Take it to the Bank

Saving & Investing

Three Angels Broadcasting Network

Program transcript

Participants: Cordell Thomas

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Series Code: TITTB

Program Code: TITTB000007


00:01 On Take It To The Bank,
00:02 you will find ways to get out of debt.
00:09 Solve your credit card problems.
00:14 How to make and stick with a budget.
00:19 Simple ways to save.
00:24 Buying or selling a home,
00:27 and many more financial matters on Take It To The Bank.
00:32 Hi, my name is Cordell Thomas,
00:33 and welcome to Take It To The Bank.
00:36 Today, we're gonna talk about saving versus investing.
00:40 They are very important topics,
00:42 I think, as it applies to how you manage your money.
00:46 We've talked about
00:48 or we're planning to talk about several things,
00:50 but one of the things I'd like to say upfront
00:51 is there's a process,
00:53 acronym - ACCSAS, assess your debt,
00:57 assess where you're at.
00:58 Then of course, create a budget.
01:00 After you've created that budget,
01:02 take a look at cutting your spending.
01:04 After you've cut the spending
01:06 to where you can feel comfortable, start saving.
01:09 After you start saving,
01:11 then you can apply some of the saving
01:13 to aggressively going after your debt.
01:16 The most important aspect that I asked you think about
01:19 is creating a budget.
01:22 The budget is essential for you to know where you're at
01:27 and to know where you're going.
01:28 It's a planning tool, it gives you an idea
01:31 of what your short term goals can be,
01:34 your mid-term goals should be,
01:36 and what your long term goals should be.
01:40 I would ask you to make a list of what your goals are.
01:42 Is it about retiring?
01:44 Is it about
01:45 putting your children through school?
01:47 Is it about paying for college?
01:48 Is it more short term in nature where you need
01:51 three to six months emergency fund?
01:53 Is it all about the context of just being able
01:57 to put a little bit of money away?
01:59 Or are we already saving some money
02:01 and what can we do to create a cash flow process
02:05 where we can invest in assets
02:08 that can help us build a business
02:10 and/or give back to the church
02:13 in helping them reach other for Christ.
02:16 There's so many different things we can do.
02:18 A budget is prime,
02:19 so the first thing I'd would like you to do
02:22 at a time that's convenient for you
02:24 is develop the habit of writing things down
02:30 and writing those things
02:32 that are goals and priorities for you.
02:34 Once you written the goals and priorities,
02:35 we can begin to take an assessment
02:37 of where we're at and what we'll need to do
02:39 to address the debt issue, if that's the case.
02:42 They say that, in America,
02:44 the average household credit card debt is $14,750.
02:49 It's essential that we understand
02:52 what that is and how we can address those concerns.
02:56 Did you know that saving just 35 cents per day,
03:00 in a savings account comes to about $125 per year?
03:05 A university did an interesting study
03:06 and they looked over the past 81 years
03:08 up through 2009.
03:10 They started, I believe, in 1928 and assessed money
03:15 that was put into a stock market
03:17 and money that was put into savings account.
03:20 And you look at the difference between the two.
03:22 Those that, they said a $100 dollars
03:25 that was placed in a savings account
03:27 versus a $100 that was invested in the stock market,
03:31 the $100 in the savings account
03:34 through 2009 came up to about $1,900
03:38 of simple interest accrued on that amount of money.
03:44 And though that was, the amount of $100
03:46 that was invested in the stock market
03:48 as of 2009, 81 years later, was about $142,000.
03:54 You take a look at the difference
03:56 between the two
03:57 and you deal with simple interest
03:58 versus compound interest.
04:00 What is the difference between simple and compound?
04:01 Well, simple interest is basically gaining interest
04:07 on the principle.
04:09 What's the principle?
04:10 The principle is basically
04:12 the initial amount you put in the account.
04:13 For example, if I put $200 into a simple savings account,
04:17 a simple interest at 5.5 percent interest,
04:22 what will that be over five years?
04:24 Well, you take your principle,
04:26 the $200 you place into the account
04:28 and you multiply it times 0.055.
04:32 That comes to what? Eleven dollars.
