Jason Hartman interviews Russ Crosson, Executive Vice Chairman of the Board at Ronald Blue Trust. They discuss the rewards of investing in yourself and your family and how to get a higher return on life. Russ gives insight into how faith should inform your finances.
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Announcer 0:12
Welcome to the Solomon success show, where we explore the timeless wisdom of King Solomon and the Bible as it relates to business and investing false prophets and get rich quick schemes are everywhere. Let’s not be distracted by these. Instead, let’s go to the source, the eternal principles that create a life of peace, power, and prosperity. Here’s our host, Jason Hartman.
Jason Hartman 0:41
It’s my pleasure to welcome Russ Crossan. He is Executive Vice President and Chief mission Officer of Ronald blue trust. He’s president and CEO of Ronald blue and company one of the largest independent fee only financial investment, tax and estate and philanthropic advisory firms in the US. He’s author of Your life well spent the eternal rewards of investing yourself and your money in your family. Russ, welcome. How are you?
Russ Crosson 1:08
I’m doing great, Jason. Thanks for having me.
Jason Hartman 1:10
Good. It’s good to have you on tell our listeners where you’re located.
Russ Crosson 1:13
Our headquarters in Atlanta, Georgia.
Jason Hartman 1:14
Fantastic. Not too far from me here in South Florida today. So your book your life well spent. Some of it or at least your practice I know relies on some biblical principles for business and investing. Can you tell us a little more more about that,
Russ Crosson 1:29
relative to the company? our tagline is wisdom for wealth for life. So people have wisdom from God’s word about their wealth, wisdom for their life, which is to be generous and purposeful, and wealth for life, which is generational. So how do you impact your children? That’s what those five words mean wisdom for wealth for life. And then in the your life, well spent context, there’s just that we talked about three different ways to invest your money. Most of us are familiar with financial capital investments, stocks, bonds, real estate, and so forth. But in the book, we unpack the fact that you can invest in spiritual capital and social capital into your children. And the fact is, if you don’t build spiritual and social capital into the generations that come after you, your financial capital may be squandered or maybe for not.
Jason Hartman 2:15
Yeah, absolutely. Tell us a little bit about how face should inform one’s finances?
Russ Crosson 2:22
Well, you know, we have a choice of where we get our facts and reality and we either get it from the world or if we get it from God’s word. And so we would say that if you apply God’s word, what it says about money to your finances, you’re going to be way better off than if you do what the world says. So for example, you’d be in the process of getting out of debt because the Bible says the borrower becomes a lender slave. Bible says you do not know what’s going to happen. So you diversify your investments Ecclesiastes 11, one and two. It says it’s steady plotting brings prosperity, you don’t make haste to be rich. And so we would think that the most prudent thing to do with your finances is to see what God’s Word has to say. about it and then apply that.
Jason Hartman 3:02
Okay, so a little bit more about the generational aspect. And being generous. Yeah. Specifically in instilling that social capital into your children?
Russ Crosson 3:14
Well, yeah, I mean, we want to teach our kids to be generous. So even from an early age, you help them learn that they can, they can live they can save it or they can give it and, and giving us close to God’s heart. He says in First Timothy, instruct those who are rich to be generous and rich and good works. And those people that do that are called wise, you know, this, he talks about Solomon, the wisest man ever lived. And so you can either be wise or you can be like the farmer over and Luke 12, who just stored up what he had in bigger bars and he was called a fool. So I like to share with people you have a choice of one of two four letter words you need to be wise or you can be a fool and we want to pass that on to our children help help them see us being generous. being generous,
Jason Hartman 3:53
isn’t always as easy as it sounds, is it? Do you want to be smart with your generosity rather than being hardy obviously.
Russ Crosson 4:01
Well, you know, it’s interesting, Jason, people will make bad financial investments and not think twice about it. But when it comes to their giving, they’ll say, oh, gosh, I’ve got to be really careful where I get my mind, what if? What if the ministry squanders it or whatever. But I would say, you know, you ask God for wisdom, and you give in the areas that you’re interested in, and, and trust God with the results, the key is being obedient with your giving. And so I encourage people to err on the side of generosity and don’t err on the side of trying to hold on to it. Right. Right. So not being overly prudent then when it comes to giving, but improvement when it comes to maybe investing sometimes. Yeah, I mean, I think the issue is you might make some bad gifts. I mean, maybe the ministry squanders the money or maybe they don’t use it the way you thought, but I wouldn’t. I would use that to learn for your next giving experience, but I wouldn’t let that cause you to freeze up on your generosity. Mm hmm. Yeah.
