Podcast Episode - Ask Suze (and KT) Anything

Must Have Documents, Roth, Savings Account, Social Security, Stocks, Trust

September 16, 2021

Listen to Podcast Episode:

On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Simone, Susan, Estelle, Sean, Mary, Nick, Tonya, Terri and Rita selected and read by KT.

Simone - What is your advise on donor-advised funds?

Susan - Can I use my husband's Must Have Documents code to make my own documents?

Estelle - What is an SMA?

Sean - How should I convince my employer to offer a Roth plan?

Mary - Will I be able to rent my farmland once I reach retirement age without penalties to my social security?

Nick - Why did Alliant not allow my family to make an account based on qualifications?

Tanya - How do I know which stocks to sell so I can buy a new car?

Terry - When do I tell my son about his trust?

Rita - What is your advice on starting a joint home care agency venture with friends or a partner?

Cynthia/Quizzie - My wife's stock has doubled. Should she sell it all or just what she put in orginally?

Podcast Transcript:

September 16th 2021. This is Ask Suze and KT Anything, Good morning Suze, morning KT. We have to, we have to really get into this show because in a few hours you're going to be on the Today show. I'm going to be on live so I'm not going to fool around everybody. I'm gonna get right to. I’m on with Hoda and Jenna with a “Can I Afford It” segment and I'm always so interested to see am I going to be able to fool Hoda and Jenna? So, if you're around tune in 10 o'clock on Hoda and Jenna on NBC. All right. KT. All right, Suze. First question is from Simone. Hi Susan and KT. I like that name. I love that name. Simone. If we had a child, what would you name it? First of all, it wouldn't be in it. Right. It's a boy or girl. Little boy, Roth. All right. All right. Let's do it. So, hi KT and Suze. I'm one of your fans for many years and I love your podcast. Both Suze school and ask Suze and KT. I wanted to ask about donor advised funds. Didn't I just talk about those, you did like last week. But anyway, she wants to know more about it. She said I want to open an account with extra money I earned from my self-employment activities and would like to know if it's a good choice. So, Simone, here's the thing for those of you who don't know about donor advised funds Just go back one or 2 podcasts and I talked about them but Simone donor advised funds are not there for you to put cash into them for you to give away. They are there in case you happen to have some asset, usually a security, a stock, that has gone up tremendously in value and you don't want to have to cash it out and pay income tax on it. So, you donate it to a donor advised fund that you control and at the same time you get a tax write off for whatever that amount of money is. So, donating extra money cash to a donor-advised fund makes absolutely no sense whatsoever. Next my dearest KT. Okay this was as easy and KT still has her flowers from our anniversary. They're beautiful, huge, huge. Okay, this is from Susan my husband ordered the Must Have Documents which he's filling out and we both read your ultimate retirement guide book. I'm currently listening to your podcast which I love. And then Susan said, I believe one of the podcasts had mentioned the must have document account can be shared with family members. So, Susan's question is am I able to use my husband's must have documents to create my own. Well Susan, it depends if you consider your husband a family member or not. Just joking Susan. Listen everybody, if you order they must have documents and you have them by the way. The way you order them is you go to suzeorman.com/offer and you get them you will get an activation code. You can share that activation code with really as many people as you want. I think it's up to nine, and when they activate, they create their own account with their own password. So, therefore what your husband has created you can't get into his stuff, he can't get into your stuff but you can all use the same activation code, now you know. All right by the way I just have to say this besides being on the today show today at 10 o'clock. This weekend on HSN at six o'clock on Saturday the 18th, 3 o'clock on Sunday the 19th. You've got to tune in because it's a great offer that is going to be on HSN, and you might want to take advantage of it. Okay she's on tv all week everyone, have fun with it. helped my hair last oh it's gonna it's beautiful, looks great. She got it cut a little bit of color. Looks really fun. All right so next question is from Estelle. I married and 50 with two teens ,my company was recently bought and I opted to take 250,000 In my 401K, and roll it over. The advisor recommends a managed portfolio and to put it in an SMA. What is an SMA, and how does it work? This is my dear Estelle, it is the latest thing that keeps happening with everybody. I think a lot of these brokerage firms, discount brokerage firms are trying to