January 16, 2020
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In this podcast of Ask Suze Anything, we hear questions from Women & Money listeners Robert, Liz, Patricia, Julie, Dawn, and Olga.
Suze O. here and welcome to the Women and Money podcast as well as the men smart enough to listen. Did you notice anything different today? Have you noticed anything? Well, if you haven't, let me tell you. Today is the first day that I want to welcome our new sponsor for the entire year. Now this, I just want to say, is a big deal because you know a lot of podcasts, if you happen to listen to them, you'll notice that 10 or 15 minutes in the host reads a commercial, reads an advertisement and a few more minutes in, they read another advertisement, and that is how usually the host or the podcast makes money.Now, I need to tell you a little bit of history about this podcast, Women and Money. One of the reasons that I decided to do it on my own is because the major podcasting companies required me to read ads from all kinds of things, whatever it may have been. They wanted me to get you to buy things, and Suze Orman couldn't do that. I tried for a little, and when I said to the podcast distributors, I'm sorry, but I can't read ads, I can't do it, it drives me crazy. They were like, well, then we're not really interested in you. I said, well, great. If you're not interested in me because I don't want to sell anything to anybody, this is a podcast about educating you about making sure that you know how to save money, not spend money. Then, all right, don't, and I'll just produce the podcast on my own. And I do now. I own this podcast, it's distributed by Suze Orman Media and the sponsors of this podcast are entities that I know can absolutely help you. I am not going to let just anybody sponsor this podcast. We have had many companies because this podcast now has become quite popular, I've had many companies come to me and say, Suze, the next sponsor, can we sponsor you? We'll pay you all this money. And I said no it's not about how much you pay me, it's about how much you can help the people that listen to this podcast. So, I had my choice of all of these sponsors to choose from, and I decided to choose credit unions.Credit unions will be the sponsor of this podcast for this year, and the reason that I chose credit unions is this. It is no secret that currently, interest rates are extremely low. And where do you go to get a good interest rate for your safe money? Sure, you could go to a bank, but most banks give you such little interest it's not even funny. So, this is the time and this is the place that you really open up your eyes to the opportunities that are out there, besides banks. Now, it is no secret that banks are not my favorite entities, on any level. The main reason a bank exists is not to service you. So a bank is a for-profit corporation, and the main reason they exist is to make money off of you. So again, they make more money for their shareholders. A credit union is very, very different.A credit union is non-profit. It is a group of people that get together that become members and owners of that credit union. And so most credit unions absolutely will give you higher interest rates on your savings, lower interest rates on your loans, and they most likely will give you better customer service. And a lot of you are like, but Suze, don't I have to be a member of a union or whatever to belong to a credit union? And the answer to that is, no, you don't. The word union just simply means a group of people coming together. You're all members, you have a unified goal in mind, which is what? You're members and owners of the credit union. And then maybe you're thinking to yourself, but Suze, a bank is F.D.I.C insured, I don't have to ever worry about losing money in there as long as I have under $250,000. Well, guess what? A credit union is exactly the same. Now, a credit union is not insured by F.D.I.C., but a credit union is insured by what's called the N.C.U.S.I.F. which is the National Credit Union Share Insurance Fund, which is really governed by the National Credit Union Association, and they give you the same insurance as a bank. To this day, never one penny has been lost in a federally insured credit union, and you could, again, get protection up to $250,000 just like you can at a bank. So, you never have to worry about not being insured in a federally insured credit union.So you always, when you open up an account at a credit union, you want to look for the sign that says N.C.U.A. Got that, everybody? Now, you might be wondering, well, Suze, where do I even find a credit union near me? The easiest way for you to do it is to go to www.mycreditunion.gov, and right there you will find a credit union that you can use.Now, you may think that I'm going on about this because they're my sponsor. But no, that is not why I'm doing this. I am doing this because again, I'm reiterating we live in a time and a place when interest rates are so low that you have got to get the highest interest rates out there for safe money. Oh, you want to borrow money? You have to get the lowest interest rates possible. Oh, you have a student loan that needs to be refinanced? You know that a credit union will give you, most likely, better refinancing on a student loan than anybody else out there. So, the reason that out of all the companies and organizations that came to me, I chose credit unions to be the sponsor for the year for the Women and Money podcast is that I know they will save you money. And what do I want all of you to do? I want you to spend less and save more, and to save more, you need to have a place where you can save more and credit unions is what I have chosen for you.All right, let's get to Ask Suze Anything. So the first question today is from Robert, one of the men smart enough to listen, and he says, my question is about long term care insurance providers. It