Jason Hartman 4:54
I love part two of your book. It says entitled How to get a higher return on Life, you have this sort of life overview balance sheet.
Russ Crosson 5:04
Tell us about that. On that life overview balance sheet, which is kind of the bedrock of our company, the punch line is you don’t manage your mind to have more money, you manage your mind have more life. And so the reason you get out of debt and the reason you spend less than you make and the reason you diversify your investments, do all these financial action steps is is to get more balanced in your life. So you can spend time with your kids and then go on a vacation and invest in the next generation. And so I’ve always liked the idea that it’s not about more money, you manage your mind to have more life in it,
Jason Hartman 5:37
but at some point, especially when one is just starting out it it needs to be about more money, doesn’t it? Because there’s always a certain part where you’re sort of just working for money rather than working for more life. And that’s a station that maybe a lot of people want to get to. But how do you know when you’re there I mean, right? It’s all a matter of degrees. It, there are people that have 10s of millions of dollars and still feel poor. Oddly, and that’s sort of dysfunctional, I would say. But there are people that are just making a decent income and feel rich, right?
Russ Crosson 6:13
Well, yeah, it’s not about how much you make or how much you have. It’s about spending less than you make and enjoying the trip, and doing it with balance. So I think the key thing, Jason is when you’re a young person starting out, you don’t try to hurry and quit or educate your kids all at once you just spend less than you make you kind of enjoy the trip, you spend some of your family you invest some, one of the biggest things that’s happened in our society in the last several decades is just the emphasis on retirement, which just accelerates the pace of people’s life. So young people are starting their jobs and right off, they’re like, figuring out how they can quit. And I think if you just extend your time horizon a little and you look at a little bigger perspective and a little longer term perspective, you’ll be able to enjoy the trip. So it’s both and you. You just need to spend less than you make and do it for a long time. That’s the key to financial freedom.
Jason Hartman 6:57
Yeah. So how much less than You make I mean, many people listening are probably familiar with the famous book, The Richest Man in Babylon, you know, that would say it live on 70% or less ideally and give 10% away, invest 10% save 10%. But how much less Do you need to live on?
Russ Crosson 7:16
Well, you know, obviously, the more margin and the more savings you have, the quicker you can experience some financial freedom and maybe even be able to retire or have financial independence. But I think there’s no formula. I mean, the point is been letting you make, do it for a long time, and you’re going to be okay. And I think early on when you have two incomes and things like that, that’s what I usually tell young couples is save that second income you can save maybe a lot more early on and then you have options. So I think there’s no magic bullet. I mean, I know some people that they’re saving everything and not enjoying the trip and so you know, that’s where you just need some accountability and somebody in your life that can kind of help you have the balance because some time you should save more other times you should you know, spend more on your family. And save a little less? How does it work? When we take some of this out into the investment world and we choose what to invest in? Right? You know, there’s a lot of talk about socially responsible investing, you know, faith based investing in terms of the actual vehicles that we pick when you get down to, you know, the mechanics of it. I think we would say you, you focus more on time horizons when you invest rather than a mission socially conscious or values based investing, those are very difficult to do, just because of the, you know, the economic environment we’re in and the nature of investments. If you take some of that thinking to an extreme, you know, you put all your money under your mattress, because you know, would you even have it in the bank type thing. So, we would say the most important thing that you just make a decision on is to diversify your investments. The Conservative you get wealthy by spending less than you make you preserve with your investments. Most people get it mixed up. They Try to get rich with their investments. So they take undue risk. And we would say no to spend less than you make. And when you have that extra, invested conservatively, you know, pay off your debt, you know, have an emergency fund, so you avoid the high cost of credit on your credit cards and things like that cars and so forth. So that’s how you should think about investments that are sequentially. I do certain things first, when I have savings, I pay off the consumer debt, I establish an emergency fund of three to six or nine or 12 months and then I say for major purchases, I pay cash for the next car. That’s your best investment approach.
Jason Hartman 9:37
Right. But what do you do after that?
