Podcast Episode - Suze Rants: Fasten Your Seatbelts

Debt, ETFs, Investing, Stock Market, Stocks

September 30, 2021

Listen to Podcast Episode:

Suze tells us some of the things that have been on her mind of late, including: supply issues driving up costs, the debt ceiling and how it affects you, inflation and investing in crypto currencies.

Podcast Transcript:

September 30th, 2021. Now I know, I know I know today is supposed to be Ask Suze and KT Anything but I asked KT permission, can I just do a Suze rant today? I don't feel like sitting down in front of the microphone and joking and laughing and playing and all of that because I think things are really serious out there and we haven't been able to be on for a week. So, I thought why not just let me rant, what's on my mind? And she said sure I have no problem with that, I'm going fishing and off she went so there we are. So, yes finally the storms have come down. There are three or four more out there but they're heading north of us and finally they fixed the cell tower on the island that we happen to be on. So, we have communication once again. That's part of the price you pay when you live on an island in the middle of an ocean. Okay, before I go on my Suze rant today, I just want to remind you there's only about two weeks left for the Alliant Sweepstakes. So, if you have not yet opened up an Ultimate Opportunity Savings account at Alliant Credit Union, now is the time to do it simply go to my myalliant.com and that is where you become a member of the Alliant Credit union. It will not cost you anything you open up your account, you're automatically entered into the sweepstakes and you have a chance to win first prize $10,000, 2nd prize $5000, 3rd prize $1000, but for five people each. So don't miss out on that. Even if you're not entering the sweepstakes, what is wrong with all of you? You want to take advantage of the Ultimate Opportunity savings account where you put in just $100 a month, for 12 consecutive months and they give you $100 at the end of this year. I am pretty sure that account will be going away for new customers. So, do not miss it. Don't miss it everybody. All right Suze rant, well it starts with about a month ago or so, we had an air conditioner man come out and look at our air conditioners on the island and he said Suze you need new air conditioners. I said okay, it's been a number of years. I understand that let's order them. So, I called him the other day and I said how are air conditioners doing? And he said Suze I can't find any air conditioners. It's going to be months and months and months before I can get you air conditioners because nobody has any air conditioners whatsoever. And I'm sitting there and I'm thinking okay no problem. But then I'm thinking this is a problem. It's a problem because it's very, very obvious that nobody has any supplies for anything. I go and I order something else and they tell me it will be 10 months to one year before I can get it. So, we all have a problem right now, where there is not enough supply on any level to meet the demands that all of us have in terms of wanting to purchase something, even when it comes to the holiday season, many retailers are actually cutting back on orders, are bringing in other things because they do not have the items to sell all of you that you want. Now, why am I ranting about this? Because when there is not enough product to fulfill the demand, when there is not enough supply for demand, prices go up. You saw this happen with real estate. You saw what happened in the last year because there was not enough supply to fill the demand that all of you wanted to buy real estate. What happened to the price of real estate? It went up and up about 20% last year alone. So, when there is not enough supply, everything starts to go up. Natural gas for instance is up 180% already this year. And do you know that 40% of the homes are powered by natural gas, you have energy prices that are just skyrocketing oil around the world, there is not enough supply. So, energy prices go up, when energy prices go up, everything else goes up as well, that's made with that kind of energy. And then we have the problem of even if we can get the product, we can't get it shipped to us. You have companies that are renting their own container ships to do what, bring over product from overseas, but then there's no place at the ports for them to actually dock and unload. So, now even if we get things here under our own financial arrangements, there's nobody there to unload it. Truckers across the United States, oh they have the trucks to deliver but they don't have the people to hire to drive the trucks. So, we are absolutely in a situation where we have inflation and we have inflation that's going up little by little all over the place. I mean even if you look at what's happening at the United States Post Office, I think it's tomorrow that they start raising their prices as well as slowing down their service. So, they don't have to rush as much to get you everything because it won't cost them as much then. So, everything from the cost of cars to the cost of your foods, to everything, is going up and that's really important to understand because when the price of things go up, what it costs you to live goes up as well and so many of you have a false idea of what it really costs you per month to live. You think if you bring home a paycheck for $3,000 a month, that that's exactly what it costs you to live, $3,000 a month because it's gone at the end of the time. But you do not take into consideration the amount of money that you put on your credit cards, all kinds of things that you spend money on, but you don't even take note of it. So, I think at a point like this, it's really important to