Podcast Episode - How Do You Help or Hurt Yourself Financially?

401k, Investing, IRA, Podcast, Saving, Saving Money

October 08, 2022

Listen to Podcast Episode:

On this Suze School, Suze walks through what happened in the markets this past week and outlines ways we can keep our money safe and secure during this very volatile time.

Podcast Transcript:


Suze: This is Saturday, October 8th 2022.


Suze: 96 years ago today, a woman by the name of Louise Hay was born. And Louise dedicated most of her life to the self-help movement. She was truly one of the pioneers of wanting all of us to love ourselves. For all of us to understand how, how we feel about who we are determines everything in life.


Suze: And Louise died August 30, 2017 now, five years ago at the age of 91.


Suze: For me, that was a tremendous loss. Because Louise who founded Hay House Publishing, who has been my partner in almost everything I have ever done for over 20 years now,


Suze: really was such an icon and a woman in my life that I could look up to and go, wow, now, that's how I want to be.


Suze: So Louise. Just know that I'm thinking of you, I know millions of others are thinking about you today, and that you live on in all your books and in everything that you've done, and you will forever be present in all of our hearts.


Suze: This was a very interesting week in not only in the stock market,


Suze: but in our world and what's really going on.


Suze: And it's been no secret that I myself have been very worried. I've been very worried, and I've told you all that. About how the economy will be dictated by what is happening in the world.


Suze: But it's not just the economy, it's our safety, it's our world,


Suze: And it's how everything affects us. First of all, you have to send your love to all the people who lost everything in Hurricane Ian. You may think that it's going to be easy for them. Oh they'll just go to FEMA, and they'll just get money, and everything will be okay. I'm just here to tell you all of you really need to make sure.


Suze: And you might want to do this little study. If you were part of Ian, how much money would your insurance company pay you? How much money would FEMA pay you?


Suze: Because it doesn't work the way that you think it works. So many of these people now, may be given enough money, maybe $30,000 or so by FEMA, to maybe find a place for a little bit to get by. But by no means will that replace everything that they've lost. Chances are their flood insurance didn't exist,


Suze: chances are they probably didn't carry hurricane insurance. So for many of these people, it is a total loss. And how do you start over when that happens?


Suze: And I just bring that up because that is a reality of life where destruction can happen, and I just want to make sure that you have thought about it. What you do, are you covered, are you not. Before something like that just might come your way. But going back to what I was talking about the world that I've been worried about. I've been worried about Ukraine and Russia,


Suze: and I'm worried about Putin and what he could or could not do.


Suze: I'm worried about inflation. Because as I've told all of you, until inflation comes down, this stock market is not going to go up. The one thing that the Feds want is for inflation to come down. And if inflation doesn't come down, they will continue to raise the Fed funds rate. And the more they raise the Fed funds rate,


Suze: the higher the interest rates will go in your savings accounts. Probably, the higher the interest rates will go on Treasury bill, bonds and notes. All investments that give you an alternative to make a nice return on your money versus the stock market.


Suze: And the higher those rates go, normally, the stock market goes down, and down, and down. And that's essentially what you are seeing. You're seeing the stock market go down dramatically in the past few days, although we kind of ended up exactly where we were a week or so ago.


Suze: But you're seeing it mainly go down because everybody is afraid of inflation.


Suze: And the main reason they are afraid of inflation right now is because OPEC has cut their production of oil by two million barrels a day. When OPEC cuts their production of oil,


Suze: the price of oil goes up, which it has, when the price of oil goes up, that means the cost of a gallon of gasoline will go up. And as that is happening, inflation goes up, and here we go again.


Suze: So we are on an incredible financial roller coaster. It's up, it's down, it's all over the place. Which is why.


Suze: It is very important that you know what you need from your money.


Suze: You know your emotional tolerance when it comes to investing.


Suze: You know that you only do that which makes you feel powerful.


Suze: I never want you to be somebody who has the fear of missing out. Who is saying to themselves, listen, I've got to get into the stock market. Or you have a financial advisor saying to you, you've got to get in. This is the time to buy, and yet in your gut


Suze: you're afraid.


Suze: I can never ever say it enough. Fear is the main internal obstacle to wealth. It will cause you to buy at the wrong time, sell at the wrong time, and in the end


Suze: the loss will be yours and nobody else's. Because when you lose money doesn't really affect financially speaking, your financial advisor, doesn't affect the mutual funds or the ETFs, or the stocks you bought, really.


Suze: The bottom line is it affects you.


