Interest Rates, IRS, Loans, Marriage, Retirement, Roth, Roth IRA, Saving Money, Taxes
December 03, 2020
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On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners selected and read by KT. We hear from Elizabeth, Shirley, Maria, Tom, Joan, Heidi, Delie and Ashlynn.
December 3rd, 2020. Welcome to the women and Money Podcast is well as the men Smart enough to listen. This is Suze and KT. Do you like that I added your name? I did, but I'm more happy that it's the last month of the year. December only one more month to go on. We're out of this 2020. This was the worst word. Worst. Worst. Worst Unbelievable. Right in every possible way, but you always have to have faith. Everything happens for the best. So one day we're gonna understand why everybody had a suffering. Everyone wants to forget 2020. All right, so but I don't want to forget your question. Ok everybody we start the podcast on Thursday with a quiz this everybody inquisition that KT had about a month ago. And I said, Suze, let's start with the first question that everyone needs to ponder. And at the end of our session, you'll give them your answer, but they have to ponder it and think how they would answer it. So the first question I chose out of these great selection today was love. Okay, Ready? Now You like this topic. This is one of her favorite topics. Hi, Suze. You have the best advice so I need to ask you about my love life. Why would you agree with that about you? Your advice on love life? I don't know. Usually, if someone's in love and they want and they meet someone, we say, don't introduce him or her to Suze, Right? Do we say that? Why do we say that? Because you'll squash it in a minute if you don't like something about the way some of the stories? No, just one quick story, I so I won't tell you who. But it was a very famous woman, she still is. And we went to this party and she was so excited to see me. And I came up there and she was standing with a man and she said to me, I'd like you to meet my new boyfriend, and I talked to him for a few seconds and essentially to make a very long story short, what did I do? KT? Oh, my God. I'm not gonna tell anybody when I think about that event, which was very public. Lots of cameras. We were in a very big famous… Anyway, essentially, what I said was I don't think so. This was after she grilled him for one minute, less than 60 seconds. She knew I said everything about his life. I would say, like like if it were me, I would so get rid of him. But anyway, but the truth is, she did get rid of them. Now she's married to somebody with kids, and it's so happy I can't even tell you. See is so great that she listened to me. Okay, go on. Okay, so this is a question about this woman's love life. I'm a divorced 41-year-old woman with a 13 year old son. I've been with the same person for four years now, and there is no engagement or marriage in the picture. Even though I told him when we first met, I did not want a long-term boyfriend. He is the nicest man I ever met, but he omitted some pretty important information. Like the fact he didn't graduate from college. He owed $250,000 in taxes, which has now been settled down to $30,000, and recently he filed for bankruptcy. Now, Suze, my dreams of buying a house with him are shot unless his parents give him money. He's more like another child instead of a partner. I make four times the amount he does, and I'm feeling stuck, stuck because I invested so much time, stuck because our families have interacted and they like each other, stuck because he met my son. And now recently I let him move in with us during Covid, even though I told him I didn't want to move in unless we were married. I don't know what to do. I love him. He has a pure heart, the purest I've ever known. But I'm putting all my needs aside because he is kind. Is love enough Suze? Should I just be happy that he's a good person? I've been through some pretty bad breakup and needs some stability in my life. Please help. So, everyone the quiz answer is should she keep him, or should she say bye bye? So at the end of this podcast, Suze's going to give us her results. Keep him or leave him. Are you going to give what you would do? Do you know what you would do? I can't wait to hear this. I have no doubt of what I would. I have no doubt to do. We really have to wait. Yes. Wait. Okay, so this was this is a fun question. Hi, Suze. I hope you're doing better. Question. I have a BFOCX. When I read this question, everyone I thought to myself, I have a BFF, but I don't have a BFOCX returns are five star, but expenses Air high. 1.95%. Should I sell it or keep it? I can't sell it until it has completed 90 days in my portfolio. Love you, KT and Suze. So this is the question that you you pick to ask you what is a BFOCX? What is it? You're so funny. That is a mutual fund, KT, which happens to be the Berkshire Focus Fund that really focuses on technology stocks. But basically, here's the problem. Even though it's a great fun, it's up 54% this year. It focuses totally on technology. Now I can get really technical on all of you. It has a really high turnover ratio, all of these things. But the thing is, and she says it right here, Elizabeth, it has a 1.95% expense ratio, far too big of an expense ratio for me. So yeah, I would be selling it in 90 days if I could. What would I be buying instead? Because that's the question and one of my favorite exchange traded funds in this area off