Podcast Episode - Suze School: The Players on Your Financial Team

In this Suze School episode, Suze talks about the types of players you need on your financial team to grow your money and keep it secure.  Are you putting everything into one stock, versus having a diverse portfolio?  Suze also covers the latest on CD rates, Series I Bonds and so much more. 

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Podcast Transcript:

Suze: April 7th, 2024. Welcome everybody to the Women and Money podcast and everybody smart enough to listen. Suze O here, and today is Suze School, and I suggest that you take out your little Suze notebooks because I just have a feeling that you're going to need them.

Now as you know—or maybe you don't know—but when I sit down to do a podcast, I really don't know what I'm exactly going to say. It's not like I have it scripted out. I just kind of talk about the things that I think you need to know based on the emails and some of the community responses that I get from you since the last podcast. So we'll see what happens.

But the very first thing that comes to my mind is the basketball game with Iowa against UConn and—oh my God—I just have to say something. Obviously, Iowa won, but it wasn't so obvious for a while. I really thought UConn was gonna win. But that's beside the point.

Whenever I watch anything, whenever I look at anything, I always think about it in terms of money—not money like how much they make or things like that—but the players of a team, such as a basketball team or football team, whatever it may be, I look at those players as if they were players in your personal financial portfolio.

You need all different kinds of players to win a basketball game. And I was really thinking about this on Friday night when Caitlin Clark—and everybody knows now who Caitlin Clark is—phenomenal. But truthfully, she was so off her game on Friday night. Yet, they still won. And why did they still win? Because the other players on that team stepped up, and that is why they won.

Most of the time, you need different players that do different things because it's a team sport to win a game. But the same is true—exactly the same is true—when it comes to your money. You need different players, different financial instruments in order for you to win the financial independence game. Really, you do.

So you need money that's safe. You need money that's liquid. You need money that's for growth. You need all different kinds of things in place to make sure that if one goes the wrong way, another one will step up and eventually it all works out.

I tell you this because I'm a little bit afraid that a lot of you aren't doing that. A lot of you, when you hear me mention a specific stock, for instance, you just buy that one stock—but you don't have any other stocks at all in your portfolio. So if that stock happens to go down, you have no other players, no other stocks or investments that may be going up to equalize it out.

And it doesn't have to just be other things besides stocks. Maybe they're stocks in different areas—not all in one specific area. Because right now, you've been seeing that last week the markets had a really hard time. For a few days there, they were going down and down and down. And I'm sure many of you were totally freaked out. "Oh no, they're going down. My portfolio was up and now they're going down and down and down."

And while I'm thrilled that they're going down—because remember, we don't want to put all of our investment money in the stock market at one time—we always want to do it little by little by little. So that in case the market goes down and your stocks or mutual funds or ETFs go down, you then can take advantage of the downward moves and dollar cost average into whatever it is that you're buying and bring your average cost down.

I'm always happy when the markets go down because then I can buy more of my favorite investments for less than if they were to continue up and up and up. And all investments cycle—and you need to know that. So you always want to keep—

They always say you want to keep powder dry. I don't know why they call money powder. But anyway, you always want to keep some money to continue to invest more. And that's true with not only obviously stocks and ETFs, but it's true with gold, Bitcoin, and even treasuries and CDs.

Just something I want you to think about. Put a pin in CDs for a second here.

Now, the first part of this lesson of the Suze School is I want you to write down: cyclical uptrend and a secular uptrend. As I sit here speaking to you today—so I don't care when you're listening to this—this applies to right here and right now. So if you listen to this podcast a year from now, it might not be true.

But we are in both a cyclical uptrend as well as a secular uptrend in the stock market. A secular uptrend is a long-term uptrend. Now, every once in a while when we're in a long-term uptrend, which means it’s going to last probably for years or a while—and we've already been in one—it can be normal that in a secular uptrend, you can have cyclical downtrends.

A cyclical downtrend is for a short period of time because certain things are happening in the economy, the markets for instance will go down. But when you have a cyclical downtrend in a secular uptrend, the markets then will tend to come back. Right now, we're also in a cyclical uptrend.

So when you look at investing—in ETFs and mutual funds, in your 401(k) plans and your retirement accounts—this is still a fabulous time right now. Now anything obviously can happen. But right here and right now, for equities, everybody, I truthfully believe from the bottom of my heart that equities, positioned correctly, diversified correctly, will outperform treasuries.