seems many of them are financially struggling and that rates keep going up. My husband and I want to get long term care coverage, but we want to get it from a provider that won't be just taking our money and then going out of business by the time we need it. How do we find a good, reputable provider?Well, Robert, that's a really good question, because it's true. You know, it was so funny years ago, I'll never forget this, a major, major magazine had a list of the top long term care providers, and by the time the article hits the newsstands, their number one pick was already out of business. So you really, really have to know when you are purchasing long term care insurance. And for those of you who don't know, long term care insurance is when you need to go into a nursing home, or you need to go into an assisted living facility, or you need to stay at home and you need help with somebody taking care of you. And you just have to know that your health insurance will not pay for it, in most cases, past 100 days. Medicare, Medicaid, they're not going to pay for it, so, you're going to end up paying for it out of your own pocket.And for so long I told the story about my own mother, who did live until she was 97, refused to get a long term care policy because she believed she was never going to need one, even though I kept saying, but Mom, I'll pay for it for you, please don't worry. Well, as it turned out, once Mom became 90 she needed help, she needed somebody to live with her, and she didn't have insurance. So, little Suze ended up paying $20,000 to $30,000 a month for my mother to have help when my aunt and uncle, who did listen to me, have the same help for no money because they purchased long term care insurance. So, I love long term care insurance, but you have to know that you can afford it from the time you buy it, which is really should be in your late fifties all the way until you are 84 years of age, which is the average age of entry into a nursing home. If you can't afford it for the entire time, do not buy it.So today is the day that I'm actually going to be making recommendations that can help you figure this out. Out of all the people in the United States who does Suze Orman go to when I want the best information on long term care insurance policies? Suze Orman goes to a woman by the name of Phyllis Shelton, who I consider the expert on long term care in the entire United States. Phyllis used to years ago, actually be the one who trained all the agents who sold you long term care insurance. So for those of you, and take this down, if you are interested in long term care insurance, why not send Phyllis and email? Why not contact her? You want to be with the best? She is the best, and you contact her at Phyllis@ltcconsultants.com. Send her an email and just tell her Suze sent you. And by the way, over all of the years that I have been giving out her name, there are many people who bought policies years ago and they got into trouble with them, they wouldn't pay for their benefits, all kinds of things would happen. And Phyllis would help them, simply to help them. So, when I give a recommendation, number one, you need to know I never make a penny from that referral ever, ever, ever. And that the people I refer you to have your best interests at heart, got that?All right, next, this one is from Liz. She says, Hi, Suze. You mentioned separate dental insurance on a podcast, but I didn't have a pen and paper with me at that moment to write it down, and now I can't find it. Do you remember the name?So just so you know, Liz, I hope I remember otherwise I'd be in bad shape here. Anyway, it wasn't dental insurance, girlfriend, because Suze doesn't like dental insurance. And I don't like dental insurance because most dental insurance plans will cost you $150 a month in premiums, they have a $1500 a year max, they have a six month waiting period until you can use it if something's going wrong when you get it, and I just don't know. Like, maybe if your company is offering it and you don't have to pay for it, fine, but if you have to pay for it out of your own pocket, I just don't think so. So the company again, another referral here, the company that I really like is called www.DentalPlans.com and DentalPlans.com offers what's called dental savings plans.Now listen carefully. Most insurance companies that offer dental insurance also offer dental savings plans. What is a dental savings plan? For approximately $120 a year, maybe $150 a year, not a month, but a year, you can get a dental savings plan, which offers you 10% to 60% discount on services that you get at your dentist's office, if they are part of that plan. So there are many companies that offer it. The particular company that I have because I have a dental savings plan that I got through DentalPlans.com is Cigna. Cigna Insurance because my dentist happens to take dental savings plans from Cigna. And so for $100 some odd dollars a year, I save, believe it or not, sometimes $2000 or $3000 a year versus what I would have paid for the exact same service if I didn't have it. So if I get a root canal, if I get a bridge, if I get my teeth cleaned, if I get X-rays, each time I go in, I can save $200, I can save $1000. I save a lot of money. So go to DentalPlans.com and check them out. And again, I do not get paid for referring people there all right? But it saves you so much money, I personally don't understand why everybody doesn't have one.The next question is from Patricia, she says. I have about $200,000 in a savings account after the sale of my condo. I want to buy another primary property, but don't know when that will happen. Can you give me advice on the best place to invest the money, or should I just keep it in the savings account until I'm ready to buy?Patricia, listen to me. When you invest money, you only invest money, and usually, when somebody says invest, they mean they buy stocks, they