January 26, 2023
Listen to Podcast Episode:
On this episode, Suze answers your questions about dividend paying stocks, managed broker accounts, I Bond interest and more!
Suze: January 26th. What year is it KT?
KT: 2023 Suze!
Suze: That's my girl. Welcome everybody to the...
KT: Women and Money podcast- Ask Suze and KT Anything.
Suze: There you go. So how excited...
KT: You're busy girl. You are so busy.
Suze: So this morning after this podcast, I'm doing CNN so you can tune in and see me there. I'm also going to be on Morning Joe with Mika. Later this afternoon
Suze: I think I'm pre taping a podcast with Keke Palmer. Yesterday, I was on CNBC.
KT: She's busy, busy, busy...
Suze: Busy doing all of these things. But I love how much all of you are loving unstoppable. You know, KT, somebody wrote in and they said, Suze, KT interrupted you. You what else is new everybody? You were about
Suze: right to tell us what Colo said. You know, because Colo said a Porsche? Is that... because I was telling him the words to unstoppable. And Colo was like a Porsche and I was like, yeah, a car, the Porsche and then KT, whatever. Alright. And you wanted to know what else did Colo say? So, here's what Colo wanted to know. I thought fascinating because Colo does listen to every one of these podcasts.
Suze: So he said, so does that mean like I have to be powerful. Like a Porsche and I have to just go for it. So when I'm afraid to go for something, you want me not to stop myself not to put the brakes on and just go for it and go for it with everything I have and all the power I have, like a powerful Porsche?
Suze: And I said, yeah, that's what I think Sia meant by that. But Colo it did not mean that you go for it, no matter what, as long as you know what you're going for is something that's safe, is something that you wanted to do is something that you have passion about. Something that you're not going to get hurt
Suze: in it, whatever it is, it means you go for the things that you want to go for in your life, with all the power that you have within you as if you are a powerful machine and you can do it.
Suze: And he went,
Suze: oh I'm going to do that. And I said with what? And he said with asking you for a raise and I won't get out of here right now.
KT: But he's been singing the song, everybody, I, you know Colo does a lot of landscaping. And
KT: I was coming down the front drive and I heard him singing unstoppable. It was hysterical.
KT: So let's move on, KT, what do you got for me?
KT: Okay, this is from Diane. Hi KT and Suze, my husband and I are retirees.
KT: My question for you is if a stock has been providing dividends in the past and has stopped giving dividends, do I sell the stock?
Suze: Well, here's the thing, if a stock has stopped giving dividends,
Suze: in most cases, in my opinion, something has gone wrong, they don't have enough cash flow or something. So
Suze: you have to ask yourself the question Diane, why did you buy the stock? Like I've been talking a lot about energy stocks here on the Women and Money podcast, but I've told everybody buy it for the dividend, the dividend. If they lowered their dividend or they stopped paying the dividend, I probably would say to people that's it, It's over. If you purchase the stock in order to get a dividend and they've stopped paying the dividend,
Suze: I would sell the stock depending on you do you have it in a retirement account do owe taxes on it. I would take all that into consideration but I don't think it's ever a good sign if a stock stops paying a dividend, number one and number two given the state of the market right now and I'll go into that more on Sunday school, Suze School.
Suze: I would only really feel comfortable if I was retiree owning stocks that paid a dividend. KT, what do you got? What's next?
KT: Ok next is from Pam.
KT: She said Suze, well I have never been so motivated since. I can remember. I love the new theme song so much more than the other great choice. You're speaking was incredible. I just maxed out my new Roth, I opened for 2023
KT: and bought a six month Treasury. My advisor told me to open a Roth to make the money tax free. Buying this Treasury is the opposite of making money. He has me questioning everything. I was planning to purchase another one and I just stopped
KT: because I'm just confused. He wanted me to do a managed brokerage account like I have for the I. R. A. Thanks for the podcast. It was incredible. Okay. So what should Pam do?
Suze: So Pam, Listen to me.
Suze: A broker does not make any money whatsoever. Really. If in fact you buy a Treasury, it doesn't matter if you put a million dollars in it or $1000 in it.
Suze: There's really no commission involved. So most financial advisors make their living by managing your money. And when he said he wanted you to do a managed brokerage account that says he gets a management fee.
Suze: You were on the right path. Now would I only be buying at this point a three month treasury because you want to make sure that the money matures before June. So we see exactly what's going to happen with the debt ceiling.
Suze: I do not have a problem with that whatsoever. So if I were you, I would just buy another three month Treasury. If you want to buy another Treasury. After that three month Treasury matures. Just wait a little and let's see what happens in June or July with the government.
KT: All right, next question...