So when it comes to investing, you have to know more than just what are treasuries doing, what are CDs doing? Should you go long term or short term with treasuries? What should you be doing with all of that? Treasuries and CDs need to make up a part possibly of your portfolio, especially if you are older—60, 70, or 80—because you just want that security.

But if you are younger, you're in your twenties, thirties, forties, or even fifties, right now we're in a fabulous investment environment where there are ways for you to invest and actually—with dividend yields on certain stocks—get a higher interest rate than what treasuries are paying you, than what CDs are paying you.

So you have to have different players. And you can't just have everything in just stocks and one type of stock, or everything just in treasuries and that is it, or everything just in your money market account, or everything that you have just in CDs. Because just like the markets go up and down, you have to make sure that you have different players on your financial team when something starts to go down versus starts to go up.

And that brings me to certificates of deposit as well as treasuries. Alliant Credit Union had a change in their certificates of deposit rates a few days ago. The six-month went to 5%. However, the 12 to 17 months went down a little bit to 5.15%. The 18 to 23 months went to 4.90%, and the two-year went to 4.30%.

Now, those are for amounts under $75,000. If you put in $75,000 or more, the 12 to 17 months went to 5.20%, the 18 to 23 months went to 4.95%, and the two-year went to 4.35%. Especially the 12 to 17 and the 18 to 23 months—those are still great, great interest rates.

The other day, I had a half-hour talk with Dennis Devine, who is the CEO of Alliant Credit Union. And what's so great is that I know that when Alliant Credit Union is having a change in interest rates, they're doing it not just because they want more customers or whatever it may be. Not just because their job is to offer you the highest interest rates out there that you can get anywhere. Their job, truthfully, is to protect your money. Their job is to protect the money of the people that have invested in Alliant Credit Union, whether it's in the Ultimate Opportunity Savings Account or one of the CDs or whatever else it may be.

I'm loving the fact that in the two and a half years that I've been talking to you about Alliant Credit Union, close to $1 billion from all of you has been invested in their CDs and in the Ultimate Opportunity Savings Account. That is a lot of money—and that's just from all of us here at the Women and Money podcast. They obviously have far more than that, because not everybody listens to the Women and Money podcast—but you should be telling absolutely everybody to listen. That's beside the point. But just from all of you, think about that. So it's Dennis’ job, and it's my job, to make sure that that money—that is a lot of money from all of you—is safe and it is protected no matter what happens.

So I have people that post and they go, "I can get a higher interest rate at such and such a place," or "I'm gonna do that," or "I'm gonna do this." You can do whatever you want. But I feel great that no matter what interest rate they’re offering right now—and it's still one of the highest out there—whatever interest rate that they're offering, I know that your money is safe and sound, assuming that you are under the $250,000 NCUA limit for insurance, or you have multiple different types of accounts or multiple beneficiaries so that even if you have a million dollars in there, it's insured.

I want to know, regardless of insurance, that your money is invested in such a way that is safe and sound.

With that said, however, for those of you who live in high-income state tax brackets—California, New York, and so forth—right now, the one-year treasury note is still a little bit under the interest rate of the CD at Alliant Credit Union. What you need to do, truthfully, is figure out in your tax bracket: Do treasuries make more sense for you now than certificates of deposit? You just need to think about that and research it. In many circumstances, it absolutely might.

I want to talk about interest rates now for a second. It is obvious that the Feds want interest rates to come down. They had projected that in this year, 2024, there would be three or four interest rate cuts. I'm not sure there will be any interest rate cuts from the Feds this year. But they really want interest rates and inflation to come down. For interest rates to come down, inflation has to come down—and we'll see what happens there.

Technically speaking, what the technical analysts are projecting—and these are people that work with numbers and look at trends and all these other things—technically, they are projecting that right now, the 10-year treasury that is at 4.40% will probably go as high as 4.55%, but most likely by the end of this year or beginning of next, it will be down to about 3.5%.

Are interest rates going to go up? Are they going to go down? We don't know. However, right now, the 30-year Treasury is about 4.551%.

Now, I know that I told many of you a while ago—including with millions of dollars of my own money—that I would start buying the 30-year treasury because as interest rates go down, the long-term treasuries will go up. Not that we plan to keep it for 30 years, but interest rates have not gone down. They've actually, with treasuries, gone up.