compete with ETFs, exchange traded funds, and they're trying to find a way to generate more income for them. Why? Because a lot of these discount brokerage firms are now allowing you to buy individual stocks for no commission, slices of stock for no commissions. And it's very difficult for them to generate revenue. So, they came up with this thing called SMA which stands for, oh this should have been your quizzie. KT, what does SMA stand for? I don't know. Most people don't. So, it stands for a separately managed account. And what financial advisors are doing is they are saying to you rather than putting all of this money. In your case, $250,000 into exchange traded funds and things like that, why not let me manage your account for you and buy individual stocks for you. And the fee will be very little they tell you the fee is approximately 0.35%. And then they tell you that they can customize it for you, if you have some areas of investing you want to avoid and this and that and they have this whole spiel in my opinion as to why you should do it. But then on top of that 0.35% fee, there's a management fee that the advisor usually gets of approximately 1%. So, if you go the SMA Route versus exchange traded funds, you are going to be paying a whole lot more in my opinion, in most cases, not all, on fees. And are you going to get that much more for it? Also, what's interesting is these SMA accounts KT, usually have large minimums, like the minimum is $100,000 or $250,000, it's a lot of money. So, when you go from a 401K, and you do an IRA rollover with a discount brokerage firm, and you have $100 or $250,000 or more. This is something that they're offering you as an alternative and you're all saying yes why not? However, you might be really if you just want it to be simple, you might want to just stick to index exchange traded funds where the fees are like nil .04%. A whole lot different. So, look, you can look this all up, but I'm not a fan of SMAs and one of the reasons that I'm not a fan is this, we do not know how good the advisor is that you're dealing with. They can pick these individual stocks for you? How do you know the advisers track record, how do you know if they can do better than an index fund? Most managers don't do better than an index fund. So, bottom line is, I don't think so. Okay, next KT. That's a Good enough reason for me. So, this is from Sean, I'm a high school teacher and currently have a 403B through my employer. When I asked them if I could sign up for a Roth 403B, they said they did not provide this as an option but would look into it. So, Sean simply asking is there something he can do, obviously, to convince employer to offer this fantastic opportunity or something else to make it all happen? You know Sean until you can convince your human resource people that they absolutely, there should not be one corporation out there, not one that has employees that do not offer a Roth alternative: a Roth 401K, a Roth 403B, a Roth TSP, it should be mandatory, but until your employer decides to do that remember, you can absolutely do a Roth IRA yourself, if you qualify for it, income wise and that would probably be even better than a Roth 403B. Especially if your employer does not match if your employer matches, which means you put in a dollar they give you 50 cents or so they match your contribution, usually up to 6% of your base pay. Until they give you a Roth 403B option, just contribute up to the point of the match and then everything above that put into a Roth IRA on your own if you can. Okay, next we're burning through. These are going, next question is from Mary, I love this. Um This is a really long question, but I'm just going to share with you the gist of what she needs to know. But I'm quite proud of everything that Mary's done. So, Mary is 60 years old, she's divorced, she was just recently divorced in 2019 at the age of 58, after 36 years of marriage. Wait, wait. Can you read that again? I want all, especially everybody out there listening to listen to this closely. Go, 0n. I turned 60 in April of this year and was divorced in May of 2019 at the age of 58, after 36 years of marriage. All right, everybody it happens, it happens it happens just think about that. Go on, and to just make this a more interesting story. So, Mary obviously is from farmland. She's from the Heartland of America. She said I moved off the farm to the next day closer to where my daughter lives. I'm curious what your opinion is, Suze on how I should be managing my money. I'm very conservative when it comes to investing and then she goes on to say I if I understand correctly, I can continue to rent the farmland once I reach retirement age, which is 67 with no penalties with social security, is that correct? Well, the truth of the matter Mary is once you reach full social security age, which depending, you know when you were born, it's either 66 and a few months or 67 right now. But let's just say your full social security age is 