Podcast Episode - Ask Suze (and KT) Anything


ETFs, Financial Advisor, Investing, Loans, Mutual Funds, Retirement, Stocks, Student Loans


October 22, 2021

Listen to Podcast Episode:

On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Corrine, Pam, Sissy, Dom, Claudia, Sharon, Monique and more selected and read by KT. 

Corinne - Who should I use as a financial advisor?


Anonymous - Can I pay off student loans with the sale of my company restricted stock options?


Pam - What should I do with the money from my house for retirement?


Sissy - Where should I go to get a small business loan?


Dominic - How do I figure out what I am actually earning from my mutual funds?


Anonymous - Should I take the land my mom is giving me out of the trust to build on?


Claudia - How should I go about buying Series I bonds?


Sharon - My husband bought us a VA, should I reinvest into a new one?


Bitcoin Buyer - Should I sell my Bitcoin stock to buy the ETF?


Podcast Transcript:

October 21st, 2021. Welcome to what KT? Women and Women and Money podcast with featuring Suze Orman starring KT. And this is Ask Suze and KT, the star, Anything. Our star is back. My star is back. You are my shining star. Do you know that? Thank you Suze, that's so sweet. My little shining star, my love. We have a lot of lucky stars to be grateful for. But today's October 21st and tomorrow is Corinne Baylee's birthday. I have no idea who Corrine is, I am looking at you going, is corinne an old friend of ours. We never met her but she sent in question and she's 33. We have to say happy birthday. Happy Birthday. Well, your answer will be her birthday gift. So, she lives in Tiburon, and we know Tiburon near San Francisco beautiful place. She's 33 she's going to be 34 on Friday, tomorrow. And she said she has one question Suze, how can you help me please find a good financial advisor. That's it. She does really well. She has a nice job. She makes $165,000 a year. She has retirement investments of about $138,000, and she saved almost $164,000, no debt. She would like to be a homeowner but she's looking for a good financial advisor. Which is the one Suze? Ready Corinne, right? My little birthday girl, the best financial advisor you're ever going to find anywhere in this world is the one that you look at when you look in the mirror. It's you, Corinne, look at I just want you to look give me this piece of paper her, KT. 33, going to be 34. You make a good sum of money. You've saved $137,000 in your retirement. You have savings of $100s. You don't have any debt. And all you want to do is buy a home, at sometime. Why do you need a financial advisor? What do you think a financial advisor could do for you, that you haven't already done for yourself? So no, I'm not going to tell you how to find a good financial advisor because you've already found one in my opinion. Just continue to save money. So, you have at least a 20% down payment on a home when you're ready to buy it. And it's just as simple as that. Girlfriend, don't look outside of yourself for information that you already have within yourself. What was that Great little restaurant in Tiburon? There was such a good restaurant, Rudy's down at the waterfront. Go buy yourself a great birthday dinner you deserve it. I don’t know if it’s still there. We haven't been there in like 10 or 15 years. I loved that place. All right, next question Suze. Hi, Suze and KT. This is a question from 51-year-old, who has a great job that pays a six-figure salary with a bonus. However, I feel stretched after paying bills, my student loans, setting money aside for the 529 plan, emergency funds, as well as funding my alliant savings account. Good for you. Currently I have $51,000 and private student loan debt at 2.75%, there is two loans, Suze one is $20,000 and the next one is $31,000. I'd like to pay off the $20,000 loan to help free up some monthly funds. Also, I hate having debt that I can pay off. Can I pay off my student loan from the sale of the company RSUs, restricted stock options? at all. Right. The answer is it depends Truthfully, because listen to me, if your student loan debt is at 2.75%. All right. That is not a high interest rate. So, what's really important is that, will your stock, the options that you have on your stock, will that increase? Will those increase more than 2.75% a year? Can you make more money on those, then you can just simply paying off your student loan? That you're going to have to decide, but that is how you make that decision. So, it's not just a simple answer. Yes, of course you should pay it off student loan debt is the most dangerous debt. No, that's what I normally say. But at 2.75% interest, and I'm paying that off with money that's in stock options. I'm not sure if I thought that my company was going to grow more than 2.75% in value on those stock options. Okay, next question, Suze. This is from Pam, Suze I've been listening to your podcast and I love them. So, here's my question. I sold my primary residence in October 2020. My proceeds were $75,000. I'm currently 58 years old. I make about $55,000 a year and I'm single. I'm living in the Raleigh-Durham area in a garage apartment behind my parent’s home. I have limited retirement money, $23,000. I will have a pension of $984 a month, if I stay at my current job based on retiring at 65. So, what should I do with the $75,000? There you go. Boy, um here's the problem Pam, is that you say in here that you know you don't want to take any chances on losing this money. If you don't want to take any chances on losing this money, then the only thing you can do with it really is to keep it safe and sound. Now currently you have money in a credit union making about .10%. Why not transfer that money seriously to Alliant credit union? Go to my alliant.com and there you can earn at least .55%, which is a whole lot more than .10%. But that's what I would be doing if in fact you don't want to take any risk with this money. You also could take some