Podcast Episode - Fees And Patience Matter

Investing, Life Insurance, Retirement, Stock Market

November 29, 2020

Listen to Podcast Episode:

In this episode, Suze talks about how we need to pay attention to the fees we pay for banking and investing.  Plus, she discusses why patience is important when it comes to that investing

Podcast Transcript:

November 29th, 2020. Welcome to the Women and Money podcast as well as the men smart enough to listen. Suze O. here and did you have a good Thanksgiving? Did you? I have to tell you personally, I loved this Thanksgiving more than almost any Thanksgiving we have ever had. And I know I know normally we have like, 20 or 22 people, and this time it was just myself and KT and Colombia, and if you don't know who Colo is, you just best find out. And we made a turkey. We did everything, and it was just the three of us. And it was so easy was so easy to serve. It was so easy to clean up, and we got to connect with our entire family in a way than different than we ever did before. Obviously it was by Zoom, and we connected with all of KT's family and then we also for the first time, believe it or not connected with my own family. My cousins, my, you know, relatives. Over the years, I've kind of really drifted into being part of KT's family more than my own, because KT's family was always used to getting together and doing things as a family and as my family. As we started to get older and our parents died, we kind of all drifted apart. Obviously, when we were younger, we did Thanksgiving and all of that together. But then, as we got older, we just kind of dissipated, and I drifted into the Travis Clan versus the Orman clan. So it's been years and years now, since I've had a gathering with my own cousins, first cousins, second cousins, brother, the whole thing and we did that. We had a zoom Thanksgiving on the Orman, not kin side. I have to tell you, I loved it because we also when all of us were there, took time to listen to one another, to here what we had to say to tell everybody what we were grateful for, but in a very different way than I don't know even when we were all physically together years ago, or even last year when I was all physically together with the Travis family. So it was really something that I loved very, very much. But it's not just family that comes together on Thanksgiving. It's also friends and people who you haven't heard from in a long time tend to, email you or send you a text and tell you what they're doing and how things are going and things like that. Which brings us to the title of two days podcast. The theme of it, which happens to be fees and patience, matters interesting, don't you think? I do And here's why so many people that I've connected with over the past did text me and they told me obviously things that were going on in their lives. And many of these people, especially the women, the abused women that we've talked about in the past, financially abused women, tend to connect with me, especially on Thanksgiving, to give me a recap of their year. And one of the women in particular was saying, Suze, it's hard, it's really hard. How do I save money? How is it possible for me to save money, Suze, I bring home $1500 a month, and I'm so grateful, at least that I still have a job. But I have a 15 year old. I have like a seven or eight year old, and my rent is $600 a month, and then she goes through every single item, and it's true with the phone and with the cable and with everything. She is spending more than what she is bringing home. And, of course, in my very flippant way. And I think it probably was a little bit flipping because I didn't realize certain things. I said well cancel the phone, cancel cable who spends $100 a month on cable and all of these things and she writes me back of Suze, it's the cable that allows the kids to go to school because it's the cable that also comes with the WiFi. And if I don't pay for that, the kids don't get to do at home learning. I don't have a choice. And then we went through everything again and I said, All right, let's just start at not only what you spent every single penny on. But how much money do you have to your name right here and right now? And she wrote back, and she said, $20.59 And I said, can you just send me your statement? And she sends me at her statement that was online from a bank, and I'm noticing that they are charging her $5.99 a month in fees, for I think it was her checking account and $5 a month for a savings account. So she has to accounts a savings account and a checking account. She's paying $11 a month approximately for these two accounts, and I wrote her back and I said, What are you doing? I said, You only have $20 in there and your pain almost $11 to have these two accounts and she literally didn't quite get that surprisingly enough. She understood that she was paying the money, but she didn't understand it in terms of percentages, now just stick with me here for a second. There was a time when she had a few $100 in that account, and so then, when she was being charged $10 or $11 a month for both of those savings as well as checking, she thought, Well, that wasn't so much money. It was okay. But now that essentially surely as I $20 left, it's a big deal because in four months are actually in two months, that money is all going to be gone. So what's really important for all of you to understand isn't what does it cost you per month in terms of dollars to do something