three buckets with those varying level of risk, like even visually, I'm kind of thinking of like a red like could be the high risk, and then you have the yellow and the green in regards to the level of risk that you're kind of looking at with those three different types of savings or investments. Yeah. I don't know if it's the level of investment risk in terms of that you're going to put that third bucket in something crazy. But it is money that you can afford to lose. And that's when it becomes okay to take risk into things that may have a bigger return for you. And so investing is a risk reward analysis. And many people confuse saving with investing and they think, well, if I've got money set aside for emergencies, then I'm investing. No, you're really just saving because that money should have no risk associated with it. And it should be a pretty significant amount of your budget to have that established. You know, setting aside three months of your income for many people is a big hurdle. And that's money you don't spend, but you've got to get to that hurdle first. Then you start your long term investing for retirement, which is shouldn't be in risk of losing that. Very, very safe investments there. And of course, it's all predicated on your time horizon. You're young. Brady's young. In that individual account, you know, you can afford to buy some stocks at IPO, some things that have real long upside potential. But ultimately, you want to be sure that you've followed God's, I think, really the two basic principles from the Lord in the scripture are, number one, understand what you're investing in. The

Proverbs say that by wisdom, the house is built and filled with rare and beautiful treasure. Well, that's not by guessing. That's not by gambling. That's not by buying a lottery ticket. That's not an investment philosophy. And collecting NASCAR plates is not an investment philosophy either. You know, I've had people tell me they collect rare things and they're into these little collectible things and that's their investment. Well, for the most part, it's not. And it's not, you know, probably going to do you good that much good long term. And the second principle is to be diversified. And when we think about diversification, Solomon said it in two ways. You diversify your investments by dividing them into different asset classes. And then secondly, he said to divide your income streams. And that means entrepreneurship is a form of investing where you invest in your own knowledge. You invest in your own ideas. You've done that, right? Tell me a little bit about that. Oh, man. Yeah. I've learned a lot from that for sure. I call that my real world MBA. So I've done a couple of side projects and I've always loved my work here at Crown. But I'm I'm always interested in kind of that, you know, side gig, you know, opportunity, being able to to learn in other ways and invest our money. I started a brick and mortar coffee company that was just so fun and rewarding in a lot of different ways. Financially wasn't necessarily the most rewarding thing, but that was one of the things that we had invested a lot of time and money into. We also have invested in just some ways where Brady and I can kind of use our knowledge by helping other organizations and some things like that. And so, yeah, that's absolutely something I know is very popular nowadays is to have a side gig or to have other opportunities where you're engaging outside of your traditional job. And that is an investment, absolutely. It's multiple income streams and the Bible endorses that.

That's actually Ecclesiastes 11, verse six. It endorses that because we don't know the future. So diversification of income streams is a form of investment. And actually, the experts will tell you that the best long-term investment is in your own development, in your own gifts and talents, in your ability to improve your career because that's gonna be the primary source of your income. So invest in yourself. Get training, go to trade school, get a lot of knowledge, read a lot of books. That's something that I don't often say to people, but just being broadly read and informed, both in terms of taking classes online, I just did a class online, at least part of it, I hadn't finished it yet, with the famed economist Robert Shiller. And it was fantastic. I couldn't believe I got to sit and listen to him and learn from him. But also keeping abreast of the news and trends and keeping yourself informed, that helps you as an investor. There's a lot of studies that show if you can simply invest in the right trend, then you will do really, really well. And trends are not that hard to spot if you're a person who stays informed.

For instance, it's not a good time to invest in the newspaper business. That trend is going away. Printing newspapers, they're getting smaller and smaller and their revenue is declining. But investing in online businesses, that trend is growing. So that's a pretty simple way to explain that. You invest in trends that you know are gonna do better and that comes from being well-informed. Yeah, that's great. I have a quick question for you to interrupt here, Chuck. And I don't wanna derail us too much, but I just was curious, when we're talking about those three different buckets, where does debt come into that picture? Because I know for a lot of our listeners, myself included, college was expensive and it takes money. So for those that have gone on and have furthered their education and had to take out student loans, what does it look like? How much should you be looking at paying off debt comparative to investing your money? Because there's a return on both sides. I like to say that paying off debt is usually your safest investment because you know how much it's costing you. And by getting rid of it, you free up so many resources. So if you've got credit card debt, it's better to pay that off now and to get rid of that.

I'd say top priority. After your emergency savings account, even to the point of not putting away money long-term, if you can't get out of that debt, attack that first. That way, because let's say if you're paying monthly, you might be paying 12 or 14% interest. Well, you're not gonna earn that in the market. So getting that off the slate, your student loan debt is gonna be a less interest rate, obviously, but it's important to get rid of that. And so if you can't get that attacked and out of the way first with and still be investing, then make that the first priority. But if you can do both at the same time, it's good to be able to put some long-term and some towards that current debt. But I wouldn't put any money in that third bucket until that debt was gone. That's really good, Chuck. That's very helpful. I know that's a big thing that a lot of Americans and a lot of young families are dealing with is multiple forms of debt, you know, credit card debt, student loan debt, car debt. It's challenging. They make the mistake of thinking, you know, if I can just make a good investment, I'll get more money and I can pay off my debt. And you're really working against yourself there. It's a sure thing to pay off the debt.

There's no risk in getting that paid off. And it's all upside to get rid of that. There is risk when you make an investment that could go south where you could lose your money. And so I would recommend waiting until you're much healthier to be able to do that. You