So now you can get a 30-year treasury for 4.551%—very different. A half a percent difference from when I started at 4%. And then it went from 4.34% to 4.5%. Now, here's what I want to say to all of you. Depending on your age and really what you need from your financial player—that is like your safeguard, your safety (now we're talking football, but that's beside the point)—your safeguard of your money...

You just want to know that interest rates on that money are locked in for a long time—possibly the rest of your life—then I don't have a problem with you on any level putting money in. Especially if you're 60, you're 70, you need the income from that money, you need it and you cannot risk it—I don't have a problem with you putting it in a 30-year treasury bond at 4.5%.

Maybe it'll go to 4.6%. Maybe if we were lucky, it would go to 5%. But again, don't put all of your safeguard money in at 30 years right here and right now. But I don't think it's a bad idea to possibly take advantage of some of it that way.

If you are younger, however—you're 20 or 30 or 40—that is money really that you don't want to lock into a 30-year treasury. Maybe you want to put it into a money market account, your emergency fund, and get 4%, 4.5%, 5%—Schwab or Fidelity or whatever that may be—and leave it there.

For those of you who are in a really high-income tax state bracket, maybe you want to buy four-week treasury bills or whatever it may be as your emergency money, so you don't have to pay state and local income taxes on it. Just up to you as to how much you're keeping in emergency funds.

When we're in, right now, a cyclical and secular uptrend and you're younger—20, 30—you have 10, 20, 30, 40 years before you need this money, this is the time to be dollar cost averaging into great ETFs, great individual stocks with diversification—all of those things. So I just wanted to say that to you and I wanted you to think about that.

Very briefly—as you know, I have been an advocate, and a lot of you are mad at me because of climate changes and that it's not politically correct—but energy right now, energy is still going up and up. And right now, WTI oil, they’re doing great. And as I've said to you, as long as oil goes up, the stocks such as Chevron and Devon and FANG and even PXD—all of them—will continue to go up as well.

It's very possible if there was a breakout of WTI above 83—and WTI right now is at about 86—that it could very well go to 93. It seems like WTI is doing quite, quite well. So, for those of you who are in energy stocks, I'm sure you're very happy with your dividends—far higher than treasuries, CDs, or anything else. Truthfully, a lot higher. And you're getting growth on your money as well.

Will energy continue up? I don't know. But when you still see all the conflicts that we have overseas, I don't see it going down. The downside of that is—when energy goes up (and I've been telling you, or I've been telling you anyway)—don't be surprised to see it at $100 again.

However, when oil or energy like that goes up, so does the price of gas at the gas station, which then relates to inflation. So will inflation start to go up again and things like that? Very possibly. So there's an upside if you're invested in energy stocks and then there's a downside if you're buying gasoline at a gas station. And then what happens to inflation? And then what happens with Jay Powell?

Let me talk about Bitcoin for a second here. Bitcoin has been going up and down and up and down. As you know, I suggested that all of you—if you don't want to buy the actual Bitcoin itself, which currently is at about $67,000—you could always buy the ETF IBIT. But Bitcoin currently, like I said, is at about $67,000 or $68,000.

And long term, it is projected to go to $81,000 per Bitcoin. If it does, I have no idea. But that's just the prediction of it. So short term, it seems positive. Over the long run, it kind of seems neutral. Just know that.

I want to talk to you now because I mentioned inflation, and so many of you are writing me about I Bonds. What should you be doing about your I Bonds that have a 0% fixed interest rate?

As you know, I have not been wanting to buy more I Bonds lately. I just think that there are more aggressive ways and more intelligent ways to be investing for the long term. I know that you want inflation fighters, but another way to fight inflation is by having investments that grow in value.

But for those of you who just want to save, you don't want to risk the money, you want it to be absolutely protected by the U.S. government, and you're into I Bonds or you purchased I Bonds in the past—if I had an I Bond with a 0% fixed interest rate right now, I would probably cash out of those.

What you would do is go onto the TreasuryDirect site and into your account. At the bottom of your account, you will see the actual cash value of your I Bond that you are currently looking at redeeming. Now, remember, you should be looking at redeeming the I Bonds that have a 0% fixed interest rate—so not the ones that have a 1.3% fixed interest rate currently, but the ones that are at 0%.

Remember, you cannot redeem an I Bond during the first year. If you redeem it during years two through five, there will be a three-month interest penalty. You don't have to figure out what that penalty is, because when you go on your TreasuryDirect account, you will see the value of that bond as of today if you redeemed it today. That amount already includes the three-month interest penalty.

