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The Huge Cost of Active Money Management

posted Mar 10, 2015, 9:58 AM by Tim Isbell

I just read a Money magazine article dramatically illustrating the huge cost of active money management. If you put $100,000 into a fund with a 1.5% expense ratio and assume a 6%/year return for 40 years, you end up with $560,000 in your retirement fund. That sounds good until you realize that your money manager ends up with $460,000!

You could have had the same 6%/year return from a low-fee generic mutual fund - indeed, data suggests you are more likely to get a higher return than from a manager. Anyway, you could have used mutual funds with a 0.25%/year expense ratio. In that case, you would have $930,000 in your retirement account.

The Money article (March, 2015) is by Robert Zagunis, who attributed the math to Jordan Ellenberg, author of How Not to be Wrong. Zagunis suggests that his readers go to bankrate.com and run the numbers themselves. So I went to bankrate.com and in the search window typed: Mutual Fund Fees Calculator. It popped up and I plugged in some numbers. That's the source for the graphic on this page (just click to enlarge). Better yet, go to bankrate.com and run your own numbers.

For more on how your investments leak away and what to do about it, click on Reduce Portfolio Leaks.

All the best,
Tim Isbell

Stained Glass Windows

posted Mar 6, 2015, 10:51 AM by Tim Isbell   [ updated Mar 6, 2015, 10:52 AM ]

Robin (my wife) grew up attending this limestone church in East Toledo, Ohio. Much of what she learned about God came from the architecture of this church.

God used the granite structure, and the 10 steps leading up to the sanctuary to teach a young girl about his stability, strength, and massiveness. Once inside, beautiful stained glass windows, illustrating stories of Jesus, revealed God's loving heart as he came to live among us.

Last fall we learned that the church was scheduled for demolition, so Robin went into action and purchased the windows. Now crated and stored in a warehouse in Minnesota, they are waiting for a church or Christian university purchase them as a way for God to enlighten their building or campus. For more on Robin's story and the windows themselves, click on Church Windows.


Tim Isbell

Financial Tip for Retirees

posted Feb 25, 2015, 8:04 AM by Tim Isbell   [ updated Feb 25, 2015, 8:27 AM ]

I've known about this concept for years but never got around to implementing it, until now. So I'm passing the tip along to readers. It is a tax-smart strategy for generating a stream of money from your taxable account. While this is useful for anyone, it is especially useful for retirees who need to supplement Social Security beyond what they can do using tax-free retirement accounts.

During the accumulation years, most of us routinely reinvest all dividends and capital gain distributions back into the investment that generated them. This is smart and results in a fast growing portfolio. In taxable accounts, this results in annual taxes as triggered by the 1099's we receive each January. So far, so good.

Then in retirement many of us hit a point where we need to extract a stream money from our taxable account. So we periodically sell shares - while continuing to reinvest distributions! This means we now we have 2 taxable things going on, the taxation on the reinvested distributions AND the capital gains taxation due to the shares we sell to generate living money!

There is a better way: stop reinvesting distributions and start diverting this stream of money into a money market fund or your checking account - and use it. You pay taxes on this distribution stream every year, whether you reinvest it or use spend it. So spend from the stream of distributions before selling shares. 

I've added this concept to both Mutual Fund Distributions and Taxation (a refresher on what all those 1099's mean), and also to Retirement Funding (some advice on how to fund your retirement). Indeed, I've just revised both pages enough that even if you saw them a year ago when I posted them, they're worth another look.

All the best, Tim

Reducing Ministers' Student Debt

posted Feb 10, 2015, 4:47 AM by Tim Isbell   [ updated Feb 10, 2015, 4:48 AM ]

Student loan debt is a major concern in the U.S., affecting many university graduates for years after they leave school. It is a particularly difficult problem for pastors and ministers because we expect them to have a masters degree (or equivalent) even though most ministry settings cannot pay enough to repay their student loans even in 5-10 years. 

Common outcomes:

  • Relying on the spouse or other family members to pay off the debt - which inherently strains relationships, sometimes to the breaking point.
  • Leaving the ministry after a few years for a higher paying job in order to pay off the debt and support a family.
  • Timidity in preaching/teaching about financial stewardship, which affects the financing of the Kingdom.

So I've spent some time assessing this ministers' student loan debt problem, especially searching for creative strategies to relieve or eliminate it. I circulated a Google Doc on this topic to several of my ministry colleagues for comments and edits. For a look at this research, and to collaborate about this topic, click on Ministers' Student Debt.

Firearm Keys & Liability

posted Jan 24, 2015, 9:54 AM by Tim Isbell   [ updated Jan 25, 2015, 1:21 PM ]

I posted a webpage about "Firearms Insurance" back in April of 2013. Not much has happened since then, other than more people getting needlessly killed by guns. So I'm revisiting the Firearms topic by sharing a CNN article: "The Best Way to Respect Guns" by Philip Cook and Kristen Goss.

The most interesting part of the CNN article (to me, at least) is the requirement to make all guns "smart," meaning they cannot fire without the presence of a "key." For more perspective and the link to the CNN article, click on Firearm Keys & Liability.