KT: this is from Daphne. She said first, she loves your pictures. So Suze's posting all kinds of things on the wall. And if you haven't been there, everybody, go check it out.
Suze: And the wall is on. everybody, the Women and Money app that you can download at Apple Apps or Google Play. And that's where
Suze: I give updates that I don't quite give all the time on the podcast. Like just the other day I gave an update about the Vicks and all of you should know what the Vicks is. If not go back and listen to past podcast and what it's indicating right now. So you should all be participating in that
Suze: because that's where I do a lot of things that I don't do anywhere else.
KT: So then Daphne goes on to say, I followed your advice with I bonds last year and my husband has some gifts to start transferring to me for the next three years each $10,000. My question is I love this question. When he transfers the
KT: 10,000 gift, what happens to the interested earn?
Suze: It goes right along with you girlfriend.
KT: I think it's funny Daphne said can he only transfer the 10,000? Right? She wants that interest.
Suze: You can only transfer one $10,000 a year plus the interest that it earned. So as long as it's in his name
Suze: where he gifted it to you. But he's keeping it in his gift box for you, it continues to earn interest and grow and grow and grow. And then when he gives it to you, everything transfers over to you. The total value of it and just continues now in your name. When you redeem it, you're the one who's going to have to pay the taxes on it.
KT: Okay. Next question is from Debbie, Suze. Hi Suze. Is there a way to buy a noncompetitive Treasury bill other than by auction?
Suze: Yes, you can.
KT: I never get the daily published rate when I buy them through Fidelity.
Suze: Now, what you can do if you want is all Treasury bills, Notes and bonds are sold on the secondary market.
Suze: So at your brokerage firm asked to speak to a broker and that you want to buy a Treasury on the secondary market. It's just that simple because then you know exactly the interest rate that you're going to get. It's not up to see what happens during the auction. And truthfully I only buy Treasuries on the secondary market. Alright, alright.
KT: This is from Jessica. Hi Suze and KT, my husband and I are starting to file our taxes as married, filing jointly. But we found out that we financially make $400 over the threshold to contribute to our Roth IRAs.
KT: Now we're stumped and confused on what we need to do with what we have already contributed to our accounts. We both haven't fully maxed out the accounts, but we're not sure if that will be penalized for just contributing to the accounts.
Suze: You know, you actually have until October 15 of the following year to withdraw any money that you put into a Roth if you do not qualify for it
Suze: income wise. $400 is so close. If in fact you're over the limit then you just withdraw whatever it is that you put in plus any interest that it earned. You'll pay taxes on the interest that it earned. And it's just that simple. Right? And in fact the truth of the matter is you may not have to pay taxes at all because maybe you invested it in a stock and the stock went down.
Suze: So if you just then take out that amount of money or you'll take out less because you don't have it in there anymore and you'll be fine. I would not be worrying about it if I were you.
Suze: The other thing Jessica that you could do if you want to qualify for the Roth if in fact you're working and your company offers you a 401(k) or your husband's company offers him a 401(k), You could fund the traditional 401(k).
Suze: Get a write off to reduce your income by that $400 and then be able to qualify for that Roth. So that's something else that you can do as well.
KT: Next question is from Joette It's a nice name, isn't it, Joette.
KT: So morning Suze and KT I missed by one day getting into Caterpillar stock for the dividend. Is it still worth it for me to buy Caterpillar anyway without the dividend? Or does this mean I'm locked out of the dividend forever going forward? Or am I only locked out for this pay period? I'm still on my learning curve with individual stocks.
KT: This is a great question. So I don't know the answer to this. Should have been my quizzie.
Suze: Ok, Joette, because KT loves your name. Here's the thing. When you buy an individual stock that pays a dividend,
Suze: you have to own that stock by a specific date to get the dividend for that quarter. Remember stocks pay dividends in most cases every three months. So Caterpillar pays a dollar 20 a share
Suze: And therefore it pays 30 cents a share every three months. Now it's X dividend date was January 18. So you obviously missed that date. If you had purchased it prior to that date then you would have qualified for the dividend. However,
Suze: normally what happens is that after the dividend date it's called the stock is trading X dividend without the dividend. And when they pay out a dividend they usually reduce the price of the stock by the amount of the dividend. So I'm sure on that date, maybe Caterpillar went down 30 cents a share that day. Now with Caterpillar
Suze: at the current price of what it's at, which is about $258 a share. It's almost at its year high, which is 260 a share. Are you buying the stock just for the dividend because that's only a 1.86% dividend or are you buying the stock for the growth of the company?