67. Once you reach full social security age, you can make any amount of money you want. And it doesn't reduce your Social Security at all. So, you have to remember that if you took Social Security when you were younger, let's say you took it at 62 let's just say that's true. Normally you're only allowed to make a specific sum of money and if you make over that, they reduce your Social security $1 for every $3, whatever it is over that amount of money. In that case, your income would not count towards that penalty. But that's not true here. What you have to be very clear about. Once you start taking social security and let's say you take it at 67, the rental income from that farmland or from anything is going to count towards whether your Social Security is going to be taxable or not. So as a woman now that is filing single, if you make between 25 to $34,000 a year and that rental income will count towards that. It's at 50,000 50% of your social security is going to be taxable, once you make over $34,000, which you are. 85% of whatever your social security check will be will be taxable to you. So, you just have to understand the difference between when your social security check is taxed, when you're younger and you're claiming Social Security, what income offsets your Social Security and what income does not? Did I confuse everybody there? No, I think that was pretty clear. Oh no. All right. Here you go. This next one's from Nick. My mom watched your TV show for years and now listens to your podcast. My mom and I each wanted to open the Ultimate Savings account with Alliant credit union. My mom is a teacher but she was not able to because she didn't fit one of their qualifications. I know you have to set Nick straight. So, then Nick says I opened an account but we want to make sure that I opened the right one you talk about. We're both very excited and also want to be entered into the sweepstakes. So, let's help Nick understand what that there are no restrictions, first of all. So first of all, as KT just said, Nick, you're right, normally when you want to open an account at a credit union, you have to become a member of that credit union and many credit unions have certain restrictions, you can only be a member if you're this or that. And it's true, when you go to myalliant.com, which is where all of you would go to open up your Ultimate Opportunity Savings account with Alliant Credit Union. You will see that there are certain qualifications that allow you to become a member. However, if you don't meet any of those qualifications, it does not matter, because then you become a member of foster to success and you become a member of that. It costs $5 which Alliant pays, so it does not cost you one penny to become a member of that. And then you qualify for an Alliant Credit union account. What is important however, if you want the ultimate opportunity savings account, you have got to open it up through myalliant.com. Do not go to Alliant directly. You have got to go through my link in order to do so and then you're automatically qualify. Now, this is something all of you should know talking about the sweepstakes because I forgot to say anything about it, to tell you the truth. And it is this, if you already were a member of the Alliant credit union and you opened up the Ultimate Opportunity savings account and you funded it prior to September 13, you automatically were entered for two entries. So, I have an account let's just say, that's true. My name now is entered twice for the sweepstakes. If you open up an account from September 13 all the way through October 13, you've opened it and you have funded it in the month that you opened it, then you get qualified. But just once to win the sweepstakes. However, listen closely because this involves everybody. Once you are a member of Alliant Credit Union with the ultimate opportunity savings account, they have your email address. They are going to be sending you a link directly to your email address. Just simply put down five people that you could refer to open up and fund an Alliant Credit Union Ultimate opportunity savings account and you can earn five more entries into the sweepstakes. That will give you at least 6 to 7 entries to win up to $10,000 1st place prize, $5,000 2nd place prize and 5 $1000 3rd place prizes. So, you should all do that and for no other reason you're going to be earning .55%. And if you do $100 a month, every month for 12 consecutive months you earn $100. So, I think it's the best thing going in the entire United States. All right, next question is from Tanya. Hi Suze. My car died after a bad trip to the wrong auto shop. Therefore, I had to buy a new car, I bought a three-year-old with a warranty, but had to sell my stocks and then Tanya goes on to say that she uses Vanguard but did not know how to choose which stocks to sell, so that she had money to buy another car. So, at some point she made a decision to sell the oldest stocks first. I know., I know. I know