04:35 So, each year you accrued $11 on that $200 dollars you place
04:41 in the savings account.
04:43 After five years,
04:44 eleven times five is fifty five.
04:48 So simple interest tells you that my $200 after five years
04:53 is worth $255.
04:58 In compound interest, what we're talking about
05:01 is compounding that interest you have.
05:03 So you have the principle
05:05 and the interest that you gain interest on.
05:08 So it's not just the principle
05:10 but it's a principle and interest that you accrue
05:12 and that accumulates that much quicker.
05:14 And now, I give you the eight wonder of the world.
05:19 It came out as the rule of 72.
05:23 What does that mean?
05:24 Okay, so I take, $1,000
05:29 and I put it into the stock market
05:33 or I invest it and I'm getting six percent
05:37 on that compound interest.
05:39 If I take 72 and divide 6 into 72,
05:43 the six being the interest rate,
05:45 I can tell you how quickly that money will double.
05:47 So 6 into 72 is 12.
05:51 So every 12 years my $1,000
05:53 that I put into that investment should double.
05:56 Therefore, you can understand the difference between
05:58 simple interest in a simple savings account
06:02 versus compound interest in an investment,
06:05 and that's where this whole conversation will start
06:09 in comparing the benefits and how should you think about
06:13 a savings account versus an investment.
06:17 Now, there is a Bible verse that talks about this race
06:22 that we're all going through.
06:24 I run a marathon
06:25 and there's this thing called A Wall.
06:31 The wall in marathon is an interesting thing,
06:35 because there comes a point in time when you're running
06:37 and you're running and you're running
06:39 and things begin to irritate you.
06:41 After mile nine,
06:42 I felt every time I jog and took a step
06:45 my shirt bounced on my shoulder.
06:48 And it was bothersome, it started irritating me
06:51 because every step I had,
06:52 the thing hitting the same spot on my body
06:54 and I said, man, this is getting irritating.
06:57 And then of course, I dealt with different things
07:01 because I had to have a orthotic device
07:04 that I wasn't quite used to in my shoe.
07:07 So it kind of put my balance off
07:09 just a little bit and my knee started hurting me.
07:13 And as of mile 15, I ran on my first wall.
07:16 I couldn't run anymore, my knee was killing me
07:18 and I had to sit on the side of the curve.
07:20 And I still remember that part of the trip
07:23 because I believe
07:24 I was running down Constitution Avenue.
07:26 And oh, by the way, it was the Marine Corps Marathon,
07:29 I was harden type of guy at that time.
07:30 But then couldn't go a step further
07:33 because of the pain in my knee,
07:37 and I remember sitting down at that time in my life
07:42 and I said, I didn't come this far not to make it.
07:47 That was the first hurdle I had to overcome
07:51 in my dream of completing this race, this marathon.
07:56 The second hurdle was mile 20 to 22.
08:00 And that time, I was just out,
08:03 I couldn't do it anymore, I had run 20 miles and wow.
08:09 I had to face this wall where I felt
08:11 it was a place I couldn't get over.
08:13 But guess what?
08:14 You can, I can, this marathon of life,
08:19 this brace that we're taking on is about completing it,
08:24 and there gonna be things and challenges in our lives,
08:27 hurtful things, thinks about our budget,
08:29 things about savings, things about cutting spending
08:32 and not going out as much.
08:34 There are things that we're going to have to overcome
08:36 to get to the goals that we set for ourselves
08:40 as you've written down in your priorities
08:42 and your goals.
08:43 So I ask you to think about that
08:46 as you think about the analogy of the race.
08:49 Did I finish the race?
08:51 Of course, I did, I over came that hurdle.
08:54 And it was interesting
08:55 how I overcame that hurdle in my life,
08:57 it was about a gentleman that I had no clue who it was.
09:00 A gentleman with black and white hair,
09:03 long hair down the back, biker dude, it seems.
09:05 And he came up to me and without batting an eye,
09:09 he knelt down and grab my knees and said,
09:11 "Dude, you look like you're in pain."
09:14 "Well, yeah."