understand how much does it actually cost you per month to live right here and right now, especially if you're thinking about retiring because you cannot retire without understanding what your after-tax income is going to be and what your expenses happen to be. And if your after-tax income doesn't far exceed your expenses today, you cannot afford to retire. So, I think it would be a really good idea for all of you just to sit down and really try to figure out what does it cost you per month to live and it's not just this month, but it's for every month throughout the year because there are some months that you're going to spend more money because there are weddings and there are holidays and there are Christmases and Hanukkah and all kinds of things, so you have to go, oh how much did I spend in the entire year. So, even though I know we're only in September, I think you should go back over the past nine months and really look at every penny you spent divide that figure by nine and that will give you an idea of your true monthly expenses. And if your income is meeting them or not. And the reason that you need more income than your expenses, is because these expenses are going to continue to go up and you don't want to be nickel and dimed to death. But you will be, if in fact you don't have enough money to pay for the escalating cost of everything. Now, this is all happening and this is why I'm calling it a Suze rant. This is all happening at the exact same time that the people in Washington. I mean I don't even know what to say about this, but that they're absolutely playing with fire right now with our future on or about October 18th of this year. It's hard to know the exact date because our debt and what we owe is dependent on the income that we have coming in. So, it can only be estimated as to when we will run out of money to pay our debt. But it's being calculated that the United States of America is going to run out of money to pay their debt approximately October 18th. That is in a few days from now. And even though people have been trying to raise the debt ceiling and make it unlimited amount of time and everything, politics has come into play and it's as if nobody can make a decision on something that is going to affect every single one of us. So, one of the reasons that you see, and this is just one of the reasons that you see that the markets have been fluctuating so much lately, is that if they do not raise that debt ceiling then, this is what's going to happen. The United States would default on their debt, if the United States default on their debt, it's going to probably tank the markets if they default on their debt. It will also tank the economy and it will delay the payments to millions and millions of Americans. You get a social security check right now, you won't be getting one if they default on their debt. So, that is in the background right now and it's happening right as I'm talking about this with you, and no decision has been made. It's almost as if they're gambling with our future just so I can get one thing, another side can get another thing and doesn't matter who's right or wrong. The only thing that is wrong is to not raise the debt ceiling and for the United States of America not to pay their debt. So, that's also happening. The other thing that's happening here is that obviously the markets have been going crazy. Absolutely crazy and I'm sure over the past week or so, especially last week you were like, oh my God I was down 930 points. Oh my God, now it's down 500, oh it's back up 500. You need to listen to me. These markets are going up and down and that's just what you should expect right now. You should expect it because things are happening with Treasury Bills for instance, the 10-year Treasury Note for a moment there hit 2% it's now back down and about 1.5% as I'm doing this podcast. But when the Treasury Note rates start to go up, people start to think, why am I in the market? I'm better off just buying a Treasury guaranteed by the taxing authority of the United States government, get 2% on my money, it's state tax free, why not do that? And then money comes out of the market and goes into what, Treasuries. So, that was a little bit of why the market started to go a little bit nuts the other day. However, I spent all day yesterday watching CNBC and what struck me about that was that I watched all these incredible analysts that I know and I know their track records. You couldn't have one agree with another one thought everything was going to be great, the other thought, no, it wasn't going to be great. There was more disagreement than I have ever seen before when watching CNBC. Everybody has their own prediction of the scenario of what's going on then? What happens is somebody I know very well calls me and he says to me Suze, I am so upset, I can't even stand it. And I said well what's wrong? He said my portfolio just know he manages it himself. My portfolio is down 5%. But the Standard and Poor's 500, the Vanguard Total stock market index fund that you keep telling everybody to buy it is up almost 12%, 15%, 16%, and I'm angry like I just don't understand it. And I said okay, tell me some of the stocks that you own and he then starts naming stocks fabulous, fabulous companies. But they were all in the technology area, every single one of them and technology whether it's Amazon or Square or Tesla or any of those companies, they have all taken a pretty good hit from their highs. It's not like that they're down under where you probably bought them, they're just down off of the highs of where they were. And his mistake was he was not diversified. The reason that I have been telling all of you over and over again, just buy the vanguard total stock market index fund, just buy