Suze: Which is why I've been telling you,


Suze: if you can't afford to lose money or if this is money that you need within 3-5 years or whatever it may be. This is not money that belongs in the stock market.


Suze: I do think that we are currently in for rough times in the market. I do think the trend of the stock market is absolutely down.


Suze: But you most likely will see a short-term rally probably even next week or so. That if you need to come out of the stock market because you need this money in a relatively short period of time, like a year or so then that is when you might want to sell.


Suze: And this isn't something that I'm just saying right now. I've been saying this for quite a while.


Suze: And I think it's possible that maybe in April of next year, we’ll be in a place that hopefully it will be a time again where it will be on more solid footing, and maybe we can see a turnaround where this market may start to go back up again little by little.


Suze: But this is not a situation like we had with a pandemic, where it went straight down, and it went straight back up. That's called a V-shaped recovery. Because it looks like a V, straight down, straight up like a V. This is going to be a long hard-fought fight financially speaking.


Suze: I tell you all this again,


Suze: because I just want you to be prepared that that's what I think is happening.


Suze: I've also said to you, if you have time on your side,


Suze: you have 10 years, 20 or 30 years until you need this money, with right diversification,


Suze: and dollar cost averaging, you should be more than okay.


Suze: I've also said that for those of you that are dollar cost averaging within your retirement accounts,


Suze: so you're putting money every single month in your 401k or 403B, or TSP, or whatever it may be from your check that you get either bi-weekly or monthly,


Suze: that you might want to now consider just diversifying that from straight stock market to maybe a small percentage or whatever percentage you may want depending on your circumstances. Maybe into bonds or bond ETFs, but I do think diversification is needed here.


Suze: And I did suggest for those of you who aren't automatically getting money taken out of your paycheck at work, and you're putting money into let's say a Roth IRA,


Suze: that may be what you would do is dollar cost average every two months or three months, rather than every month.


Suze: And that confused a lot of you, because why wouldn't you just do it every month?


Suze: Because I think we need to see what's really happening when we invest at this point in time.


Suze: Now all of you know,


Suze: that I love the stock Devon,


Suze: Pioneer, Diamondback, all energy stocks. I love them. And I've been telling all of you for a long time now to buy them.


Suze: Now remember the date is October 8, 2022.


Suze: So you have to listen carefully and differently now than those of you who have been following me for the past year or so and you got in when many of the energy stocks, especially the energy ETF symbol XLE, whose price was $35 a share at the time, and now as I speak it's about 82.


Suze: And XLE is currently paying in dividends about 3.48%.


Suze: So I've been telling you about this ETF, I've been telling you about energy stocks, and I have to tell you I'm really proud about that, because even as you look at this last week's performance, the only stocks that were up, and they were up considerably, considerably.


Suze: Were the energy stocks. In particular, Devon, XLE, Diamondback and Pioneer.


Suze: Now I don't have any way to tell you for sure if oil is going to continue up, is it going to go back down, because just remember a little bit ago,


Suze: really, a few weeks ago, Devon was at $55 a share.


Suze: Today, Devon is about $72 a share.


Suze: So things can be very volatile even within the energy sector.


Suze: that is why I said to many of you,


Suze: if you're going to be buying these stocks, I want you to be buying them for the dividend that they pay you, so that you are making money while you have volatility,


Suze: and don't just buy them because you think they are going to go up. Because again, they went from 69, 70 like a month ago, all the way down to 55, and then all the way back up again. I do believe that they are still good companies to purchase,


Suze: you might just want to watch for a moment where they do go down, because I have no doubt there will be some volatility there as well,


Suze: and that therefore you might want to have some exposure to them. Just watch them.


Suze: But here's what I wanted to talk to you about. What did you do when Devon went from $70 a share down to 55? What did you do when that happened?


Suze: Did you in fact sell? Did you get afraid?


Suze: Did you think, oh my God, I want to get out? Or did you buy more? Or did you do nothing?


Suze: What did you do?


Suze: Because if you are exhibiting behavior of you buy something at 72, you're buying it for the dividend,


Suze: and it goes down to 55, and now you sell,


Suze: you didn't buy it for the dividend. You therefore bought it because you wanted it to go up. Because the dividend even at 72 or right around wherever you may have bought, was still 8,9, 10%.


Suze: So you have to look at your own behavior here. And how do you help yourself financially, and how do you hurt yourself financially? Because the tendency is always when something goes down, you sell it.


Suze: If it is paying you a good dividend, which all these energy stocks are,


Suze: the volatility, just stop watching it. Stop.


