Podcast Episode - Suze School: Don't Be In A Rush To Have Regrets

For this Suze School, we get a lesson on why you shouldn’t have all your money invested in one single asset category - especially real estate.  Remember to think things through and don’t rush into investing.

Listen to Podcast Episode:

Podcast Transcript:

January 19, 2025. Welcome everybody to the Women and Money podcast as well as everybody smart enough to listen. Suze O here.

And today is Suze's school, so get out your little notebooks. First, thank you, thank you, thank you for all the tremendous amount of emails that I got, thanking me for last Sunday's podcast and the Sunday before that's podcast, and how much it helped you.

You listened to those podcasts, but did you do what I asked you to do in those podcasts, especially the 12 weeks ago? Did you go around to your home and photograph everything? Did you get a box? Did you put everything in it, blah blah blah blah blah. Did you? Many of you wrote me and said you did.

However, if you didn't, my question to you is, why not? oh, oh, I know. I'm sure life's excuses got in your way. You had time, of course, to look at your favorite Netflix show that just came out or to go to movies or go out to eat or play with it, whatever it may be. Life's excuses got in the way.

But your entire life is lived in that home. And so there should be no excuse big enough to keep you from doing everything I asked you to do two weeks ago. I'm sure if we could turn back the hands of time, that many of the people who lost their homes and everything in it could have listened to that podcast a long time ago, could have done everything I asked them to do, and they'd be in a whole lot better situation right now.

Now, when it comes to real estate, which is what I want this podcast to be about, many of you believe that real estate is the absolute best investment out there. And when I ask you, for those of you who tell me that and I get to talk to you personally, well, what other investments do you have? I go, do you at least have a Roth IRA or an IRA or something like that? They go, Oh yeah, we have an IRA, but we have a real estate IRA where we bought a home within our IRA. So I said, wait, wait, wait, wait, are you telling me that every penny of your investable assets are in real estate? Yes, isn't that great? Do you have any idea, Suze, how much money we're up? It has been the best investment out there, bar none.

And I go, so you own no stocks or bonds or anything like that? Not even gold or even a little Bitcoin. No, we only own real estate.

Right, I want you all to listen to me right now. It is really important that not all of your money is invested in one asset category.

It is not OK to have 100% of your money invested in just real estate. It is not OK to have 100% of your money invested in the stock market. It is not OK to have 100% of your money, believe it or not, invested in bonds. It is not OK to have 100% of your money invested in gold, Bitcoin, and so on. Do you hear me?

You need to make sure that you have put your little investment hose in almost every single one of those categories that make sense to you and your situation, but not all your money in one.

I've told you this story before, but I'm going to tell it to you again. When I was actually seeing clients from the Suze Orman Financial Group, this woman came in. She had 3 homes in the San Francisco hills. That is all she had. She owned them outright.

I talked to her about diversifying. These were multi-million dollar homes. She said, no, no, the rent, everything on them, it's absolutely great. No problem, Suze. I'm doing fine.

And I said, OK. And of course there was torrential rains that came to the hills. All three of her homes actually slid down the hill, and they were destroyed. Now whether she got I don't know her insurance money for them or not, but she did lose during that time the rental income. She then didn't have access to any of those homes. Her whole security blanket totally came uncovered and exposed her to not having at that moment in time any net worth at all.

So I don't want that to happen to all of you.

But even more so than back then when that happened to her, real estate is a changing everybody, and I think it's changing in a way that I never expected it to change, and how is that?

So let's put a pin in that for a second and let's just go back to these fires in LA. Now these wildfires in LA have not been the only serious devastation that has happened within the United States. There have been many wildfires. There have been many tornadoes. There have been many hurricanes, and all of these things, the floods, everything have really put insurance companies under pressure and a lot of you tend to think well didn't happen to me. I'm fine. My house is fine, doesn't matter.

The cost of these losses from insurance companies you in my opinion, are going to feel them no matter what, whether you were close to those fires, not close to those fires, we're all going to feel it. So let me just give you an example of what's happening in LA.

As you know, over the past years there, because of many of the wildfires and the devastations that they've had many, many insurance companies have absolutely pulled out of insuring people in the Pacific Palisades in many areas in Los Angeles and really throughout California.