for a savings account for a checking account, even for an investment account? Not what does it cost you in dollars? But what does it cost you on a percentage basis? So, for instance, please listen to me closely now. There was a company that really wanted to be a sponsor of this podcast for next year, and I interview the sponsors very, very carefully because I don't want just anybody to sponsor this podcast. I want to make sure that whoever sponsors this podcast really has your best interest at heart or I won't have it no matter what they pay me. I don't care if they pay me anything. I would do this podcast even if I didn't have a sponsor, but one of the sponsors that really wanted to sponsor this podcast and they were a great company. They they have really great intentions off helping you invest, needed to charge ah, $3 a month fee for you to have an account with them $3 a month. Now I know that sounds like a little amount of money to have investment help in all of these things, but what I said back to them was, I said, You know what? If people could just put in $50 a month and that's a lot, what if they could only put in $10 a month now, at $50 a month, that's a 6% fee. $3 equates to a 6% fee. That is a lot of money. Even if it was a $100 a month that you were to put in at $3 a month, that would be a 3% fee. At $25 a month, that would be a 12% fee. Now for the markets to go up, and for you to need to make 6% or 12% or whatever it is on your money just for you to break even because of the fees that you are paying, denied. I don't think so, Everybody. So are all of you, seriously? Are all of you paying attention to the fees that you are paying on your checking accounts, your savings accounts, your investment accounts, your mutual funds that you're purchasing, possibly through a financial advisor known as a loaded mutual fund? Are you paying attention to those and not in terms of the dollar amount, but in terms of the percentage of what you are investing? How do you figure out the percentage of what you are investing? You take the dollar amount of the fee, let's just say $3, and you divide that by the amount that you invest every month, let's say $50 and you will see that it is 6% and you have got to do that. So the woman who texted me, who was saying Suze, I need help. I need help, please. And they're charging her $5, $5.99. The advice to her was you are to close those accounts right now, right here and right now, because that's just crazy everybody. It's just crazy. Do you all remember, it was, I think it was in 2007 when I came out with the Women in Money Book and I had created the Save Yourself account at the time with TD Ameritrade, where you just put in $50 a month and you did so every single month for 12 consecutive months and then they would give you $100. Well, there were never any fees on that account. You never had to pay anything to withdraw the money. Whatever it was, it was just all free. I'm on a serious mission now because I really want to find an institution that will allow you to put in, let's say, $100 a month for 12 consecutive months and give you $100 after the end of 12 months. That would be like a 14% return on your money. Now I'm looking at all these accounts that are out there, and they're giving you cash back if you buy something. And what if you don't have any money to buy anything? Why isn't anybody paying you to save money? So that's what I'm really looking to have happen. So if you want to be a sponsor of this podcast for next year, that's something that I really want you to do. I want you to help people save. I want you to reward them for saving, not first spending and getting cash back. And I don't want there to be fees on the account. And I wanted to be an account that even if you put in $100 a month and let's say five months later, you have to stop. Okay, so you can't complete it. But you're rewarded for saving, and then you're given 100 bucks at the end, and then you could do anything you want with the money. So if you're out there and you're interested in something like that, might want to write in to, asksuzepodcast@gmail.com. You know, because that is what I'm looking for in a sponsor. So with that said you might be thinking but Suze, aren't I interested in getting a good interest rate on my money right now and things like that? Yeah, I guess you are. I guess you are. But if you look at what interest rates are doing at this point in time, really everybody, who cares? Are you going to get 0.89%? Are you going to get 1%? Interest rates are really low and they're going to stay low. So it's not about the interest that you can get somewhere. It's about the fees. You have to make sure that your money is being kept someplace where there are absolutely no fees for you to have that money, for you to access that money at an ATM, for you to do anything with that money because the fees will absolutely be far more than the interest rate than some of these banks are charging you. So I am asking you to be very, very careful with that and check it seriously. So fee’s matter, got that. Then I get another text from somebody who used to work at a company that I used to do a lot of business with, and I would see him all the time, and I would call him John Boy and John Boy during this pandemic lost his job. They had a lay off a lot of people. It was in the airlines industry, and they had a lay off a lot of people last year. So he decided that he was going to take this opportunity and move from