09:15 And he rub some stuff into my knee,
09:17 heated up my knee and said, "Come, let's go."
09:20 When you look like you can't get over that hurdle
09:24 and you run into a wall of life I ask you to have a partner,
09:29 have someone that you are responsible to,
09:32 it may be your spouse, it may be your good friend.
09:35 But don't go away from that budget
09:40 that you've set up.
09:44 Secondarily, make certain
09:47 that you follow those rules,
09:51 the priorities and those goals that you set for your life.
09:54 If in fact you want to save $1,000 in the next six months,
10:00 if in fact you want to pay off that credit card debt
10:03 over the next two to three years,
10:05 if you want to get debt free,
10:07 if you want to pay for that college tuition,
10:12 if you want to begin saving for retirement,
10:16 what is it that's important about...
10:18 what we're talking about in savings and investing?
10:21 It means, you need to overcome,
10:23 you need to place yourself at the end of the race
10:28 and realize what life can feel like being debt free.
10:32 Imagine yourself not having the burden
10:34 of credit card debt that you may have
10:37 or the concerns you may have by overspending
10:40 and not knowing where you're at from a budgetary stand point.
10:43 Understanding
10:44 that you are Christ's servant,
10:51 using the Holy Spirit of the gifts
10:53 that He has provided you
10:55 that you're now held responsible
10:57 for how you use the money God has given to you.
11:06 There are many other issues we can talk about,
11:08 but I want to limit it now
11:11 to just the issue of saving versus investing.
11:15 And I have verse for you in reference to the race.
11:18 1 Timothy 4: 7.
11:21 1 Timothy...
11:22 excuses me, 2 Timothy 4:7.
11:25 2 Timothy 4:7, 2 Timothy says"
11:31 I have fought the good fight,
11:34 I have finished the race, I have kept the faith.
11:38 Now there is in store for me the crown of righteousness."
11:42 Understand that God is telling you
11:45 if you complete the race
11:47 there is something in store for you.
11:50 I finished the race, when I got to the end of the race
11:54 I felt no pain.
11:56 Yeah, for the first few minutes, of course,
11:57 after that things started contracting,
11:59 my muscles started hurting,
12:01 it is results of putting your body
12:02 through something that's not really normal.
12:05 But when I got to the finish line
12:07 and imagine getting into heaven,
12:08 there will be no more pain, you finished it.
12:11 And being debt free, the pain and the languish
12:14 and the weight of those debts are no longer with you,
12:18 and there is a certain sense of peace that you'll have.
12:23 Finish the race.
12:24 Let's finish this race together.
12:27 As a tool I'd like you to use 21 days, 21 days.
12:31 If you can assess and look at a budget
12:35 and look at your priorities each day for next 21 days,
12:39 it will form a habit.
12:41 You'll get in the habit of looking at it,
12:43 and addressing it, and assessing it,
12:46 and cutting spending where you can,
12:48 and creating a larger margin
12:50 between your income and your expenses.
12:55 Such that you can put away that 35 cents a day,
12:59 or $35 a day, or $100 a month and understand that
13:03 that money will begin to accumulate.
13:06 There are various saving plans that you should be aware of,
13:09 there are things like a regular saving plan,
13:11 that's simple interest.
13:12 There are things called money market accounts,
13:15 there are things concerns like CDs,
13:18 which are Certificates of Deposits.
13:20 And we'll talk a little bit about that as we go through
13:25 this comparison between savings and investing.
13:29 And I ask you to bear with me as we talk
13:31 because that's the most exciting subject.
13:34 But it is something that's very important,
13:36 and it can become very exciting for you if you begin to think
13:40 in a way that says
13:42 that I too can get to a place that I'm debt free.
13:46 Okay.
13:48 The goal is to address some of the disadvantages
13:50 and some of the advantages
13:51 of different methodology of saving
13:53 and different investment vehicles
13:54 that you can use to make your money work
13:57 a little bit better for you.
13:59 Remember, the parable of the talents,
14:01 the servant that received five talents
14:05 put his money to work and he doubled his investments.
14:09 The man that got four... there was two talents.