What it doesn't include, unless you ask them to, is the taxes that you will owe on that interest. So just remember, when you redeem an I Bond, in most cases you will owe federal income tax on the interest that the I Bond earned. So if you have a lot of I Bonds at a 0% fixed rate and you want to redeem them all, you will owe income taxes on whatever interest you earned.

You just might want to think about what that does to your taxes and your actual return. Again, you can redeem all of them—but you can still only buy $10,000 of I Bonds a year per person. Obviously, you could buy $10,000 in a trust, $10,000 as a business, you can gift each other $10,000, but as an individual, the annual limit is $10,000.

Now, for those of you who are writing me and saying, "Suze, I've been told I need to redeem my 0% fixed interest rate I Bonds now and roll them over to the I Bonds right now before they change in May to lock in the 1.3% fixed rate"—what do I think about that?

I think that if that money was your safeguard money, your inflation hedge, and you feel good in I Bonds—and that was the goal of that money for a long time—then I don't have a problem. That’s actually a very smart move to do.

But just remember, if you have an I Bond that you bought maybe in 2022 or whenever, it may be worth $11,000 or whatever it may be right now. You can only buy $10,000 of a new I Bond with that money. The interest earned—you have to do something else with that portion.

I don’t have a problem if that’s what you want to do. That’s my take on I Bonds.

We’ll see what happens. Remember, I Bonds come out with a new rate every November 1st and May 1st. If this, however, is something that you want to do to lock in the 1.3% fixed interest rate—which is really the highest it’s been in, I don’t even know how many years, a lot of years—if you want that guarantee, then you need to redeem your I Bonds right now and buy the new one right now.

Sometimes TreasuryDirect can take quite a while to process, so I would definitely be buying the new one before the 27th or 26th of this month. Make sure that you have done it really right away. Just do it now. Why even wait?

What will the new I Bond rate be May 1st? What will the new fixed rate be? I don’t know. Everybody can guess. I'm sure many people will be guessing. But again, the reason that I've switched courses here is that if you want safety, you want the government guarantee, you want to make sure your money is protected against inflation—but that’s all you want—then I Bonds may be the way you decide to go.

However, with an I Bond now comes a one-year lock-up that you cannot touch it, as well as four more years of a three-month interest penalty. So right now, if you want to sign up for that, you can go ahead. However, that’s not what I’m choosing to do with safe money.

I still feel better, at my age of 73, with a 30-year treasury bond because I want to know that if something happens—even in two years or six months or the first year—and I need that money, I can get it. Maybe some of you are in that position, but I always like to know personally that I can get at my money and there are no restrictions.

All right, one more thing. On myalliant.com, which is the website that you go to—the URL—if you want to buy a certificate of deposit with Alliant Credit Union or if you want to do the Ultimate Opportunity Savings Account. And for those of you, by the way, who don't have a savings account, you just don't even know how to start—you have got to start with the Ultimate Opportunity Savings Account.

This is where you put in $100 a month. You do so every single month for 12 consecutive months. And guess what? In the 12th month, you get $100 from Alliant Credit Union. You get about a 3% interest rate while it's sitting in there. You can access it. If you can't continue to do it, there's no penalties. That's how you start.

Somebody wrote me and they said, "Suze, I don't even have a penny to do anything with. I'm a teacher, I'm this, I'm that. I have only a few little... I'm nothing. How do I start?" That's how you start. There's not a better savings account out there that does that anywhere—bar none—number one.

But if you go to myalliant.com, you will see a quiz that I created for all of you. I'm calling it the "Stay Smart in 2024" quiz. Can you just take that quiz? Five simple questions that are yes or no. And I just want you to answer them. If you answer yes, there's a reply for you. If you answer no, there's a direction of what you should be doing for you.

Can you just do that and see? Are you smart? What do you need to do to stay smart? And then there's a place that asks you for your email. I'm just going to give you a little heads-up—if I were you, I would put in your legitimate email there, because I just have a feeling in a few weeks, I'm going to have something to announce for all of you that took the Stay Smart quiz, put in your email, and you'll see what happens.

You might just want to do that, everybody.

So I'd like to end this podcast with one last thing. Iowa Hawkeyes, Caitlin—you go out there this afternoon and you be unstoppable and bring that championship home.

Until then, everybody else, remember there's only one thing that matters when it comes to your money. And it is this: People first, then money, then things.

Now you stay safe and also stay unstoppable.