Suze. So basically, she said I don't know how to tell what is the best or cost or the return. I did not understand. Suze help people understand how to make these decisions. So, it's very simple. You sell the stocks if you have to sell stocks that have the least capital gains or tax ramifications if you sell it. Usually if you sell stocks that you've held the longest, obviously it's over one year and one day. So, you pay capital gains tax on it. But still those stocks probably are stocks that you have the largest gain overall, because if you help them the longest and they're good quality stocks, you probably have made more money in those stocks than in stocks that maybe you bought a year ago or two years ago. But when looking at a stock portfolio, when you need to sell stocks, everybody, sell the stocks that either are at a loss right now, so, you can take a loss off of your income taxes or stocks that have the least gains right now, so, your income tax implications will be nil. So, this is from Terry. Dear Suze, thanks for all your great advice over the years, here's our situation. We have not disclosed to our 24-year-old son that he has a substantial trust that's been available to him since he turned 18. Probably a wise decision. And then mom goes on to give us the backstory. He's a great kid. He's Bar Mitzvahed college graduate was accepted to law school. But then the pandemic hit and he deferred a year which we supported instead of taking alone and enduring his first year of law school on zoom. So, he cut, we're going to just cut to a year later, basically he's living in their mother-in-law attached department rent free. He now wants to look for his own apartment with a friend. He's in search of a job with a salary. He currently works at an ice cream shop. Again, we support his decision. So, the conflict is do they tell them about the Trust or do we wait till he's gained a little momentum on his own? That's the conflict Terry, you know how I always say it? I say this over and over again on the podcast. You never ask a question. You don't know the answer to when it's a question, especially like this. You know, you need to wait. You may support him that he's working in an ice cream shop, but somehow, I just don't think so. I don't think so. So, therefore just let him do whatever he's doing. And when he does go back to school, if he goes, if he goes back to school, let's see what he does. But at this point he's still 24 years old and I know that a lot of 20-year-olds out there think, oh my god, I have it together. I'm responsible. I should know what I have and everything like that. And I have seen so many 24-year-old, 30-year-olds, and 40-year-olds blow through a million dollars or $3 million. One in particular blew through a $5 million trust that was left to him. So, I wouldn't do it if I were you at this point in time, which is why you wrote, let's see what he does on his own right now. He's living in your attached apartment, rent free. Okay. And has decided that he no longer wants to go to law school. Okay. That's a sign. And he's looking for an apartment with a friend. Okay. Let him get a real taste of life before you tell him that he has a lot of money. I don't like the decision so far that he has made. I wouldn't be telling him. But you already knew that, I just want to add something. Our trust lawyer has had many conversations with Suze and I about trust that she manages for quite a few people. She always recommends that she doesn't want to leave money to you know, heirs before the age of 30 or 35. And that's her rule of thumb. She really believes that it takes a good solid amount of time for a young, you know, individual to be independent. So, I wouldn't be doing it. All right. All right. This will last. This is my last question, Suze. But it's a little bit wide open. It's from Rita and I don't know how we can help her. But says I was wondering if you have any advice or opinion regarding what to watch for when starting a joint home care agency business venture with friends or a partnership business. My advice, Suze would be I wouldn't do anything with friends. Of course, that would be right. But here's the thing Rita. What I would say to you. Friends, not friends, people that you know what whatever it is. Before you do anything, you need a legal agreement between all of you. What you know, how are you going to split profits? What are you going to do if one of you wants to leave? You have to think of every single thing that could happen. And you know recently I told one of my niece’s this, who was starting a business, and I said you have to get a legal agreement between all of you before you even start and she didn't do that. She just went for it. And now she sees why I was saying that. So, it doesn't matter how good your friendship is. My best, seriously, my best advice to you would be if you're going to do something, everybody's got to put in the equal amounts of money or equal amounts of energy, how are you going to