buy another piece of real estate, they are investing. Investing is for the long run, and you never, ever take money that you're going to need in less than five years to put it in the stock market. If you need money within three to five years, right in there, to do something else with, then that is money that belongs in a savings account. And as I started this entire podcast with, can you just check out a credit union near you and compare their interest rates to what you could get anywhere else? And if you don't know where a credit union is, that is close to you, go to www.mycreditunion.gov and see what you can find. Just check it out and see if you can get a higher interest rate at a credit union versus a bank. But wherever you can get the highest interest rate, that's where you should put your money.Next one is from Julie, she says, I have a Roth IRA, but I'm considering quitting my job this year to be a stay at home Mom. I like that for you, Julie. My husband will still have income, and we plan to continue maxing out both our Roth IRAs going forward. However, does this mean I need to open an all-new spousal Roth IRA? Or can I just keep contributing to the Roth IRA that I already have with my husband's income?Julie, want to hear what's funny? There's really no official account that's called a spousal Roth IRA. It's just how we refer to them, the non-working spouse's Roth IRA. But if you went to a brokerage firm and said, I want to open up a spousal Roth IRA, you would just be opening up a Roth IRA. So you get to continue to contribute to the Roth IRA that you already have.The next one is from Dawn. Hi, Suze. Could you do a Suze School episode to discuss the difference between short term and long term capital gains versus dividends?All right, so then let's go to Suze School and I'll do this for you. Here's what you need to know, girlfriend. When you buy a stock, you can hold that stock for his little or as long as you want. Once you have held a stock for as long as one year and one day, so you buy a stock and you have not sold it for a least one year and one day, that is considered long-term. Anything held under one year and one day, or longer, is considered short-term. So if you buy a stock and you sell it before one year and one day is up, you haven't held it for at least that long, and you sell it, and you sell it for more than what you paid for it, you have a short-term gain.Short-term gains are taxed as if they were ordinary income to you. It's taxed the exact same way when you go out and you earn income, that's how a short-term gain is taxed. So whatever tax bracket you are in, that's the tax that you're going to pay on a short term game. Got that?Long-term gains, as well as dividends, and a dividend, if it's a qualified dividend, and you can all look up what a qualified dividend is, but because most of you who are buying stocks, you're getting qualified dividends. Let me just say this. Dividends and long-term capital gains happen to be taxed in the exact same way. And what is that? If you have held it for at least one year and one day for the long-term gain, and now you bought a stock and one year and one day has passed, or longer, and you sell it and you have made money, you pay taxes on that as a long-term gain. And this is how it's taxed. If you are in the 10% or 12% tax bracket, which essentially means you're making, like under $40,000 a year or less, OK? You pay nothing, 0%, on a long-term gain or dividend, for that matter. If you are in the 20% to 24%, 32% or 35% tax bracket, you will pay 15% on that gain. If you make over $434,500 a year, you will pay 20% on that gain, and that's what you need to know.So, you know, I had a friend who had bought a whole lot of Apple stock. I'll never forget, this just happened a year ago. And she used to make a whole lot of money, and the stock had been going up and up and up, and she had a significant amount of money as a long-term gain, but she didn't really want to take it because she didn't want to have to pay 20% of capital gains tax on it because she used to make almost a $1,000,000 a year. Then it came time where she wasn't working anymore, and she made absolutely no income last year, what so ever. So guess what? I said to her, sell all of your Apple stock. Sell it all. Because she didn't have any income, she did not pay one penny of capital gains on a whole lot of money that she made. That was a big deal. Then this year, she bought some Apple stock back. She has a new cost basis in it, which means the price that she paid for it. So now if it goes up, she's not going to have to pay as much in capital gains. And if it goes down, she can take a loss. But do you understand what we did there? But that is essentially how it works.This next one is from Olga, and Olga actually asks a few questions, but I'm only going to answer one of them because we have so many questions. By the way, if you want to ask a question, just send an email to AskSuzePodcast@gmail.com and if chosen, I will answer them on this podcast. We have now hundreds and hundreds that are coming in at a time because this podcast is growing. So, just be patient because one day, you never know, I'll just look at all these and go, I'm going to answer them. I'm gonna answer them all because you never know, I could do something like that. Anyway, but keep sending in your questions.Olga wants to know, Suze, you said on one of the episodes when the market goes down, the cost of shares also go down. This then allows us to buy more shares, hold onto them until the market goes up, and thus create wealth over time. How does this look in practice, Suze? Say hypothetically, I have $5000 invested in a Standard and Poor's 500 index when the market was high, and then the market crashes. Do I leave my $5000 as it is, buy more shares every month as I am transferring more money from my checking account, sell, trade, sit, or cry? It's all very confusing to