Podcast Episode - Suze School: Four Things You Need to Know Now


Home Buying, Interest Rates, Investing, Podcast


September 29, 2024

For this Suze School, Suze goes over four of the things you need to know right now, with a review of what’s going on regarding interest rates and real estate.  Plus, Bitcoin, Gold and more.

Listen to Podcast Episode:


Podcast Transcript:

September 29th, 2024. Welcome everybody to the Women and Money podcast. As well as everybody smart enough to listen, Suze O, here and today is Suze School. So as always get out your Suze notebooks. So just a few things before I get into Suze School:

Colo, you all know Colo and if you don't know Colo, you should know Colo. He's like our son arrives from the island to Florida. And the reason that he's coming to Florida is for the first time ever, his wife Annie has gotten a visa that allows her to leave Colombia, which is where they live.

And so what's interesting about that is this will be her very first time in the United States of America. And on the second, I have to go to Las Vegas to give a talk. And so one of our promises to Colo was, hey, if we ever go to Las Vegas, we'll take you with us.

And so what's fascinating is that since Annie is coming to the United States to meet Colo, we're taking both of them to Las Vegas and I just can't even imagine what that's gonna be like for them. We're staying in a hotel and they've given me one of the top penthouse suites because I'm speaking at the event. And they're giving one to Colo and Annie as well and two tickets to go see Cirque Du Soleil

And I'm just so excited. I can't even stand it. And then when we come back on the fourth, he's going back with Annie to the island and she's gonna see the very first time where Colo works and has lived all these years and we're not going back with them and we're going to let him be the man of the house and have it all just for himself. And Annie and I just want to tell you, I'm so excited because that all starts today.

And I'm sure you're thinking, but Suze, this is a financial podcast. Why are you talking to us about Colo?

This isn't just a financial podcast. This is a family financial podcast because it's important for me to answer your questions and to really talk about money. I need to know about you. You need to know about me and my life with KT and with Colo. And when you get to know all of that, I don't know that's kind of making finances, a family, a fair. So that's what this podcast is all about.

So, let's start Suze School today with interest rates. Now, what's fascinating about interest rates is, I'm sure you all know that in the last fed funds meeting, they lowered the fed funds rate by 0.50%.

And everybody was just so excited about that because all of you believed that when they did that, that meant interest rates were going to come down immediately across the board. So many of you have been writing to me saying, Suze, what should I do? I've been getting 4.5% in my money market accounts and now I have a feeling that next week they're gonna go down to nothing just because the Feds move down 0.50% doesn't mean that everything in the United States is going to change interest rate wise.

Ok, everybody. So it takes time to work it through the system. Number one.

And number two, since that interest rate was projected to happen, not knowing, was it going to be a quarter percent, half a percent, whatever, that was already built into certain things. So just know that the decrease in interest rates truthfully for you to feel the result of them is going to take some time.

Now with that said, I need you to listen to me closely here for over one year. Now, over a year, if you go back, you'll hear this. I have been saying to you, if I were you, I would do what I've been doing and I was buying 30 year treasury bonds and I educated all of you on the fact that as long term interest rates go down the value of your bonds, the prices of them go up and they go up more than a short term bond. So, if you had a 30 year bond and you bought it at 5% you'd be up almost 10% right now on the value of that bond. Plus the fact that you were making 5% the entire time.

If you bought a two year note or a three year note or whatever, and interest rates went down, your gain would be very little because how does it work? Everybody, the longer the maturity of your bond, the greater increase in your gain when interest rates go down also when interest rates go up, the greater loss than if it were a shorter term maturity.

So given that it was obvious or at least expected that interest rates were going to go down. We didn't know when, but we thought, you know what they've been going up and up and up. Let's take advantage of it, let's lock it in and that eventually they would start to come down and that's when we will have a nice gain. And maybe at that time, depending, is it a long term gain or do you own this within a retirement account? Maybe you would sell the bonds at that time and buy shorter term bonds with even more money giving you approximately the same yield.

What was fascinating to me is that some of you wrote to me recently and you said, oh, Suze, the reason that I didn't buy 20 or 30 year bonds, I didn't know how to sell them.

And I, you know, I was thinking to myself that wasn't the reason not to buy them. Obviously, if you buy through Treasury direct, it's a lot more complicated. But if you were able to buy your bonds or notes or bills through Charles Schwab through Fidelity through some brokerage account, then it's as easy to buy them as it is to sell them because they trade all the time. So I'm so sorry that that's what kept you from doing it.

Do you remember my saying? Fear, shame and anger the three internal obstacles to wealth. Your fear of not doing something because you didn't know how to do something kept you from locking in a great rate and being up pretty much right now considerably on your original investment. If you did want to sell.