Russ Crosson 9:39
Well, you then you do a mix of stocks, bonds, real estate, you know, commodities, things like that, you know, usually a diversified portfolio of mutual funds or ETFs or whatever, is what people should do with a mix of bond funds and an equity funds and, you know, people want socially conscious They can find those out there. But that, you know, the more important thing is is diversification among asset classes? Not so much. You know what you exactly pick?
Jason Hartman 10:09
Yeah, yeah. Tell me about your thoughts on real estate. I mean, I love real estate, I think Wall Street’s the modern version of organized crime. I’m sure a lot of people agree with me, even in the Wall Street world, they make it pretty easy to invest because you can deploy a lot of capital, you know, relatively easily, obviously, in the in the markets. You know, what do you think about real estate, you you mentioned more about, you know, mixing it up with the stocks and the funds and so forth. But talk to us about real estate a little bit your thoughts there,
Russ Crosson 10:36
some of those funds will be real estate funds, so you can still invest in real estate but keep it liquid the challenge when you buy the rental property or you know, the the piece of land or whatever is is non liquid, so you expect a way higher return, obviously, since it’s illiquid, and so, nothing wrong with that. But one of the things the markets have done for us has given us the ability or give the investor the ability to have a real estate exposure. to still have it be liquid. And we would say that’s a better way to invest in real estate. That doesn’t mean you can’t go buy a second home or go buy a rental property or whatever. But just remember, when you buy the actual direct ownership in the real estate, it’s illiquid. It doesn’t have you know, may take you a while to sell it, if the renter is not paying, so just a piece of a portfolio, but usually you buy liquid investments first, just because back to the conservative approach, usually do the liquid investments first. And then you can move into the non liquid, where you have direct ownership of a piece of real estate. Right. Yeah, I’m so
Jason Hartman 11:32
glad you brought that up. Because, you know, I’ve really thought heavily about that. And it seems to me that there are some real benefits from that illiquidity. Number one, it’s kind of a forced savings program. You know, people can’t make quick decisions that might actually hurt them. Sometimes we’re our own worst enemies with our investments, right. But also liquidity. I don’t know this is the premise from which I’m operating, but you Tell me if you disagree and feel free to disagree with me. I always say liquidity creates volatility, the more liquidity in any market of any widget, any commodity of any sort, the more volatility you have, because people can trade it so quickly, right? We, you know, we’re all familiar with flash crashes and so forth. In real estate, it does have its ups and downs, especially in these crazy cyclical high flying markets that I try to avoid. I just like the conservative markets that are sort of slow and steady. Because of that illiquidity. It moves slowly, right. And it allows people to be more thoughtful, hopefully, and not be their own worst enemies, you know, making rash decisions. I mean, yeah, you see your stock portfolio, big move, and some people just sell sell into that and you know, they can really get hurt by it by not taking that kind of long term approach. I mean, hey, if it’s your lunch money, you got to have a be liquid right? Because you may need the money but hopefully one’s not in that position. And they’re just putting that money in there to grow over time, right?
Russ Crosson 13:04
Well, Jason, I’ve been doing this almost 40 years. And it’s both and but I think most people err on not having enough liquidity. There’s two types of liquidity. There’s the risky liquidity, you know, the stuff that’s in the market. And that needs to be your longer term thinking where we can let it go up and down and not be stressed out need to have the short term liquidity, which isn’t to be volatile, and that will help you be more generous. It’ll help you pay off debt. It’ll help you withstand the downturn in the real estate market. I mean, the biggest problem real estate folks have is they put everything in real estate, they have no liquidity to weather the storms, like oh 809 so it’s, it’s both and, and the people that have the real estate and they’re predominantly in real estate, the only way they can weather downturns is to have an ample amount of liquidity and that’s where the the rubber music comes. They usually don’t have enough liquidity to weather the downturn. And so it’s both and it’s a mixture and that’s why we say the clients beginning out of debt, have some liquidity, diversify your investments. If you do those things you can weather any economic scenario, ma’am,
Jason Hartman 14:08
good stuff. Give all your website tell people where they can find out more about you and your book.
Russ Crosson 14:12
Yeah, just Ron blue.com is where you can look read about our company Ron blue trust and it has some of our books on there as well. You know what your life will span the truth about money lies and some others.
Jason Hartman 14:23
Good stuff. Russ, thank you so much for joining us.
Russ Crosson 14:25
Well, Jason, thanks for having me.
Jason Hartman 14:29
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