of it if you wanted to and put it into a Series I bond by going to treasurydirect.gov and getting into an inflation bond there. So, just some of it. But the maximum is $10,000 that you can put there. So, you might want to do a combination of those two. But if you don't want to take any risk, that's the best advice I have for you. It's hard KT because you know, it's almost as if these low interest rates are forcing people into the stock market, to get high dividend yields, to get preferred stocks, to do all kinds of things. But that's a risk and that's a risk always will be always will be, yep. All right, next question. Oh, this one. I like this one, Suze. KT and Suze, Hi KT, I heard in the past that you love goats. I do. I love goats. How do you think they heard that? I don't know we talk about because I always told you if I could have a pet, it would be a goat and I told you I'd wanted goats on the island and I told her she can't have goats on the islands, we have hurricanes what are we going to do with the goats? You can take them with you, just like a puppy. So, maybe because I'm a goat lover to you will read this. So, I am reading this. I need a small business loan to buy some equipment for my farm. Do you know the best place I can go in the Midwest? Big banks intimidate me. Thank you, Suze. I always look forward to your great advice. This is from Sissy, the farmer, the goat pharmacy. Well, here's the thing, whether truthfully, you're in the Midwest, or anywhere in the United States, one of my favorite banks. Now, all of you know, I don't like banks, you know that I always feel like, alright, I'd rather you use a credit union. I rather you, you know keep your money somewhere like that. But every once in a while, a bank can serve a good purpose to work with the SBA, to do small business administration loans and to help you really get the type of loan that you need. So, one of my favorite banks for that purpose, just that purpose, happens to be Stearns Bank. Fabulous. They're located, I believe in Minnesota, the way that they work with their customers is absolutely amazing because they help you, not only get the loan, but they help you work with it and make sure that you're set up correctly and everything like that. So, let me look up here one second, one second everybody. All right, you can call 800-247-1922. Give them a call and see what happens from what I hear, they're fabulous. Alright. The next question Suze is from Dominic and he refers to himself as dumb. So, he said my question is about mutual fund fees. In a prior podcast Suze, the recommendation was that a mutual fee should have a fee of 0.50% or less. I invest $100 monthly in TCREX Real estate mutual funds from TIAACREF. It has a fee of .79% a year-to-date return of 20.4% and a yield of 1.25%. How do I figure out what I'm actually earning? So, what normally happens, dumb, is that when you go when you look up the things, they'll show you what your actual return is prior to fees and after fees. If it's if this 20.4% is prior to fees then you would subtract the .79% from the 20.4%. And that's what you actually would have been earning .79% for a specialty mutual fund that specializes in just real estate, like this one isn't that bad. I really like the mutual funds, the no load mutual funds. The index funds where your expense ratio is .04%, you know or at most .12% of fee really matters in the long run. So, check it out. But also I hope you have other diversification besides this, because you cannot be 100% invested in real estate and when you're looking up the return of a fund, don't look up what the fund just did this year. Look what it did over the past five years, the past 10 years, because it's important for you to get an idea of how did it do in good markets, in bad markets so that you can see it's overall return that it will give you in the long run. Just something to think about. Okay Suze, I'm going to read this full email because it's very interesting and this has to do with conversations that you and I have recently had with friends. Listen to this one, this is from a woman in California. She said I live in California. My mom has an empty lot that has paid off. It's in trust for me as part of my inheritance. I'm the sole beneficiary, I'm married and my husband and I would prefer to build on this land instead of purchasing a home. My mom doesn't have an issue with the build, although she would prefer the land stay in trust to protect me. Plus, we have lower property taxes on it because it was purchased during the ‘78 California Prop 13. So, she's okay if this is something I really want to do. But just wants me to be thoughtful and still protect as much as possible. So, this is a very wise mom. Got that right, really wise. My concern is I believe for my husband, he would feel I had more control. I don't want us both to be feeling unequal about this. That's what she's said, then she's asking Suze, do you think a fair way to make us both feel equal is for my mom to remove the land out of trust and deed to me, sell 50% of it to my husband. Then put in writing that if we split, the house cannot be sold because it would be left to our two children, and another method of payment would be discussed. Getting very complicated here, what do you think Suze? So here here's what I really think. I think what is reality and what's fabrication in your mind? Like are you the one coming up with all of this? Like have you talked to your husband in terms of how would he feel, does it make them feel less or is this something that you're just afraid of, that he would feel that way because maybe you would feel that way. But the truth of the matter is I would not do that. I understand that you love your husband very much right now. I get that and I get that you probably think that you're going to be with him for the rest of your life. I get that. I get that that's been true with millions and millions and millions of people throughout this century. However, millions and millions