Now, for those of you who did not listen to me or you didn't, for whatever reason, take advantage of buying 30 year bonds over a year ago and even dollar cost averaging into them as they went up as they started to go down a little bit. What should you be doing? Now, because again, a lot of you are writing me and saying, is it too late? Should I buy a 30 year bond now?

Well, you still could buy a 30 year bond if you wanted to hold it for 30 years. But the capital appreciation of a 30 year bond at this point in time, in my opinion, is far, far less than it was a little while ago as they were going up and they hit their high around 5%.

What would I be doing now to take advantage of treasury bonds with money that maybe I wanted to lock in an interest rate and maybe have a little bit of appreciation, but at least kind of be more safe than 30 years having to keep it for 30 years because you never know what could happen with bonds.

And for new money, for me that I want to commit to treasuries, I'm doing a treasury ladder of a three year, a five year and a seven year that midterm there right in there is the years that I would be buying, I would be buying some three years, some five years and some seven years. But I wouldn't, at this point in time be putting money into 30 year treasury bonds. You know, it was maybe a week or two ago. Somebody wrote in a question that said, my banker said that long term interest rates were probably going to go up.

And I think at the time they were referring to certificates of deposits and I very flippantly and maybe too flippantly said, get yourself a new banker. And then I started to think about that question and what you would have seen after the feds lowered their interest rates last week or whenever it was. Now, I'm losing track of time because of my return from Spain.

But anyway, you would have seen after that one day or so, you would have seen interest rates on long term bonds starting to tick up. And there have been times during certain periods of the economy where long term bonds, even though rates were going down, did blip up 100 basis points or so. So that is possible, which is why I'm saying at this point in time and I don't see that happening just so, you know, if I were going to put more money into a treasury, I would be dividing it between 35 and seven years and I would not be buying 30 year bonds at this point in time for me.

All right, when that happened, and I saw the tremendous uptick in my personal portfolio and many of those were in a nontaxable situation as well as long term it was, let's sell, let's take advantage of my 5% gain my 7% gain, whatever it was. And then let's keep that money for a little bit here. And then let's see where I wanna deploy it. But I will be deploying it in 3, 5 and seven year bonds. Just wanna say that's what I am doing at this point in time.

Next topic, real estate. Now, a lot of you are very excited because interest rates are coming down. So again, maybe it's more affordable for you to buy a piece of real estate because interest rates have come down and will probably continue to go down when it comes to mortgages.

However, it may not help you as much as you think. And the reason is I don't think you're going to see real estate prices come down as well. Now, maybe they'll come down a little bit,but especially for single family residences, you have so many people that bought their homes at 2 2.5 3% interest, they're not gonna go anywhere. You're not seeing homebuilders really building enough inventory for the demand.

So when there's less supply than demand, real estate prices will not go down. Now, that doesn't mean that real estate sales might not slow down and things like that. But my advice to you and just something to think about if you want to buy a piece of real estate and you want to do it now and maybe still the fixed on a 30 or even 15 year mortgage is way too high. Just maybe just maybe you look at an adjustable rate mortgage where maybe you get a five and one where the interest rate is fixed for five years and then it adjusts every year, maybe even a seven and one.

And if interest rates go down, maybe your adjustable rate will also adjust down because, you know, they don't always just adjust up and maybe if interest rates come down enough. All right, maybe it's worth the while then knowing that you're going to stay in that house for a lot longer time.

Maybe, then you refinance when interest rates do really come down, if they come down. But I don't think you're gonna see them come down to the 2% area or where they were a few years ago, maybe 3.5% maybe 4%. But I just don't think in the foreseeable future they're gonna come down further than that. I hope I'm wrong.

But I'd rather see you get into real estate now being able to refinance if interest rates go down and see what happens at that point in time than not being able to buy because you can't afford the fixed rate interest and you're holding out thinking that real estate prices are going to be coming down. I don't think it's gonna work that way. So it's just something for you to explore and think about next.

As you know, I've been a tremendous advocate of regardless of your income telling you and encouraging you for a retirement account to put the money in a Roth Ira. If you qualify a Roth 401k or 403 B or TSP, regardless of your income.

And the other day I read this incredible article quite long on why. If you're in a high tax bracket, pre-tax retirement accounts are the way to go. And they did the math on it and the math and the numbers were like showing, ok, you kind of come out the same or you don't and it, but you're better off. Here's what I want to say to you. I've been doing this now for 40 years.