innovation is the Ark innovation. ETF symbol is ARKK. It's managed by a woman by the name of Kathy Wood who I think is absolutely brilliant. If you had subscribed my women and money app, I did a live thing, and I think I mentioned this fund a while ago and fabulous fun, and its expense ratio is only 0.75%. So if I were you, yeah, 1.25% makes a big difference in terms of return. So yeah, in 90 days I would sell this. And if this is the area that you want to be invested in, go to the ARKK ETF. But expect some volatility everybody, and make sure that you all have a least 10 years or longer. If this is what you want to invest in in terms of a type of fund, that's all about technology. Here's a Here's a short and sweet question. This is great. This is from Shirley. Thank you, Shirley. I'm an immigrant, but already obtained a green card in my investment. Can I put my beneficiary to my niece, who lives in Indonesia? She is not a U S citizen does not have a U. S. Bank account or any U. S. Identification. Can we do that? Surely I have a lot of friends in Indonesia and I just love that Bali Coffe. Jesus, Bali Coffee. Everybody Okay? Alright, everyone. You've asked for KT, I have no problem. So I don't know if it's a savings account, a retirement account, whatever. But you Absolutely. Let's just say it was a retirement account and she was putting money into a retirement account. And she wants to leave. Somebody who is not a citizen lives in a foreign country as her beneficiary. Can she do it? She absolutely can, however, because it's a retirement account and let's just assume that it is. Then at least 30% of what's in there is going to be withheld for taxes. So you just have to know this. But you can absolutely leave anybody you want, no matter where they are as a beneficiary of your money, there just might be some tax consequences to them for doing so. All right, go on. Good. Thanks, Suze. All right. This is Hello, Suze and company, the shows have been really fun lately. Thanks to KT. He said, Do you have an opinion on insurance umbrella policies? I have sold my home and now rent. So not 100% sure if I really need that part of my insurance policy anymore. The bulk of my money is in a 401 K, outside of the 401 K is about 200,000 in stocks and cash. The policy is for a million dollars and cost me about $100 per year. What should she do Maria! An umbrella policy. I'm sure KT doesn't know what an umbrella policy is. Right? All right, all right. So I'm So here's the thing. You could only have an umbrella policy if you already have insurance coverage for something, and it's in addition to what you're already covered for, like your car insurance, your home insurance, whatever it may be. Normally you never carry an umbrella policy that's more than your net worth. So you just have to decide. Are you in a profession? Do you do things that could somehow make it so somebody sues you? Up to you. Listen, if you can afford it, and it makes you feel comfortable. Okay, I'm not somebody who absolutely loves umbrella policies. Suze finally questioned from a man, a man smart enough to. Listen, it's that I have appreciated your advice ever since you released your first PBS special. Wow, Tom, Tom. Tom's been listening a long time to you, Suze. So here's this question. I understand that Airbnb and the code is ABNB will launch its AIPO in early December this month, and I wanted to jump in. I have a personal Roth and an employer, Roth IRA at Fidelity and have set aside cash with the specific purpose in mind. Question. How is buying stock in an IPO different? Any tips on buying an IPO. There you go, Suze. Always thank and he's thank you so much for for, um, all of your great advice and passing on blessing. Right. So, Tom, here's the thing. Everybody wishes that they could get into an IPO. Which Stands for what? KT. Oh, um initial public offering. And I knew that they're going to give me a minute. All right, there you go. But but seriously, and there's only limited number of shares that comes out with that initial public offering price. Now, I'd have to do an entire Suze school to get you to really understand the difference between something trading on the open market and the IPO price on lee, a limited number of people get in on the IPO price. You have to have an incredible relationship with the brokerage firm that's bringing it public to give you some of those shares, so chances are you're not going to get it on the IPO price. So the IPO price, maybe 12. And when it comes to where you could buy it could already be at 100. So you just have to decide. Do you really like Airbnb? Do you like it for the long run? And if you do, do you want to buy it? And whether you buy it on the day it comes out or a month later or whatever, it may be that something that you're gonna have to decide. But I can tell you, I doubt highly that you're going to get any IPO stock from Airbnb. What if he knows someone at Airbnb and they offer him such should he buy it if you if you know someone get in IPO Price. Well, he was like, Hey would be then part of the friends and family and he could get it that way. But it's really gonna be a stock that is in great great great demand. Probably be will be a fabulous stock, but it could open up really, really high and then possibly pull back. So, you know, Facebook came out and went all the way up and then came all the way down. So you just have to decide. Do you like the stock period? Whether you want to get it at the IPO or not. Okay, Suze, next