Fort Lauderdale to Tampa, which is something that he had always wanted to do. And it was fired cheaper to live in Tampa than it was in Fort Lauderdale. And he did so. So he writes me and he tells me how he's doing, and I'm always happy to hear from him because he's such a great guy. And then he tells me he says, Suze, do you know how I'm making money? I have a friend whose day trading and is making a lot of money trading stocks outside of his retirement account. So I'm trying it, and I've made 40% on my money in a relatively short period of time, and I'm sitting there reading this, and of course I don't ever want to discourage anyone from doing something. You know, I really hate it when I have a really great idea and I tell somebody about it and they say that is just ridiculous. That's corny and I like, really I thought it was great, and thank God I don't listen to what other people tell me. I trust my own gut, and I usually just go ahead and I present the idea to the company that I'm working with or I create the idea myself, and it usually absolutely works or they really like it and they go, I love that idea. So it's really important that if somebody has an idea and they're doing something that you don't just go poo poo and you just don't make it so that they don't do it. So I really didn't respond and I said, Okay, just be careful because you never know in life. But I do know in life. And I do know that when it comes to investing, that patience really, really matters, that true fortunes are not built by you purchasing a stock at 10, and then it goes to 20 or then it goes to 30 and you've tripled your money, and you think I'm out of here and you sell it. You really have to think twice about this, everybody, and let me tell you why patience’s matters, because when it comes, especially to investing outside of a retirement account, you want to make sure that if you own a stock and the stock is going up that you have owned that stock for at least one year or longer so that if you do decide to sell it, you're only paying capital gains tax on it and not ordinary income tax on it. Short term gains. Because if you buy a stock and then you sell it outside of a retirement account in less than one year, so you haven't held it for more than a year, then you will pay ordinary income tax on that gain. So I wanted to say to my friend John, you haven't really made 40% on your money because you're gonna have to pay income tax on it. And depending on what tax bracket you're in, it will make a big difference. Now, maybe John isn't really working right now. Maybe is not in a tax bracket. But if he's really successful with trading in and out and in and out and he makes good money with it Oh, it's gonna put him in a good tax bracket and there will come a time, obviously, when jobs come back and people are making money again and you're you're back in these higher tax brackets and maybe you were in the year 2020 and you're really going to find that what you see is not what you get to keep. And you have to remember that, there are many companies that I purchased this year, especially when the market went down considerably in March. I happened to invest a significant amount of money. And I'm here to tell you some of those companies are up 300 to 500%. Okay. And you would think, Well, why not just sell him here? Why not? It's because I did buy them just for them to go up this year. I bought them to hold on for a long period of time, Number one, because I think the future in these companies are magnificent. But even so, even companies that I purchased that went up 20 or 30 or 40% this year. It hasn't been a year since I've owned them, and if I sell it, I'm going to owe ordinary income tax on them. And even if I think that one of the companies and listen closely, if one of the companies that I purchased is going to go down, so I want to capture this gain. Really? I don't think so, because if I sell it, I'm in a really high income tax bracket. I'm going to lose almost 40% of that to taxes. So do I really think that that stock is going to go down 40%? Maybe it'll go down 10%. Maybe it'll go down 20%. But then I think it will probably turn around and go right back up again. I think the year 2021 is going to be a good year in the stock market. Do I think it will go up and down between now and then? Possibly who knows? But I do think and I said this last Thursday on the Thanksgiving podcast, that there's really very little other places to put your money besides real estate. But real estate if you're buying the physical properties, as I said last week, and it's a big deal because you usually need a lot of money to put down. Maybe you could buy real estate investment trusts, which is trades like a stock on the stock market, but is that really where you want to go. Are there other stocks that are probably even better? But it's key for you to be patient. I know very well that when stocks, they're going up and they're going up and they're going up, that you freak out and you want to take the money off of the table. But that isn't the time that you take the money off the table. That's the time when the stock market is going up and your stock is going up, that you really kind of just look at the situation. Why is it going up? Are they having good earnings? Are they getting more and more popular before you pull the trigger? All right, Can you think about that? And the same thing is when you have a really good quality stock, it's a great stock, and it's