Many of the people that I've been dealing with for all those years. Many of you are older now and now you're at the point where you are near retirement or you have retired or you're 70 73 75 whatever it is. And you're having to take money out of your pre-tax retirement accounts. And a lot of you are saying to me, if only I had listened to you to begin with, I now retired. I now still have a mortgage on my home. I wish I could pay off that mortgage on my home. But all my money really is in my pre-tax retirement account. And if I took out $300,000 in one lump sum to pay off a $300,000 mortgage, that would put me in a higher income tax bracket, I'd pay taxes on all of it. I'd probably end up with only maybe $200,000. So it still wouldn't be enough. So I'd have to take out four or $500,000 to pay off a $300,000 mortgage. If I just had all that money in a Roth retirement account, I could take out $300,000 and be done with my mortgage.

So later on in life, things can happen where you need a lump sum of money. Maybe you need a lump sum because you want to help your Children buy a home or whatever it may be. Maybe you're ill and you need a nurse all the time and you need more money.

It's nice to know that the money that you have is all yours. What you see is what you get and I don't personally care what the numbers say. I care about your needs as a person.

And it just seems to me that as a person, you not only care about yourself and your own needs because remember in a Roth retirement account, you do not have to take out required minimum distributions as you do in a pre-tax account.

So if you don't need that money, that money will continue to grow and grow. Because what as a mother or a father or parents, what is your biggest priority in life? It's not yourselves, it's not the quality of your life. It's your children.

You live for your children in the majority of cases. And so many of you want to make sure that it's your children that are ok. You're all right. You're getting by on certain things. You're living a maybe lesser lifestyle, but you're afraid that your kids are gonna need help. Maybe their job's gonna be replaced by artificial intelligence. Maybe they get in a situation where they're married and then they get divorced and they lose all their money to their spouse or whatever and now they're starting all over again at 50 or 60.

And you want to know that they're ok and it gives you such joy and security to know that the money that you have in your Roth retirement accounts not only could help you if you needed it without any tax consequences, but in the long run, you could leave it to your family members.

Remember what I said at the beginning of this podcast, this is a Financial Family podcast where we don't just think about ourselves. We think about our family members. I think about all of you and all of your situations as if you were and are my family because on some level you are or you won't be listening to this podcast. You just won't. I know it because this isn't your typical financial podcast. It just isn't.

So I don't care what the CPA say, the enrolled agents say some of the most astute financial people out there that write articles for other financial people and what they say. The numbers don't tell the entire story, your personal situations do.

So it's really important, really important that if you're gonna go by my advice, I don't care what article you read. I say hands down a Roth IRA. A Roth retirement account is the way to go at work. And I can tell you the biggest mistake I have made, in my opinion, with my money is not taking advantage of the one time conversion that I could have done from my pretext into a Roth and just had that money grow and grow and grow. Because now even though I don't need it, I have to take out a whole lot of money and I wish I didn't have to starting next year, Miss Travis is gonna have to start taking out a whole lot of money and I wish she didn't have to, I wish all of that money could just stay in that retirement account as a Roth. It can't because it's not a Roth and grow and grow and grow. And then for us to have a serious sum of money to leave to hospitals, to leave to Saint Jude.

And instead, what do I do? I have to take it out and lose a big percentage to what Uncle Sam. So I just wanna say that next topic, Bitcoin, somebody recently wrote me and they took me in their opinion to the cleaners. I don't even know if that's the right phrase.

But anyway, and they said how dare I talk to people about Bitcoin. Now, I may have also mentioned this on a previous podcast, but I just want to be clear with people, I would never invest any money in Bitcoin or any of the Bitcoin ETFs with money that I couldn't afford to lose. Number one.

Number two. Do I think however, if you can afford to lose it because you never know what will happen with Bitcoin if I could afford to lose it. Do I think it's a wise investment and as much as everybody's gonna think, I'm crazy. I do. And one of the reasons that I do is that there are too many corporations now sitting on the sideline really taking a look at it. The younger generations are seriously into it and they like it and you know, as the youth goes sometimes, so does the economy.

So I still like Bitcoin a lot. One of you recently wrote in and you asked me a question, Suze, if you were to buy IBIT the ETF or Bitcoin directly BTC that you can do through many different ways or would you buy Coinbase as a surrogate for Bitcoin? What I would tell you is this and for those of you who don't know, Coinbase is a stock of a company that you can open up an account and buy all different kind of cryptocurrencies there. So they're just not about Bitcoin. You could do Ethereum, you could do so many different ones. So it's not a pure play on Bitcoin.

Now. I like Coinbase a lot. I don't have a problem, if you want to buy it, it's down significantly. You want a dollar cost average. Ok, up to you.