14:12 The second servant that got two talents
14:15 invested those two talents and it became four talents
14:18 regardless if it was $20,000, $2,000,
14:20 whatever the case may be, he took the money,
14:23 invested in some product or some asset
14:26 and used the production methodology
14:28 and double that money.
14:29 The third servant took the talent
14:31 based on his own ability and he buried it.
14:35 Wow, you know, it's too much weight on me
14:38 to take this money and do anything with it.
14:41 And it was in that we learn
14:43 that that talent was taken from him
14:45 and given to somebody else.
14:48 Okay, we talked about simple versus compound interest,
14:54 Now let's understand savings,
14:57 and we'll talk about savings for now
15:00 and then talk about investing a little bit later on.
15:03 Why do people save?
15:04 People save for two primary purposes.
15:08 One is for emergencies.
15:12 It's essential that you have some money put away,
15:15 because there are many different things
15:17 that can happen in your life that are unexpected.
15:20 They can be from the standpoint
15:23 of losing a job.
15:24 And one of the recommendations that people have is
15:27 try to ensure that you have three to six months savings
15:30 for... three to six months based on your typical expenses
15:35 so that you can carry yourself for those six months.
15:37 Now we know that if you hit the jobless mark
15:40 and many of those individuals that are out there
15:43 can't find work for upwards of 24 to 28 months,
15:47 the average amount of time someone is out of work.
15:50 Different things can be discussed about
15:52 tapping an unemployment insurance
15:55 and using some other talents you may have,
15:57 and developing a different business
15:59 and those type of things.
16:01 But the context is you need to save for that rainy day.
16:05 Secondarily, things can happen such as medical emergencies,
16:10 illness, and those type of things
16:12 can wipe out people's wealth very quickly.
16:14 So it's essential that you budget
16:16 for sometimes of health insurance
16:18 within that context.
16:21 But the two purposes
16:22 that you have is for the emergencies.
16:25 Emergency fund could entail car repairs,
16:29 it could entail layoffs, it could entail disabilities.
16:34 Three to six months, I'd say
16:35 save as much as you possibly can
16:37 because if you have 10, 12, 14 months worth of savings,
16:41 that is a good thing.
16:42 Now, if we think about some of those saving tools,
16:48 one would be a money market account
16:52 where you basically saying, okay, Mr. Banker,
16:54 I want to put this money into money market account.
16:56 Which basically says,
16:57 I'd like you to take the funds that I have in there
17:00 and invested into government or corporate securities
17:05 and as your performance does well
17:07 on your side of things, give me some of that profit
17:10 and help my small amount grow that much more quicker.
17:16 There's also,
17:17 now what are the drawbacks about of money market account?
17:19 I can't see really too much of drawback
17:21 except that, that bank is investing your money.
17:24 Did you know that the bank
17:26 as you put the money in the savings account
17:27 or whatever the case may be,
17:28 that bank takes your money and invests it.
17:31 The banker may make 24, 26, 28 percent
17:34 on the money they invest
17:36 and they can give you as simple as you know,
17:37 one percent back on your
17:39 savings account simple interest.
17:40 But if you know how to talk to a banker
17:42 and know some of the different avenues
17:45 for saving your money
17:46 and getting the best from your money,
17:49 that context then tells you
17:50 that I too can become a wealthy person
17:55 from a savings standpoint
17:57 and I can understand the concept
17:58 of how can I invest some of the money
18:00 to make even make more money.
18:03 There is also the context of CDs,
18:07 the CD is a Certificate of Deposits.
18:09 What is the Certificate of Deposit?
18:11 Well, I go to the banker and say,
18:12 you know, I want to open up a CD.
18:14 The CD in of itself can be $10,000
18:17 or I can have a Jumbo CD over a $100,000.
18:21 The CD says that the bank
18:24 will give you a promissory note,
18:26 a promissory note is a promise to pay you a certain thing
18:28 over a certain amount of time.
18:30 A CD has a maturity date.
18:31 You can have CDs open for as little as three months
18:34 and for as long as five years.
18:37 Now, in that you have agreed upon percentage that you're
18:41 or interest rate that you're guaranteed from the bank.