question is from Joan. I have my 12 month plus emergency cash. I also have my retirement accounts in about $300,000. But I won't be retiring for about nine months and will collect Social Security at full retirement, 66 and 4 months. I was thinking of investing in some home lots in the areas that are growing in my area of North Florida. Please let me know your thoughts as to whether this is a good time to do this. Joan. Really? Seriously, I need you to listen to me. No, I do not want you to do this. And the reason that I don't want you to do this is empty lots are some of the most speculative investments you could ever make. You're going to be retiring soon, and all you have is the $300,000 that's in a retirement account and your emergency fund. I need that $300,000 to carry you through all the way. Because Social Security is not going to be enough for you to live on, so, no, you cannot take that money and invest it. And by the way, if you read the ultimate retirement guide for 50 plus my latest book, you would see that it says that when you go into retirement, I want you to have a least three years of emergency money in cash. So no, you cannot do that. You are denied. Okay, next question. Suze, this next question is from Heidi, Travis, Heidi. Maybe you're related to me. I don't know. My KT you might not know is Kathy Travis. Hi, Suze. I very much appreciated your tutorial about the Dow Jones. I'm wondering if others, maybe even KT, like myself, do not know what the numbers 1000, 10,000, 20,000 and 30,000 represent, as I have no idea. I only know that it's something positive. I can certainly look it up, but I thought it might be helpful for you to explain to your listeners. Oh, KT, you're really asking some difficult questions today. But let me see if I can make this a simple is possible. And I'll know everybody if I'm succeeding based on what KT's face looks like. Listen, The Dow Jones industrial average is made up of 30 stocks, so there are 30 stocks that are tracked and those 30 stocks are an indicator if the market is going up or if the market is going down now. What makes the Dow Jones industrial average different than others is that it is a price weighted index, which means the price that every stock is at whether it's a large company or a small company carries the exact same weight. Years ago, when the Dow Jones first came about, they would take the price of the stocks and they were divided by 30. And that would give you the Dow Jones industrial average. Well, they can't really do that anymore because of how fast everything is moving and so on and so forth. So they take the index, usually at about 12th intervals, and they came up with this divisor and whatever, and it comes out to be a number. What do those numbers mean? It means what the value of those stocks are at when they're quoting him on the Dow Jones Industrial index. Now, why is it different than 1000. 5000, 10,000, 50,000. It's because the stocks in the index and they changed by the way they've changed them over the years. Those stocks themselves are growing in value, So when those stocks are going up, the index than is higher and it goes higher and higher, it can also go lower. So remember back in 2000 and eight, the Dow Jones index went all the way down to 6000 and something. That's because all the stocks the 30 stocks that the index is made up of, also went down. So depending on the price that the stocks in the index happened to be at, that's what determines the Dow Jones industrial index. And really, you just have to look at it. And if it's going up, you know the market. The broad market is doing well, and if it's going down, it means it's not. But it will go up and down and up and down. It could go significantly down again, or it can continue to go up. But you should just know what is the price of the index today. Whatever the price of the index's today and you should look it up, I could tell you, but look it up. And this, then, is your starting point. If you see that it's going up in, the markets are going up. If it's going down, the markets are going down if you're invested in the markets. Alright, alright, KT I’m wrapping this up. If you're invested within your 401 K or retirement accounts or whatever, that's an indicator if you are making money or losing money, but not necessarily because maybe your stock is going up when the other stocks are going down. Okay, KT. Next question. Okay, Here you go, Suze. I would love to help my son pay off a $15,000 credit card debt at 24%. That was used to help his family when his wife became ill. He's been faithfully paying the card without missing any payment, but can't seem to get ahead. He's not aware that I'm considering this. I would take out a personal loan at 3 to 6% for 48 months. He would be making the payment, even though I know I would be responsible should anything happen. And then this is where she explained Suze she said. My father helped me in a similar situation when I was in my thirties. I'm currently 62. I was forever grateful and I paid the $6000 loan. I have 400,000 in a 401 k, 100,000 in saving, a fixed monthly income off 4,480 which are to pensions and spousal survivor benefits. Monthly payments of $3288 no debt and I own my own home outright. Thanks, Suze. Listening to you faithfully Deli. Deli, I want you to listen to me. I want you to help him. But I want you to help him in the most intelligent way for you. And it makes no sense when you have $100,000 in savings, no debt, your pensions air covering