Suze: And with as little of a yield as 1.86, I would hope that you're also buying the stock because you think it's a good quality stock that continues to grow. So if you were to buy it now, when it pays its next dividend probably and around April you will get that 30 cents at that time per share or whatever the dividend is at that time and for as long as you own it every three months from now
Suze: however you have to decide if you're going to buy caterpillar or not. That decision is up to you. All right, KT, you know what time it is right now?
Suze: Are you going to be Unstoppable with this quizzie? And everyone else listening, do you have a new attitude this year about quizzies?
Suze: Alright everybody. This is where I ask KT a question that you wrote in and it's for you as well as her because the object of the quizzie is that you get to a point in your life where you can answer questions on your own.
Suze: This one is from Deanna and I chose it because she says quick quizzie. I love that.
KT: Me too. I like that Deanna.
Suze: So Deanna, since you created a quizzie
Suze: I'm gonna do it for you. Okay KT a quick quizzie read this fast, think about it faster and give me your best answer in record time. Ready go. I need a furnace and an A. C. For my condo.
Suze: The need is $13,000. Should I a take it from my Roth? I. R. A. I have $70,000 and another 520,000 in a 401(k). And I am 61. Should I borrow it at 10.5% for a year or two? Or should I borrow from the 401(k). I can't figure it out. Can you?
KT: The Roth?
Suze: You didn't even think about it.
KT: You said record time go fast. So those were the three choices. Roth, 401(k), or a bank loan.
KT: Right Roth. Right.
Suze: Is that what all of you decided you really think she should take it from her Roth versus alone from a 401(k)? Or borrowing it at 10.5% for a year or two?
Suze: Ding ding ding ding ding ding.
KT: That's why Roths are great everybody. Tell them why that's the advantage.
Suze: So Deanna, the reason that I would tell you to take it from a Roth without even knowing everything about you is that obviously at the age of 61 you're no longer subjected to any of the five year rules for the 10% penalty doesn't matter.
Suze: I'm sure that you originally put in more than $13,000 over all the years that you've had it. So if you take out 13,000 you absolutely are not going to pay any taxes on it whatsoever.
Suze: And I'm sure no matter what, you wouldn't have had to pay any taxes at all if you owned it for more than five years. So out of all of this I would take it from the Roth IRA it is the cheapest thing to do. Number one. Again, I'm not liking the stock market necessarily for this quarter and maybe next quarter.
Suze: I don't want you to borrow from your 401(k). At all. That makes no sense. And 10.5%. I don't think so. So that is the answer to your quick quizzie. All right, KT, I have to go ready to do tv. I know we have a show to do so you know what that means? We have to have time to put your makeup on. Do you all know that KT...
KT: Actually, I've been doing Suze's makeup for at least 15 years now, maybe more. And I learned from watching incredibly talented makeup artists, most of them in New york do her makeup over and over again every day.
Suze: You know what else KT has to do,
Suze: Tell them.
KT: Well, okay, I'll share this with all of you. Suze wears contacts when she's on tv and I put them in and out. I put them in her eye and I take them out of her eye. That's the most difficult part of getting ready. She can't do it herself. She's tried over and over again, she's in front of the mirror,
KT: she went through boxes of contacts trying to do it and she just, she can't do it. So I do it.
Suze: And I'll tell you just another quick story which is so once I had to go to Washington D. C to give a talk...
KT: Oh my goodness, I was really, really sick. This was years ago.
Suze: And actually when I got there I had gotten whatever she got and I had like this 103 fever but we had the flu that was but I couldn't travel with. So the makeup artist from CNBC went with me, she did my makeup and I said, okay, Laura put in my contacts and she said, I can't put in your contacts. I said Laura, how am I gonna see? Said I said put in my contacts
Suze: and she tried and she tried, I said never mind. I put on my glasses and I wore my glasses to give that talk.
KT: She poked your eye a million million times.
Suze: But alright everybody, so until Sunday when I am going to do a Suze school on God knows what, how do we end every podcast now, KT,
Suze: we end it with the saying that all of us are to repeat every morning when we wake up and it is this today, wherever we go, we will create a peaceful, joyful and loving world. Now you stay safe and don't ever stop yourself from being who you are. Bye! Everybody see you soon.
Take advantage of the Ultimate Opportunity Savings Account with Alliant Credit Union at: https://bit.ly/3vEUTZW
Get Suze’s special offers for podcast listeners at suzeorman.com/offer
Join Suze’s Women & Money Community for FREE and ASK SUZE your questions which may just end up on her podcast!
To ask Suze a question, download by following one of these links:
CLICK HERE FOR APPLE: https://apple.co/2KcAHbH
CLICK HERE FOR GOOGLE PLAY: https://bit.ly/3curfMI