Suze: Because again these companies have what is called a lot of free cash flow. They have the ability to pay you the dividends that they're paying you.


Suze: And until that changes,


Suze: it's just something that don't let the price fluctuation worry you.


Suze: Now the reason that I wanted you to have exposure, not only to energy,


Suze: but also like staples the ETF  XLP,


Suze: maybe some health ETFs. But I wanted you to have different exposure


Suze: because as you also know


Suze: many of you are dollar cost averaging into the Vanguard Total Stock Market index ETF, or the Standard and Poor's 500 index ETF, the SPYs,


Suze: and you are seeing them go down.


Suze: And they're actually going down more


Suze: than other ETFs possibly are going down, and that is because the top holdings of all of those ETFs are mainly in stocks like Amazon, Apple, Microsoft, Facebook which is now Meta, and those stocks are being obliterated.


Suze: So you need diversification outside a VTI as well in times like this. There will come a time again


Suze: when Amazon, Apple, all of those stocks skyrocket and go back up. But it might not be for a long time.


Suze: So diversification now is needed beyond VTI. It's needed in things that are rooted in stability and safety, and areas of demand. Such as energy.


Suze: Next,


Suze: you also have the ability to keep new money absolutely safe and sound.


Suze: And beyond the Alliant Credit Union that's now paying 2%, and you know I love them tremendously,


Suze: I also am continuing really loving, for those of you who have safe money that you can lock up for at least a year or hopefully five years, I'm really loving Series I bonds still.


Suze: And I am encouraging all of you not to wait. If you are interested in a Series I bond,


Suze: you can't wait. Because starting November 1st, they are going to change the interest rates on Series I bonds for everybody who purchases a Series I bond November 1st, all the way through May 1st, they will be setting a new rate. Now I have a feeling that rate will probably be about 6%.


Suze: If you were to purchase your Series I bond right now,


Suze: you would be getting a 9.62% rate.


Suze: Now the rates, the interest rates on Series I bonds, you only get that interest rate for six months. So if you were to purchase it right now,


Suze: over the next six months you would get 4.81% interest. That's half of 9.62% on an annualized basis, if you purchased a Series I bond right now, do not wait.


Suze: And then on November 1st, let's just say they announced a six percent


Suze: new I bond rate, in six months from now in April, when your Series I bond resets,


Suze: for six months you'll be set for another annualized rate of 6%, which means for the next six months after these six months, you would get 3%.


Suze: So over the year, you would have averaged if you bought an I bond right now, and the new I bond rate come November 1st is 6%,


Suze: you will get 7.81% over an entire year. Where else are you going to get 7.81?


Suze: Now I have no idea that come May of next year what the I bond rate will be. Could be higher, could be lower.


Suze: But this is what I want you to do right now. So you would go to treasurydirect.gov. You could buy it for as little as $25, you can purchase an individual I bond for as much as $10,000. You still have the ability to gift I bonds, do all of that. If you don't know about I bonds,


Suze: search my past podcast for I bonds, Series I bonds, and there will be many cases of a master class that I think I gave on April 17th, and how you gift a bond and how much you can get in there, and ways to get $30,000 a person in there,


Suze: and on, and on. This is something that you really cannot miss. Because I doubt highly that we're going to ever see, or at least for a long time, an interest rate of 9.6 as we have right now.


Suze: Again, just briefly, the reason that I said, if you can lock your money up for one year because in a Series I bond, you cannot touch that money for one year no matter what. And years two through five, there will be a three month interest penalty.


Suze: But if you think about it, if interest rates continue down,


Suze: if they do because the inflation rate is going down,


Suze: then what happens? Hey, you come out two years from now, three years from now because you can get a better deal somewhere else, or now you want this money to go back in the stock market, a three month interest penalty on a small renewal interest rate that the I bonds may give you, isn't that big of a deal given the amount of return you are getting right now.


Suze: So again, you need to go to treasurydirect.gov, and do it, do it, do it. Do not wait. If you're waiting until let's say October 25 or so, it may be too late because of how long it takes to settle your purchase.


Suze: So just remember I said that. Next, I just have to also say this, I'm getting a lot of emails from women


Suze: who are now widows and their spouse, their husband died,


Suze: and they are absolutely being taken advantage of by Financial Advisors or so called financial advisors. And they're getting all of this insurance money. They're getting all of this money that was left to them from retirement accounts. And many of the women writing me are putting all of this money in annuities,


Suze: now annuities that may pay them in income or annuities that may just give them an interest rate. But no diversification, no growth, nothing that makes sense overall.