of people have also, who started in the most incredible state of love, ended up in the most incredible state of hate and everything from that point on, didn't go the way that you planned it to go. It's not just simply as easy as taking it out of trust, selling it and then making sure that it goes to your kids. No, leave it in trust, have a talk with your husband. If your husband really loves you, he will understand that this is your inheritance. This is what your mother wants to leave to you. She didn't want to leave it to you and to your husband. She wanted to leave it to you and you need to respect her wishes, because this is her land and she is able to tell you what she desires with it. And you should listen to that. So, I would figure out an absolute other way of doing it. Because the truth is, if the land is just in your name, then the two of you are going to have to decide if you build a home on it, whose name is the home in because the home could be in both your and your husband's name. But it's built on this land that belongs to you. So, in many cases you would have to take out a lease on that land, where your husband and you are leasing the land from you. And that way you never lose the land and it's just that simple. But I would work with a good lawyer to figure out. How do we do this, so that I never, ever have to take that land out of trust. Great, I totally agree. And you know what else what KT, if they really want to build a home build it somewhere else they could. Yeah. And just keep the land as per mommy's wishes. Yeah, that's all you know, in this case you cannot, you cannot disrespect or worry your mother for everything that she created for you. You just can't do that and I don't want you to, oh good. All right. Next is from Claudia. Hi my dear Suze, yeah baby. I'm your number one fan, trying to figure out how much money to put. KT is my number one fan. Yeah. Okay so Claudia, you're number two fan, she is trying to figure out how to put money in the I Series bonds and then she wrote those are the ones protected by inflation, right? Right. I have no idea how to do it. I already opened an account with the Treasury Direct but haven't bought anything yet. I'm thinking about $2,000. Do I put it all at once or little by little or Suze, is it better than a Roth IRA? As you can see I am clueless, you betcha you are girlfriend. Claudia says she loves you mucho. Listen one has nothing to do with the other. You're far better off if you want to put $2,000 in your series, I bond, go ahead and do it. It's just that simple by putting the money into treasurydirect.gov and buy $2,000 worth of I bonds. Now does that mean is it better than a Roth IRA? It's different than a Roth IRA. A Roth IRA is a retirement account that you fund with money you've already paid taxes on, and hopefully that is money that you want to invest in the market, into other things that will absolutely grow for you over the years. So, it will grow absolutely tax free, if you just abide by the rules. So, it's a very different thing if you can't afford to do both, put $1,000 in a Roth IRA and put $1,000 in series I bonds. But they're very different, but both necessary if you ask me. Okay, so Suze this this next question is from Sharon and these are, this is the area that I find just as complicated as a Roth. It has to do with variable annuities, your favorite. Ready. So, after 33 years of marriage, my husband passed in 2018. I'm still figuring out things but I've realized that $230,000 of our $750,000 retirement portfolio includes a VA, which I believe was purchased in 2003. And a variable annuity is a VA. So, this is important. Just a couple quick facts. There's no surrender charge, no lifetime income with this VA, only an annual income of $11,000 for 14.2 years. And now Sharon is 62 years old. The death benefit is $96,000. So, for peace of mind, my advisor is recommending I transfer the current annuity $230,000 to a new annuity, which will lock me in to a seven-year surrender charge, and also make him or her a $10,000 commission. Go on KT. The new annuity will have a lifetime annual income based on hypothetical projection. Hypothetical projection. Let me hear the interest rate, where at remember everybody wait. A good interest rate today is 0.55%. What is the interest rate that's guaranteed on this KT? So, on a hypothetical projection of 6% stop, 6% on a hypothetical projection of 6%. You tell me where any of you can get 6% today. The mere fact KT, before you go on the I'm so mad right now the mere fact that this so-called financial advisor is giving you a projection of what you could have on a hypothetical return of 6%. He's giving her the big care, is saying hypothetically you could be making $18,000. So, I just have to interrupt you reading this email for a second KT, because the so-called financial advisor cannot show somebody a client what they're going to have on the future on a hypothetical projection of 6%. Really? You owe haven't I always said to all of you, when you look at a projection, you want to look at the guaranteed side of the projection, not the hypothetical projection. So, I just think that's absolutely crazy. All right, go on KT. Sorry. All right. So, there's clearly hesitancy and a red flag to move into another VA after listening to your podcast. Good, while I like the idea of guaranteed income, at what cost. At this point, I could take my $230,000 and invest it wherever I like or just stay put, which doesn't seem to make sense because there's no lifetime income. First of all, you don't buy a variable annuity for lifetime income. You buy a variable annuity usually outside of a retirement account. If you buy a variable annuity within a retirement account, that is the first sign that your financial advisor is a salesperson. I'll tell you that right now, however you usually buy a variable annuity outside of a retirement account so that any money that you earn in there can just grow tax deferred and then when you sell it, you