Tim's Quote File

posted Jan 13, 2015, 2:11 PM by Tim Isbell   [ updated Jan 13, 2015, 5:20 PM ]

Here's the link to my personal quotation file. It's not full of things I've written or said; it's full of quotes I've gathered from personal reading over many years. The file is over 60 pages long, and I'm sure I'll continue adding to it. You can view it, or download it and make it your own - for free.

When I need a shot of encouragement or clarity, reading a few entries gets me ready for another “run around the track.” I hope you will give this a try. If a quote triggers a question for you, feel free to contact me. 

Here are some examples from the file:
  • Birthdays need to be celebrated, because to celebrate a birthday means to say to someone: “Thank you for being you.” --Henri Nouwen
  • The Bible is not a script for a funeral service, but it is the record of God always bringing life where we expected to find death. Everywhere it is the story of resurrection. --Eugene Peterson
  • When we cannot get along with each other within our own marriages and families, we should not be surprised that countries do not get along with each other. --Ronald Rolheiser
  • We all have a right to our own opinions, but we don’t have a right to our own truth. –-Irwin Lutzer
  • All religions have record of man seeking God, but Christianity teaches that God is seeking man. --Paul Simpson
  • Be assured of this one thing. No one ever drifts into a life of full devotion. --John Ortberg
  • Be kind; everyone you meet is fighting a hard battle. --Tony Castle
  • Even in its ruined condition a human being is regarded by God as something immensely worth saving. Sin does not make it worthless, but only lost. --Dallas Willard
  • God never gives discernment in order that we may criticize, but that we may intercede. --Oswald Chambers

Enjoy the file and, in the process, let its wisdom encourage and enlighten you.


Identity in Christ

posted Jan 7, 2015, 8:12 AM by Tim Isbell

Disappointments, insecurities, and shame stifle our joy and fruitfulness. Such feelings can stem from personal failure, or our lack of skills, or our appearance, or guilt for a behavior or attitude, or even from someone's opinion about us. Perhaps we grew up in a demanding family where we could never satisfy a parent. In some of us, our insecurity arises naturally from our psychological makeup. Regardless of the origin, we desire freedom to lead a joyful, productive life. For help finding this freedom, check out Identity in Christ

Blessings, Tim

New Advent Readings posted!

posted Nov 27, 2014, 2:36 PM by Tim Isbell   [ updated Nov 27, 2014, 9:29 PM ]

Sharon Rauenzahn, the author of 2 previous years' Advent Readings already on my site, is writing a new set for this year! 

So if you're looking for extremely fresh material, check out "Preparing for Perfection." The readings for the first two Sundays are finished and ready for use. The ones for the remaining Sundays will be ready in a few days - well before you need them.

Or for links to all 5 reading sets, go to Advent Readings.


Tim (and Sharon)

Sainsbury's Christmas Video

posted Nov 15, 2014, 8:57 AM by Tim Isbell

An acquaintance sent me a link to Sainsbury's 2014 Christmas advertisement. Sainsbury is the third largest supermarket chain in the U.K. and they built this ad around a true story which has circulated among Christian preachers for years. I think I used it myself. But Sainsbury's 4-minute dramatization tells it far better than I ever did.
The clip depicts the 1914 story of a 48-hour localized truce during WW1 between British and German troops to celebrate Christmas. 

Sainsbury is receiving some criticism for commercializing this "war story." But the story is a good one, and (in my opinion) is not about commercializing or condoning war. Quite the opposite, it is about the Spirit of Christmas showing up, even in the worst of circumstances.

After all, Christmas is very much about God incarnate coming into the broken circumstances of our world. And Christmas offers much, much more than a temporary, localized truce. This clip will help some ministers make this point.


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Most Visited Pages

posted Nov 9, 2014, 4:24 PM by Tim Isbell   [ updated Nov 12, 2014, 7:13 AM ]

I noticed it last year, and it's happening again this year: A significant uptick in the number of visitors to my site looking for Advent Readings. Looks like Christmas is coming! 

If you've been intending to take a look at my site but haven't gotten around to it, here are some places to start. These are the 5 most visited pages over the last 30 days:

  1. Advent Readings. I'd like to add a couple new Advent readings to the four that are already there, and have a couple of writers considering adding to this offering. If you are a good writer with an interest in this sort of thing, take a look at the link to see what these look like. Let me know if you want to give one a try.
  2. Premarriage Counseling. While the visitors to this page are probably mostly pastors or professional counselors, the Advice for Couples page contains similar material that is designed especially for parishioners.
  3. Tithes & Offerings. This is a very complete treatment of a complicated topic. It is good for pastors and parishioners. See also a related and very recently posted page: Tax-smart Donations.
  4. Stock Donations. Good for parishioners, and also for pastors/church leaders who want to position their organization to receive such donations.
  5. Overcoming Temptation. While I'm a bit surprised by the popularity of the first four on the list, I'm not surprised by this one. Everyone struggles with one or more temptations, and have fallen to these more than once in their life. When this happens we all want help so we can do better next time. I know that I need to write some more on this topic, and am working on some material in the background.

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