Suze: I just want all of you out there to understand that as interest rates are going up, is it possible that you may just be better off in a Treasury bill, bond or note paying you 4%, possibly going to pay you even more than that, then locking your money up in an annuity for essentially the same interest rate?


Suze: The higher the interest rates go,


Suze: if you then eventually want to go into an annuity that pays you a monthly income, I don't have a problem with that.


Suze: But I would not be putting 100% of everything that I just received into an annuity. It's very important that when you go to see a financial advisor,


Suze: that that financial advisor exhibits enough emotion to understand that if you recently just lost your spouse, you are not in your body, and there is no way that you have the ability to comprehend what that financial advisor is telling you to do.


Suze: So I would like you simply to take my advice, and it's been a law of money in mind for a long time. You are to do nothing other than keep your money safe and sound for at least six months, preferably one year after you have suffered the loss of a loved one. And that includes divorce because sometimes divorce can be more emotionally damaging than a death, believe it or not.


Suze: Because with the death you're mourning you're in sorrow. But you have love.


Suze: In a divorce... sometimes you come from a state of hate.


Suze: A state of anger. And again anger is one of the main internal obstacles to wealth. So that is not the time for you to make decisions with your money.


Suze: Obviously if you have debt, if you have a mortgage on your home, if things like that are out there, alright. Take money and make yourself safe and sound. I don't have a problem with that. But to take an entire inheritance, and put it all in an annuity and lock it up, is not something I want you to do. And it seems like it's very prevalent now.


Suze: So if you're listening to me, and you have a parent who has just died, or your spouse has just died, regardless of age, please be careful. You need a financial advisor that asks a million different questions, they ask you, are you in debt? Do you owe money on a car? Do you have a mortgage payment that you would like to pay off?


Suze: Do you have a trust? Are you yourself sick? Are you going to inherit any more money from possibly your parents?


Suze: How do you feel about the stocks that you own? Do they make you nervous? Do they not?


Suze: They really need to go into great depth about who you are and how you feel before any moves are made. But given that we don't know that that's where they're going to come from,


Suze: please listen to what I just told you. Also briefly I want to say as expected, many lawsuits are popping up around the student loan forgiveness program. So we will see what happens. Do not count on that is going to happen.


Suze: I have learned a long time ago, I do not count my money until the check has been cashed. I do not care about deals that come in and how much money I'm supposedly going to make until I have made that money, and it is in the account.


Suze: So please don't plan your life that absolutely you're gonna have $10,000 forgiven, or $20,000 depending on your circumstance.


Suze: Continue to live your life that that's not going to happen until it happens, because too many people are essentially thinking, I don't want this to happen, or too many legislators are trying to stop it, just so you know. Also good news is just going back to series I bonds for a second,


Suze: they're also debating and possibly going to raise the individual limit on Series I bonds from $10,000 a person to $30,000. So wouldn't that be something if they did that? That would be incredible if interest rates continue up.


Suze: So there's really not a lot more or new that I can report to all of you in terms of what's happening in the economy.


Suze: All I know is this.


Suze: They need to see, and they means the Feds, need to see inflation come down.


Suze: The only way inflation will come down


Suze: is when all of you stop buying everything.


Suze: And that has not happened yet. And as long as you continue to buy and buy and buy,


Suze: then inflation stays up. There's no reason for it to come down. That will cause the Feds to create a situation where corporations will start to lay off people,


Suze: because once people no longer have a paycheck, they can't go out and buy. And if they can't go out and buy, then inflation starts to come down. So the Feds need to see unemployment start to go up and up.


Suze: They need to see you stop spending money.


Suze: And then they need to see inflation come down for them stopping to raise the fed funds rate until they see that 00:30:17

Suze: they're not going to stop. 00:30:20

Suze: And if they don't stop, you're going to continue to see these stock markets go down.


Suze: So I ask you all to be careful. I ask you all if what I think comes to pass, then where I really want you to concentrate on is look into Series I bonds, continue with the Ultimate Opportunity Savings Account for liquid money,


Suze: really think about Treasury bill, notes and bonds as a great place to get a good interest rate and keep money safe.


Suze: I just want that to be how you are looking at everything. And of course diversification. So that is the Suze School for today.


Suze: As you know, there's really only one thing that matters when it comes to your money, and it is this. We want you all to be safe, strong, smart and secure. Alright everybody, see you on Thursday. Bye bye.

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