pay ordinary income tax on it, which makes absolutely no sense anyway. Because of variable annuities like buy mutual funds within an insurance company. You could just buy mutual funds or individual stocks totally, and then when they're sold you get a capital gains tax. I mean I just so hate variable annuities. It's not even funny. So, I would not do this. I would not do this. I would not do this on absolutely any level. The reason your financial advisor in my opinion is telling you to do this is he or she gets another commission all over again and you can't do anything for seven years. Don't do this. What you could do is just take that amount, and in fact if all of this amount of money is with this financial advisor I would probably look for another financial advisor truthfully. But I would take this amount of money and do an IRA rollover with it, and invest it in stocks or no-load mutual funds or anything that you wanted but I would not be doing a variable annuity. I knew that would get her a little riled up everyone. Hey Suze, thank you for pushing us to consider Bitcoin. I purchased at $40,000. I'm in it for about a month and it's already gone to $60,000. It's actually at about $65 or $66,000. Alright. I'm thinking about selling it now to buy Bitcoin through the Bitcoin ETFs, is that a good ide?. No that's one of the most horrible ideas. There's no name on this you're always so funny when you don't sign a name, it's like do not want anybody to know who you are. What does that has to do with Bitcoin right? And it's like no I do not like the current Bitcoin ETF that's out there and I don't like the ones that are about to come out and even though I know very well that because their ETFs are coming out. That's one of the reasons that maybe it has been pushing Bitcoin up in price dramatically. The truth of the matter is if you want to invest in Bitcoin, just invest in Bitcoin itself. If you in fact by the ETFs that are currently being offered, you are buying something that is based on the future price of Bitcoin. You are not buying something that is based on the price of Bitcoin today. So, it has a lot to do with the future’s market versus the actual price of Bitcoin today because of that the expense ratios are high, the fees are high. It's something that I can't explain very quickly really in this. I could do an entire Suze school on it. But the current way Bitcoin ETFs work, I would not be investing in them if I were you. I would simply be buying the Cryptocurrency itself whether it's through Paypal, Coinbase, FTX, any of them. Just buy them yourself. It's so easy and then it's just, I'm telling you the ETFs aren't what you think they are right now. I hope that you all understood that. All right, KT, do you know what it is now time for? It's my quizzie time. All right, ready, KT, I'm always ready. All right. Are we go? All right. Let's see if all of you get this right too. Last week, you talked about the 30-day wash rule. Just so I'm clear, I was told by my financial advisor that if I sold at a loss outside of my retirement account, so I could take it off my taxes, I could immediately buy it back inside my retirement account to get around the 30-day wash rule. True or false. False, false false. You didn't even let the people have a chance to think about it. No false, because you can't change the rules. No matter where you repurchase it, are you positive? I'm not that positive, but it sounds like it's absolutely false. So, what all of you think, remember a 30-day wash rule here, look at KT’s face, a 30-day wash rule is simple. You own a stock outside of a retirement account and it has gone down in value but yet you want to still own that stock. So, you sell the stock, take a loss off your taxes. And currently the law says you cannot re buy that stock or any stock similar to that within 30 days for the lost account. This financial advisor this person has is telling them, that if they do that but they repurchase it in a retirement account that they can do that. You're sticking with your answer. Yeah, absolutely. I don't think you can be. Ding, ding, ding. So, listen everybody will you just stop trying to get around the rules. The rules are the rules and the rules are always going to be the rules, and when you get in trouble is when you try to go around the rules, it is really important. When a financial advisor says I know a way around it, you better check double check and be clear and crystal clear that that person really knows what they're talking about. So, it's just something for you to think about. Remember the wash rule does not apply for retirement account so, if you had purchased a stock in a retirement account and now you sell it in a retirement account and you change your mind and two days later you want to buy it back in a retirement account. That's fine because you're not taking any loss off the money in your retirement account cause it's in your retirement account. Very different than outside of a retirement account, so the 30-day wash rule only applies to money outside of retirement accounts. All right, want to know what Sunday's school. I’m really happy I got that. Right. I want to know what Suze's Sunday school is going to be about. Okay, recasting. Recasting what? Recasting a mortgage. What that means? I know that I'm really good at casting my casting lures, but I don't know anything about a mortgage. Right? So, you're going to have to listen everybody. Is it like fishing? No, it's called recasting, recasting? Not refinancing but recasting. And it's something at this point in time, especially if you're strapped to make your payments and you have a little extra money sitting around. It's something that you just might want to think about. So, tune in to learn about it. All right, everybody. So, until next Sunday there's only one thing we want for all of you and that is what, for you to be safe, smart baby, and most of all secure. See you soon. Bye bye.


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