going down and down and down. Don't pull the trigger. Just be patient. Don't pull the trigger and sell it because you can see what can happen. One of the reasons on Thursday that I did do the history of the Dow Jones Industrial average was that I think there is a lot more to gain than to lose in the stock market at this point in time. So I'm asking you to be patient, especially when you purchase something, whether it's going up or whether it's going down. You need to think about it. Right now listen, everybody. I just gave an example. If your money was outside a retirement account, right, that's what I've been talking about. And you may be sitting there thinking, but Suze, what if it is inside a retirement account where I could buy and sell and not have to worry about taxes what so ever? Most likely the main reason this person John's friend was trading outside of a retirement account was because I'm sure that he would make some trades and have losses on them. And when you have losses in the stock market outside of a retirement account, it can come off of your taxable income. Or if you have gains in the stock market outside of a retirement account and losses, you can offset your losses and your gains and equalize out your taxes that you cannot do in a retirement account. You can't do losses or gains like that. That's not how it works, but it is true that you could sell and not have to pay any taxes on it at the time. When you sell now, what's great about that is that you don't have to pay taxes on it. But what's not so great is this. The reason that you need patience is because in a retirement account where you could buy or sell or do anything with no tax consequences at the time, sometimes you make moves that really you should not be making. How many of you sold out in March of this year, when the market was down 38% because that was money that was in your retirement account and you could just sell it out and lock in all the gains. Or so you thought that you had, even though you lost some of them and then you never got back in. And now look where we are today because you weren't patient enough. I'm going to say this again, even if we go all the way back to 2007, 2008 where the market went down 50 some odd percent and then for 10 years it had a massive bull run. If you had just been patient. If you had just continued to dollar cost average where you put money in every single month and as it goes down, you're buying more shares and you just stay involved with it. As long as you have 10 years or longer till you need this money, your patience would have paid off big time. So you just have to always be patient. Just think about if you had bought Amazon when it first came out. If you had bought Apple when it first came out, if you're just stuck with it the whole time. If you just bought Tesla when it first came out or some of these stocks, Zoom, whatever it may be Facebook and you just had been patient. Do you have any idea how wealthy you would be today? And that increase of doubling or tripling it in the long run would been so little. So between fees and patience, those two things are really important for a successful investment strategy. Those two things are really important for you to make the most out of your money. So I just want to tell you one other thing today. You know, a lot of you have been writing in to asksuzepodcast@gmail.com. And a lot of your questions are about long term care insurance, and I keep referring out a woman by the name of Phyllis Shelton and her email address is Phyllis phyllis@gotltci, Long term care insurance, that's what it stands for. So phyllis@gotltci.com. And I tell you to contact her and ask her your questions about long term care insurance or if you really need to see somebody, she is fabulous now. Lesson time again. Whenever somebody makes a referral like I just did, your first question should be in your mind. How much is Suze getting paid to make that referral? I don't get a penny. If any of you happen to go and see Phyllis, you talked to her on the phone, email her whatever it is and buy a policy from her. I do not make a penny. I'll tell you what I make. I make comfort in knowing that you're getting the best thing in your situation or you're getting an honest person that's telling you, Don't buy it. You can't afford it. It's not right for you. So you need to understand that. But because there were so many questions out there, Phyllis decided to do a webinar for you to physically watcher or communicate with her. And that will be on December 3rd at 1 p.m. East Coast time. And if you would like to be part of that webinar again, I do not make any money from it. I doubt highly that she's charging anything for it. It just simply because there are so many questions. Then you would simply go to the Link, buddyins, so buddy insurance.com/Suze-Orman Just go there, buddy. BUDDYINS.com/suze-orman and register and listen to her. Or at least listen to the questions that are being asked on this webinar again. That's December 3rd at 1 p.m. East Coast time. All right, these matter. Patience matter, But I have to tell you the truth. You matter to me more than you have any idea, which is exactly why I do these podcasts, so continue to listen. Let's continue to learn together. And let's always make sure that we understand that the goal of money is for you to be secure. Hopefully, these podcasts are helping you do just that. See you soon.

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