But again, with money you can afford to lose. But a pure play on Bitcoin will make you more money, in my opinion, whether it's IBIT or the actual coin itself. I just think that's a 100% play on that Cryptocurrency. And do I think that it's possible that it could still continue way up? I do.

I don't think it's impossible that you could see it at $100,000 one day. I don't know when, but you have to remember even just a few months ago, it went up like 75% in a very short period of time. If it went up 75% from here. Well, now you're there. But it's just something that if you want to do and you just want to do it with a small amount of money or an amount of money that you can afford to lose. I don't have a problem with that. So I don't really care what anybody else says, what anybody else thinks. Is there something better to do with the money, maybe?

But I've done it with a small amount of money and I like that. I've done it gold. We've done quite well with gold. If you think about it a while ago, I had many of you buy Barrack and it was paying a 2% or so dividend. We're up now on that stock symbol was gold. Also, many of you actually bought the ETF GLD and gold has had a nice run here.

I always know that it's gone up when KT comes to me and says, is it time to sell our gold? Should we go? Because, you know, over the years, what was funny is that I did a lot of work in South Africa and whenever I was there, I was given a coin, a Krugerrand and the Krugerrand at the time weren't really worth that much. And now they're worth 2600 $2700 a Krugerrand. And so KT s says to me, well, should we sell them now?

And every time I'm like, well, maybe we should hold it a little, it goes back down and then it goes back up again. So, however, at this point in time, I think it's very possible that gold could continue up. I think it's a nice thing to kind of have in a portfolio just to stabilize it. Not because we're losing out on our dollars. We're doing this, we're doing that now, just, just a little amount again for diversification.

But I have decided given that it's gone up so much from the time that we got these that maybe we'll sell one, two or three of them. Um, but we'll see what happens here, but I still like gold. I don't have a problem with it, but again, just a very, very small amount.

So that's one thing last, but not least the stock market, the stock such as NVIDIA and AMD and the ETF SMH, which somebody can remember they wrote back and they said, Suze, I hate this stock. I'm not making any money with it and it was at 235 when they wrote that and I kind of let them have it and I said, fine, sell it if you don't like it.

And then right after that, it went all the way up, then it went all the way back down again. Now it's up again.This is an area of investing that is here to stay.

There are some opportunities within this area that will be life long opportunities. And one day if you don't take advantage of the correct stocks within that area, you will look back and go. Why didn't I? So how do you know what those right stocks are?

Let's see what Mr Fitzgerald comes out with in the next month or so in his program and we'll go from there. But I do think that there's nothing wrong with for a start dollar cost average and just no, that it's brighter for the future than it is darker. It's always been brighter for the future when you're investing in the stock market because it likes to go up more than it likes to go down. It's very hard to be pessimistic when it comes to the stock market.

You know, over the years, obviously, I've been quite the investor and there were times when I thought that the market would go down and I would short the market or I would do something called buying puts, which is an option strategy that if you buy puts in the market goes down, you make money.

And every time I did that, I felt so horrific wanting the market to go down, I felt like I was a financial traitor, you know, and that's traitor - traitor that I was going against the grain of America and wanting the stocks to go up. And I just couldn't do it.

And to this day I've never done it again. Selling puts is a whole another strategy that maybe one day we'll talk about. So I think it's in the psychological makeup of human beings that they want things to go up more than they feel good when they go down and they want to profit from it going down. Which is why I think the majority of the times the markets go higher than they do lower. And even if they go lower, they return and go higher. And if they go lower and you are dollar cost, averaging, you take advantage of it. It's just that simple.

So I'm very optimistic about the future, especially of certain stocks. And so even if these markets go down for a while here in the long run, I want us all to be optimistic.

All right, I have two more announcements.

A few days ago, September 25th, we added a new addition to our family, our niece, Kaitlyn Stener and nephew Taylor Neely and their children, Tommy J and Will. They added a new addition to all of our families, a little baby boy by the name of Nicholas Neely. And he is stunning. Just stunning. So Katie, Taylor, Will and Tommy J and Nicholas. So, so happy for all of you. Next, yesterday was Oliver Tandy, my nephew's birthday and today is his sister's Scarlett Tandy's birthday. So I want to wish both of you a really, really happy birthday.

All right, everybody. So until Thursday, what I want to say is that KT and I will be recording and Ask KT and Suze Anything early because we will be in Las Vegas at that point in time. But I don't want you to miss out on Miss Travis. So you'll have your KT and Suze Anything edition like always. And then I'll see you next Sunday for another Suze school.

And the topic of that Suze School is let's make a date with your money. Hm. Curious. But until then there's really only one thing that I want you to remember when it comes to your money and it's this people first, then money, then things. And if you do that, stay safe and stay healthy, you will be unstoppable.

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