divide it? What happens if one of you wants out and you have to know about this business, the insides and the outsides, all of it before you go ahead and do it. I would tell you to be very very careful. All right, Mrs. Travis. So, I got some not so nice emails because last time we didn't do a quizzie Oh, people missed the quizzie. People did not like it. They thought we went on too much about other things that weren't as important and that they wanted their quizzie. All right, I get that. So, here Miss Travis is your quizzie, and everybody else's quizzie as well. Okay, I'm ready. This is from Cynthia and she's one of the ones that missed the cuisine she wrote in and said Suze, this is a quizzie for KT. You need to ask her this question. All right, Cynthia, I'm ready. Ready. She says my spouse bought $5,000 worth of one stock just four months ago. It's now worth $10,000. Cynthia, why don't you tell us what stock it was? She didn't tell us what stock. Wouldn't you want to know what stock it was? But anyway, there are many stocks and things that have doubled in the past few months right. Now, my spouse wants to sell the original $5,000 that she invested and let the $5,000 gain ride, because then she has no money at risk. I want her to sell it all. Who is right? Just think about it. Do you all understand the question? This woman's spouse bought a stock it for $5,000. It's now worth $10,000. Her spouse wants to sell half of it, get the original $5,000 back and let the $5,000 gain just ride. However, Cynthia wants all $10,000 because they also need money. She wants it sold, all of it. Cynthia, you have to support your spouse first of all. She's the one that made the investment. But it's their money, it's both their money think before you answer. Are you all thinking everybody, so KT think about it. I made an investment I doubled. I think Cynthia should honor her spouse's decision to take the $5,000 original investment off the table and let the balance what they made ride and see what happens or. No, that's it. Is that your answer? There's no or Yeah, that's my answer. Is that all of your answers? What would you do in this case? I think about it, KT, am I going to approve or deny you, you are going to approve me. You think? NO. why did you do that? Because you're wrong. So, wait, why should she do that? Let me tell you the correct answer. All right. Many of you are going to find yourselves in situations, especially maybe even with Cryptocurrency, where things double very quickly. And maybe you want to take money off the table. But you have to remember that all $10,000 is your money. You can't just think about it as well. I invested $5,000, it's now 10. So now if I take $5,000 off, I have nothing to lose. Yeah, you do. You have $5,000 that you can absolutely lose. So, if here is the rule of thumb, everybody, I want you to listen closely to me. Now. If you invested $5,000 and it's now worth $10,000, take $7,500 off the table. I was going to say that, because you made a 50% gain on your money in four months. That way, no matter what happens, you made 50% on your money in four months. So, now you're just not getting your money back, you're getting your money back plus 50%. So, now if you want to let $2,500 ride, okay? But if you have just taken $5,000 off the table and now that $5,000 gain goes down to zero and now it's not worth anything again, you would feel horrible. Absolutely, horrible. So, the correct answer is the one that I gave you. Did that make sense KT? I was almost going to do that, suggest that they split the difference and make it $7,500 out. Why didn't you say that then? Because I thought, well, there you go. I didn't think I was just answering A or B, instead of offering up C. Now, here you go, what KT just said is very important. Just because your choices are A or B in this case. That doesn't mean that either of those choices are correct. So, you have to spend time and think about it. What else could I do? You can always do other things. So, just remember that. All right, KT. We gotta get a move on here and get ready for the Today Show 10 o'clock. Hoda and Jenna. Let's see what happens. And don't forget this weekend on HSN. All right. Everybody until next week. What do we want to say, KT? There's only one thing that matters when it comes to your money and it is this, people first, then money, then things. There we go, girlfriend. Now you stay safe. See ya on Sunday. Bye, Bye now.

Take advantage of the Ultimate Opportunity Savings Account with Alliant Credit Union at: https://bit.ly/3vEUTZW

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

Suze Orman Blog and Podcast Episodes

Suze Recommends

Suze Orman Blog and Podcast Episodes


3 Easy Financial Housekeeping Tasks with a Big Payoff

Read Now

Suze Orman Blog and Podcast Episodes

Podcast Episode - Ask KT & Suze Anything: Should We Buy or Rent When We Retire?

Read Now

Suze Orman Blog and Podcast Episodes


Your Ultimate Savings Opportunity Starts Now

Read Now