the standard and Poor's 500 index fund, just by the aristocrats, the NOBL is the symbol and get a dividend and get diversification is because, successful investing can only be done if you have diversification. The technology stocks have not been doing very well as of late. Does that mean that they'll never do well again? No, it's just that right now what's doing really incredible. Our financial stocks, energy stocks, stocks like that. That you know some financial stocks are up like 30% since you know the beginning of the year. So, you need diversification in your portfolios. So, I'm sure some of you are thinking as I'm ranting here saying, well Suze, I'm not that unhappy. It's pretty good. I watch the markets go up and down. But I'm in the Vanguard Total Stock Market Index fund. I'm in those other ETFs that you've always said to do and I haven't really seen much fluctuation and that is because you are diversified. So, for those of you out there that are going crazy. You're absolutely going crazy because you put all of your eggs in one basket. That is a serious mistake. You cannot do that. I was talking to another person a while ago, a very, very intelligent woman who happens to be an author and very successful one. And I said so how are you doing? She said, well I was doing better and I said why said, well I had $11 million dollars in marijuana stocks and over the past year or so, you know it hasn't done so well. I said well, what else do you own? And she said nothing. I said, what are you talking about? So, all of you are to listen to me, you are not to get hung up on a specific area. Every single one of you needs. If you're buying individual stocks, you need at least 20-25 individual stocks. Now, that used to be more difficult years ago, when you had to buy at least 100 shares or you had to buy one full share. Now that you can buy slices of stocks, which means you could put $10 in each stock if you wanted to, you could build yourself your own portfolio if you so desired. You know, with stocks that are diversified across the board. If you don't have what it takes to do that, then just buy the vanguard Total stock market Index fund on a dollar cost averaging basis, and you will be absolutely fine over the long run. Many of you and I've said this to you before in the past. Right, bingo Suze. Where do I find out what stocks to buy? I love the Motley Fool's, I love the stock Advisor that they offer, I love all kinds of newsletters that they offer. I just think that if this is something you really want to do on your own and this is something that you need help doing because you don't know what to do on your own, you might want to look into them. now as I was watching CNBC the other day, I saw that they had an introductory offer to one of Their newsletters that I think was $99. I do not get paid to say this. They don't even know that I'm saying this all right, everybody, but you know, you might want to look that up and see if you can find that just to see what's up. Bitcoin. Well Bitcoin isn't really doing so great right now. You know it's kind of stuck in this area and one of the reasons that it's stuck in this area of about $40,000 is because number one a week or so ago, China seriously cracked down on Bitcoin and miners in China and they do not want that to be happening there. At the same time, it's obvious that the United States government wants to get more and more involved in the regulation of Bitcoin. So, we're just going to have to wait and see how that goes. I'm still in it. I still like it. I still have profits in it at this point in time. So, it's just a matter of what happens in the future. But no matter what happens, remember you cannot be invested in Bitcoin or any Cryptocurrency in my opinion, with money that you cannot afford to lose. Just something to think about. I know everybody thinks that it's a solid investment and I know many people have made a lot of money on it but until you've sold it, until you've taken your money out. Okay you haven't made money until you sell. And just to understand that Bitcoin, Ethereum, all of the different cryptocurrencies have to work their way out. Too many people are asking me about wanting to own Bitcoin in their IRAs. Can we just talk about this for a second? I am sure you will absolutely see where many major brokerage firms, even though they don't currently do so they will allow you to own cryptocurrencies within your IRAs. Right now, there's only like one or two firms that allow you to do it in a self-directed IRA. But here's what I want to say about it. If you can open up a Roth IRA and you want to buy Bitcoin within a Roth IRA. All right, I don't have a problem with that. But if you don't qualify for a Roth IRA, and or you cannot do a backdoor Roth IRA because you have other traditional IRAs out there as well. So, you would be subjected to the pro-rata rule. And if you don't know what I'm talking about, go and listen to one of the past podcasts and you'll find out and you therefore have to open up a traditional IRA. In my opinion it makes absolutely no sense on any level to buy Bitcoin in a traditional IRA. So, if you are thinking about doing it, let me tell you why you should not. So, here you are and you put money into a traditional IRA and you buy Bitcoin and Bitcoin over the years that you own it now goes up and up and up and maybe you put in $7,000 depending on your age. And now over the years that $7,000 is worth $70,000 is worth $150,000, maybe it's worth 200,000, who knows? Then you decide okay I'm going to sell it and you go to take money out of your traditional IRA. Because it's a traditional IRA, you have not paid taxes on this money that's in there. Remember, you got a tax write off when you put the original amount in. Now you go to take