me, and the more I research it, the more confusing it becomes.Olga, here's what you need to understand and here is exactly what I said. In times like this, when the market really is relatively seriously high, because it's been the highest it's ever been in the history of the stock market. There's got to come a time when the market eventually starts to go down and I don't want you, if you have at least 10, 20, 30, 40 years or more until you need this money, I don't want you to make the mistake where you invest, the market starts to go down, you freak out and you sell. You know all those people that sold in 2008, 2009, they missed out on the 10 greatest years of what was going on in the market. So I want all of you if you are investing in the stock market, to invest with a technique called dollar-cost averaging, which means that rather than taking $5000 or $6000, let's say you're going to do a Roth IRA and you're under the age of 50, so you can put in $6000 a year. Rather than putting in $6000 all in one lump sum, and now you buy the Vanguard Total Stock Market Index ETF, whose symbol is VTI.Again, this is a show where I'm giving recommendations here, and if I were going to buy anything rather than the Standard and Poor's really 500 index, rather than whatever, I would buy at this point the Total Stock Market ETF, especially because you can now buy exchange-traded funds for zero commissions. That used to not be true. So, therefore, I would always say to you, look into buying a fund, just by the VTI. V like in Victoria, T like in Tracy, I like in Isabel. See, those were all women's names, I love that. Anyway, so let's just say you were going to do that. You would take $500 a month, every month, and purchase the VTI. When VTI goes up, you buy fewer shares with your $500. When VTI goes down, you buy more shares, but over time, you are averaging the cost of VTI with the dollars that you are investing.So Olga, do not cry, number one. You do not sell, number two. If you have time on your side, which means 10 years or longer, every month you just keep investing $500, $500, $500, or whatever amount it is. Now, a lot of you may think, well $500, how many shares can I buy? It does not matter, especially if you are investing let's just say, at a place that is not charging you commissions at all to buy any shares. So, let's just say it's Charles Schwab or TD Ameritrade. And now you can buy fractional shares at Charles Schwab with no commission whatsoever. Again, that is the way to do it. No matter whether it's one share, two shares, five shares, whatever, that's how you should do it.You know, Colombia, and I have talked about Colombia before on this podcast. Colombia works for me and KT here on the island, and we love him like I've told you, like our son. I invest Colombia's money for him and he has a Roth IRA at TD Ameritrade. And Colombia has so many stocks it's not even funny. One share of maybe Amazon, one share of Apple. But if you were to look at his portfolio, he has maybe now 40 different stocks. One share, three shares here, four shares there, and I have to tell you, I have done incredibly well for him. I've tripled his money this past year, but that's beside the point. But I did it on diversification and just him owning one share, two shares, five shares. He doesn't own more than five shares of any stock, so you can do that on your own if you want.You know, one of the companies that I like the best in terms of their newsletter, if you want to spend money and you want to get advice, the Motley Fools. I think they have some of the best newsletters out there, so you might want to check them out, listen to their podcast, get educated with them. Or, if you just want to keep your life simple, just dollar cost average every month into the VTI. It should not be that confusing, my dear Olga.All right, I think we're past our time limit. I had a few more, but I'll wait until next Thursday. Now, listen to me. This Sunday, make sure you tune in because I'm going to tell you what happened last week when I went to St. Paul, Minnesota, and saw Oprah and everything. So many of you wrote in and said you loved last Sunday's podcast because I was being vulnerable and if I could be afraid, it gave you permission to be afraid. Are all of you out of your minds? Don't you know that it doesn't matter how famous, or how rich, or popular anybody is? Everybody gets afraid. Everybody, really, is identical, you know? And so it's good that you can identify with me and I can identify with you because that's what makes us human beings.So, tune in on Sunday and I'll tell you exactly what happened. And again, to all the credit unions out there, thank you so, so much for choosing to support the Women and Money podcast as well as the men smart enough to listen. And remember everybody, if you want to find a credit union near you, please go to www.mycreditunion.gov. Tune in on Sunday, and I have a story to tell you. In providing answers neither Suze Orman Media nor Suze Orman is acting as a Certified Financial Planner, advisor, a Certified Financial Analyst, an economist, CPA, accountant, or lawyer. Neither Suze Orman Media nor Suze Orman makes any recommendations as to any specific securities or investments. All content is for informational and general purposes only and does not constitute financial, accounting or legal advice. You should consult your own tax, legal and financial advisors regarding your particular situation. Neither Suze Orman Media nor Suze Orman accepts any responsibility for any loss, which may arise from accessing or reliance on the information in this podcast and to the fullest extent permitted by law, we exclude all liability for loss or damages, direct or indirect, arising from use of the information. To find the right Credit Union for you, visit https://www.mycreditunion.gov/. Interested in Suze's Must Have Documents? Go to https://shop.suzeorman.com/checkout/cart/index/.