your expenses every month for you, therefore, to take out a loan at an interest rate that he pays, I would much rather see you take out $15,000 from your savings account, which is probably making absolutely no interest whatsoever versus paying interest on a loan for that. So therefore, that's how I want you to do it. However, do we want to first have a conversation with him to see? Can he refinance that loan at a lower interest rate? Because what concerns me is if he can't qualify for a lower interest rate loan, that does mean that he's been irresponsible with money. Maybe he's been responsible for paying this loan back. But if he has a low FICO score than something else is going on, so you just have to be prepared that even though he is currently paying that money back, that something may happen and he might not be able to because of the unemployment, covid and everything else that's on. But if you want to help him, I don't have a problem with you doing so. But from cash, not alone. All right, KT. Okay, Suze. Last question. Then we go to our quiz. So this is from Ashlyn. I'm a sophomore in college. Should I open a brokerage account or Roth IRA as a means to save for a down payment on a home in the next 5 to 7 years, I said, I guess she wants to buy one in the next 5 to 7 years. I currently work part time, so I can only invest a small amount each month. Thank you Suze. Ashlyn. So, number one if you're going to buy a home, you have to put at least 20% down. Now, normally, I would tell you just save that money outside of a retirement account. That's the best way to do it. However, with a Roth IRA. You can take out any money that you originally put in without any taxes or penalties whatsoever. Plus an additional amount for your first home, Just in case you don't have enough money to buy a home. I don't want you to miss out on these years of you funding a Roth IRA because you could only fund a Roth IRA up to $6000 a year. So I don't want you to miss out on that, so I would be saving it within a Roth IRA. But I need you to be really realistic, because maybe if you could just save a little bit of money, you're better off saving for your future and your retirement, and not necessarily for a down payment on a home. Okay, everyone, we're at the end of our podcast today and we're going to go to our quiz here. Suze's take on the love or money question. Now, for those of you who maybe don't remember that question, go back to the beginning of the podcast and listen to it again. Think about how you would answer it. And here's how I am answering it. Adda I need you to listen to me, you know, on the podcast. I always have a saying that people never ask a question that they don't know the answer to, especially when it comes to the topic of love. And I think you know the answer to this question. Let me tell you what seriously concerns me. Four times. Four times in this email, you say that you were stuck right that I make four times the amount of money that he does. And I'm feeling stuck stuck because I invested so much stuck because of our families have interacted in like each other stuck because, uh, stuck. You don't get stuck in a relationship. You are in a relationship because you wanna be there. No, stuck is not the word I would ever use to say how I feel about being with KT, except when it comes to the Ask Suze anything segments. But that is besides the point. No, but really everybody at, uh you've got to think about that. But here is the one line that really bothered me. You said you wrote this. He's more like another child instead of a partner. You don't need another child. You already have a 13-year-old son. You've already been divorced once. You're only, 41 years of age. You need to move on. You know, you need to move on. So the question I'm asking back at you is this one. If you could turn back the hands of time and not be in a relationship with him having not met him, would you wish that you were exactly where you are right now with him. And I get it. I get it that you love him. He has a pure heart. He has all that. But you say in here, am I putting all of my needs aside because he is kind? I haven't put one of my needs aside. In fact, KT fulfills needs that I don't even know I had I've never put anything aside to be with KT. And I know while I shouldn't say that since she's sitting here, But I know that she hasn't put anything aside to be with me. And if anything, we enhance each other. We do not diminish one another. We don't have any secrets from each other. We don't all of a sudden say, KT, I've got to tell you this. I owe $250,000 to the IRS and I have to move in with you because I don't have any money. Wrong, wrong, wrong. I agree with you. So you ask. Should I be happy that he's a good person? No. Be happy for him that he is a good person, but he's not the right person for you, in my personal opinion. Agree. There we go. Alright. Everybody agree on that one. Did you answer it that way? Or did you answer it? Yeah, you should stay. Don't judge people because of money. That's not what I was judging this on everybody. I was judging it on the words that Adda chose when she wrote in this email to the email@example.com. That's where you need to write in. And possibly one of your questions will be chosen to be answered on this podcast. See everybody on Sunday wanna say bye, KT? Yeah. Everybody have a great great week ahead. See you this weekend. And remember, everybody. You stay safe.
Credit & Debt, Saving, Investing, Retirement