it out, you're going to pay ordinary income tax on that gain If you die and leave it to your beneficiaries and they take it out because they're going to have to take it out within 10 years, if there anybody other than your spouse, they're going to pay ordinary income taxes on that gain at what tax bracket at whatever tax brackets are at that time. And given the deficits that we’re at, I keep telling all of you, the reason you want a Roth IRA, a Roth retirement account of any kind, is so that later on in life, what you see in that account is yours and you get to take it out tax free. Do not get a tax write off today simply to avoid taxes today. No. So, if you did that, you're going to subject yourself and your beneficiaries to pay ordinary income taxes or you put money in an IRA a traditional one and you buy Bitcoin and now it goes down and now you want to get out of it. So, you just sell it, you cannot take those losses off of your taxes. Something for you to think about. If you simply had purchased Bitcoin in a regular account and now you put $6,000 or $7,000 and or whatever you want to put in and over the years that you've held it, it goes up and up and up and then you decide to sell it, you sell it and all you do is pay capital gains tax on it, period. You do not pay ordinary income tax, you don't pay taxes on it while it's in there, you only pay taxes when you sell it. So, a traditional Ira does absolutely nothing for you when you look at it that way. In fact, it would hurt you in my opinion to buy Bitcoin in a traditional IRA. So, what if you did it in a Roth IRA well, if it went from $6 or $7,000 up to a few $100,000 or whatever and you take it out all tax free. Oh, you die and it goes to your beneficiaries all tax free. The only downside is if it goes down and you sell it, you decide you want out, you don't get to take those losses off your taxes, in a Roth IRA do I think that that is a fine way to go. I do. I don't have a problem with that. But I have a serious problem with those of you who want to buy Bitcoin in a traditional IRA. I am telling you don't do it. Don't do it. Don't do it. Alright. So, I've been ranting. So, what does that mean all of you should do? This is the time where you need to also continue to take a breath. And over this year we've seen volatility. We've seen a lot of unknowns. We've seen things happen in Afghanistan that many of us don't understand. We have a refugee problem. We have climate problems. We have so many problems right now. It's not even funny. So, my advice to all of you would be this stay the course. If you have more than 5, 10, 15 years until you need this money, just continue to dollar cost average into these markets. I've always told you that you need to diversify and one of the best ways to do it is through the Vanguard total stock market index fund. If you don't know what else to do. Also, what's really important is that for those of you who need the money that's in the market, you need it within a year, you need it now whatever. Again, I'm going to tell you money that you need in 1, 2 or three years is not money that belongs in the stock market. That is money that needs to be kept safe and sound. When it comes to inflation, I personally think inflation is here to stay for a considerable amount of time. I do not see it passing in the next week or the next month and the next three months or year, it's here for a while until supply can keep up with demand. I suggested this a while ago. I'm still going to suggested for those of you who are just looking to as for a place to put safe money with the great interest rate. Take advantage of inflation right now and look into series I bonds go to treasurydirect.gov and that is where you would purchase them, the maximum you can really purchase is $10,000 in your individual name. You could do another $10,000 if you wanted in a trust name. So, $20,000 for one person and with the tax return, if you got it you could buy another $5,000 with it if you wanted to. But I love series I bonds for those of you who just want to put money away and get about a 3.5% yield on your money and make more money as inflation goes up. Fabulous thing for you to be thinking about. But you need to stay calm right now. Stop watching the markets go up and down. Stop watching that oil and bank stocks and all of those stocks are skyrocketing. But my technology stocks are just going to, it does not matter. If you are diversified across the board, eventually one of the sectors that is part of that diversification will come into favor and you will start to make money over all. I'm just wanting you to really stay calm. Watch everything that's going on. But get your expenses under control, know how much money it really costs you to live. Are you able to cover those expenses or not? And if you can't, you've got to make adjustments right here and right now to be able to do so. I don't care if that's cutting your cable so that you can go on, you know, some internet service that's free or whatever it is. But now is the time to take a look at everything and get realistic about what is going on in your life. Because as I've said many times, the government's not going to help you, other people aren't going to help you. There's nobody that's going to help you with this other than yourself. And if you just start turning towards your money, working with your money, understanding not only where your money is invested, but the money you have coming in, the money you have going out. Should you sell the house? Should you downsize? What should you do? Everything will be okay. The outcome, however, everybody is up to you. All right. That was the Suze rant for September 30th, 2021. See ya on Sunday. Bye, bye now.

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