18:44 The bank says that in the promissory note
18:47 or this promise to you, is that we will promise you,
18:51 for example five percent interest
18:53 over the 12 months that you have this CD open.
18:58 Over that 12 months time
18:59 we promise you five percent interest
19:01 and your maturity is 12 months from today.
19:04 So it basically says, I put $10,000 into a CD,
19:07 the bank takes it,
19:09 and basically gives you five percent interest
19:12 continuously over that amount of time.
19:15 Simple interest.
19:17 At the end of that 12 months
19:18 you would then have how much money?
19:20 You take the $10,000 times 1.05 or 0.5 percent,
19:25 five percent, gives you $500.
19:28 So at the end of 12 months, I don't have the $10,000
19:31 but I have $10,500, and your CD matures,
19:35 you can withdraw the money.
19:37 Now if you put a CD in for more than $100,000,
19:42 you have the right to negotiate
19:43 with the bank about how much that CD,
19:46 the interest you can get on that CD.
19:49 The drawback of CD is this, if you put in five,
19:52 you can't pull it out for that five years.
19:55 And within that five years,
19:56 what if the interest rate goes up or goes down?
19:59 Well, if it goes, if the interest rate goes up
20:03 you suffer because you're stuck at that five percent interest.
20:07 If the interest rate drops, the bank suffer
20:09 because they're gonna pay you that five percent regardless.
20:14 That's one potential drawback, but their is another drawback
20:17 that you cannot take that money out
20:19 for that five years.
20:20 So you can't access that amount
20:22 and if it's an emergency savings account,
20:23 it really isn't
20:24 because you'll have to wait five years
20:26 or absorb a penalty for withdrawal.
20:29 The benefits of understanding money
20:32 now tells you that there are different venues.
20:34 Investing is another specific areas.
20:36 Why invest?
20:38 Well, we told you about that simple $100 invested
20:40 and compound interest will actually double
20:44 over the course of certain amount of time,
20:46 based on the interest rate.
20:49 What I would tell you about investing is this,
20:53 investment is a risk.
20:55 There's many different investment methodologies.
20:57 And if you plan to invest, invest for the long term.
21:01 The key is this,
21:02 we saw the volatizing in stock market
21:04 over the past several months.
21:07 We see it going up by 400 points
21:09 and down by several hundred points,
21:11 and we don't know what to think.
21:13 But those who are in the market
21:15 should be in it for the long haul.
21:16 Here is my point, you as an individual
21:21 need to understand that if you don't have a budget
21:24 you have no right being in the stock market.
21:26 If you don't know how much of a margin you have
21:28 between your income and your expenses,
21:31 you have no reason investing in something that's risky.
21:34 And the fact that you're thinking long-term
21:37 is a good thing,
21:38 because if you do look at a budget
21:40 and understand that, okay, I've this margin
21:42 and I can save here and I can invest here,
21:45 that is key.
21:46 You have the funds that are necessary
21:48 for that specific investment purpose.
21:52 If you don't have the money, it makes no sense to invest
21:55 because if you lose that money, that money is gone.
21:58 And if you invest the money,
22:00 you shouldn't really want to touch that money
22:04 for the long term, it could be for 401K,
22:07 it could be any different IRA,
22:09 it could be some type of investment tool
22:11 that can take you to retirement.
22:13 If you have toddlers right now,
22:15 you can invest for the college education,
22:17 that's the long term process.
22:19 And as a result of you taking the necessary steps,
22:23 taking those necessary steps of understanding
22:26 where you are from a budgetary stand point,
22:29 where you are in reference to
22:30 how much money you can actually save.
22:32 And then, once you're saving a good amount of money
22:35 and you cut your expenses,
22:37 and you are adhering to a budget,
22:40 then you can start the process of talking
22:42 to a financial advisor and asking them, "Where is it,
22:46 I can take this talent God has given me
22:50 and get a little bit more back?"
22:52 As the servant in the Parable of the Talents did.
22:56 It's essential that we take those necessary steps
22:59 and understand it is a key issue
23:02 to knowing what the values is in the savings
23:07 as well as the investment products.
23:08 So here's what we'll talk about, set goals,
23:11 get a direction of where you want to go.
23:14 Start taking actions now,
23:16 start the process of prioritizing,
23:21 setting those goals, and look at your short term goals,
23:25 which should be between one and four weeks
23:26 or it could be between one month and three months.
23:29 Short term, where do you want to be
23:31 over the next three months?
23:32 I'd ask you to begin to assess your budget
23:37 and see how much you can at least just start to save.
23:41 Then take a look at what your medium-term goals would be.
23:45 And what's a medium-term goal?
23:47 Something between three months and a year, mid-term goal.
23:51 A mid- term could be, I wanna start
23:53 cutting into my credit card debts significantly
23:56 and start paying it off.
23:57 That's a good mid-term goal.
23:59 And long-term goals range from one year or longer.
24:03 We know that credit card debt, $14,000
24:07 with interest is gonna take approximately
24:09 two to three years to pay that off.
24:11 So part of your long-term goals
24:12 is paying off that debt.
24:14 But additionally, it would be investment,
24:17 or investing in retirement, and taking a look at
24:20 where you want to be from a state savings perspective
24:23 that I'd like to have 15 months to 24 months
24:26 with the savings in cases the crisis that hits.
24:29 And then also take a look at
24:31 where I want to be at retirement
24:33 and how comfortable life
24:34 I would like to live from that standpoint.
24:36 And understanding all of that, you still know
24:39 that it's not a matter of your possessions
24:43 that matter to Christ,
24:45 it's a matter of how you use the funds.
24:48 It's interesting.
24:50 Biblically, when you take a look
24:52 at Luke 12, 13, 14, and 15,
24:55 many of us don't know the rest of the story.
25:01 Look there with me.
25:03 It was the parable of the rich fool.
25:05 And you remember Christ said,
25:08 "Be on your guard against all kinds of greed.
25:13 A man's life doesn't consist in the abundance
25:16 of his possessions."
25:19 Verse 16, and he told in this parable,
25:23 the ground of a certain man produce a good crop.
25:27 "He thought to himself, what shall I do?
25:30 I have no place to store my crops.
25:32 Then he said, this is what'll do,
25:35 I will tear down my barns and I'll build bigger ones,
25:40 and there I will store all the stuff that I have,
25:43 the grain and all of my goods.
25:45 And I'll say to myself, myself speaking,
25:49 you have plenty of good laid up for many years, take life easy,
25:54 eat, drink and be merry."
25:58 Next verse is quit interesting, it says, "But God said to him,
26:03 'You fool, this very night
26:07 your life will be demanded from you
26:11 then who will get
26:13 what you have prepared for yourself?'
26:17 This is how it will be with anyone
26:19 who stores up things for himself,
26:21 but it's not rich towards God."
26:24 This ties right into the Parable of the Talents.
26:27 A man's life does not consist of your possessions,
26:31 a man's life consists of how he uses the talents
26:35 that God has given him, the Holy Spirit has given him.
26:38 To get the word out about the Gospel of Christ,
26:43 your immediate need in developing a budget
26:47 is to create a margin between your income and your expenses.
26:51 You'll hear me say that over and over again,
26:54 because when you can increase that margin
26:56 you can take more money and save it,
26:58 you can prepare for that rainy day.
26:59 You can prepare for the problems
27:04 that life may have
27:05 and you can prepare to pay off all off your debt.
27:09 But here's key, of that money that you have saved
27:12 and you have as in an abundance that God has given you,
27:16 you can turn around and say, 3ABN,
27:19 I have $5,000 that you can use
27:23 to help share the word of God in a foreign country.
27:27 I have $5,000 I can give to a local charity
27:32 to help in inter-city needs
27:34 and help people begin to exist on a higher level,
27:37 and to begin to get better,
27:39 and to begin to get economically
27:42 aware of what's going on
27:43 and they can also pass things forward.
27:46 I share these things with you
27:48 because it's essential to understand the value
27:50 of what's saving and investing can mean in our lives.
27:54 So, Take it the Bank and save.
27:58 God bless.


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Revised 2016-06-09