The hurricanes in Florida have done the same to insuring people in Florida here, so they have either done two things. They have totally pulled out, and they no longer will insure here. Or if they do insure here, premiums have gone up anywhere from 35% to 50%, so high that many people who own their homes outright can't afford to live in their homes anymore because of the increase in insurance.

It is true that when insurance companies refuse to insure you, you can't get insurance anywhere.

I told you about the fair access to insurance requirements, which happens to be the fair FAIR insurance for those of you who cannot get insurance anywhere.

Now this phenomenon that's happening and happened in LA, Florida, all kinds of places is something that really affects us all when it comes to purchasing or owning real estate.

So for those of you now, and let's just go straight to real estate, let's get off insurance for a second here. For those of you who want to buy a home, you want to get into the real estate market, whatever it may be, you have two things right now in my opinion that are really working against you.

Number 1, mortgage rates are back above 7%. I really, really believed that I was going to be able to tell you sometime this year, guess what, you could get a 30 year mortgage for 5.5%. We're above 7% again. That's number one.

Number 2, when insurance companies have losses like we see with reinsurance and everything that has gone on with the change and how insurance can bill their customers now for their losses, believe it or not, your insurance premiums are not only going to be high, they're going to be seriously higher as time goes on, in my opinion.

So in order to own a home where you can't afford to pay for it outright, which is like 99.5% of everybody, in order to get a mortgage you're only gonna be able to get a mortgage if in fact you can get insurance so in figuring out what it's gonna cost you to own a home, you now can't look at what the insurance is currently costing maybe the people who own that home you need to look at what it's going to cost you if you bought it today.

In your situation, and I would only buy a home if I knew I could afford at least a 30 to 50% increase in my insurance premiums over time. That is number one.

Number 2, remember when you buy a home, property taxes can go up any time, and if the state happens to start being responsible for paying some of the losses and coming up with money when there is insurance shortfalls to be able to repair a community.

Don't be surprised if you don't see your property taxes increased tremendously as well.

And number 3. Your mortgage interest rate has to be figured into it now when all of these things are put together.

It may mean for many people that renting is going to be more affordable and a better choice, believe it or not, than owning a home because people can't afford to own a home.

I just want you to know that these are things that you need to take in consideration before you're just somebody who goes, I need to buy a home. I have to buy a home. Oh my God, I can't rent. If I'm renting, I'm gonna be a renter for my entire life and I'm just gonna throw all that money away and stop, just stop.

Depending on what happens with natural disasters, the insurance companies, and interest rates, if you need to rent, then rent.

Owning a home is not the key to absolutely being financially secure.

Now I get that many of you think it's the key. In fact, not so long ago I was interviewed on a podcast that most likely will never air because I kind of disagreed with the interviewer on almost everything. But she was asking me about younger people today and how they'll never be able to afford to buy a home, and I said, yeah.

And she said, well, what can they do? And then I gave her my typical example that you've heard me say a million times, where they could open up a Roth IRA when they're in their 20s, put $100 a month away every single month from like 25 to 65 and with 12% annual average rate of return in the stock market which is absolutely possible over all that period of time remember an annual average rate of return everybody is not interest rate, not like you lock in 12%. Markets go up 30% 1 year, down 40%, whatever it is, but over a long period of time it can average, let's say 12% annually when you average it over 40 years. I said they'd have a million dollars. And in a Roth IRA that's tax free. If they put in more than that, I think if they were able to put in $300 a month or $500 a month or whatever it may be, and she says to me, but Suze, what good's that gonna do them if they don't have a home?

And that's where our disagreement started, which was, are you telling me you rather have them own a home than have a million dollars or $5 million in a retirement account? And she essentially was like, yeah, without owning a home, what good is that money going to do them? She actually said that to me, OK, she actually said that to me.

Well, the interview was totally downhill from that point on. The point of why I'm telling you this is I don't want your dream to be you have to be a homeowner in order to be financially independent. You do not. You simply have to live a life where you have an emergency account. You have a big retirement account, you have things you're totally out of debt. You're living below your means but within your needs, and you may be a renter.

Now when you're a renter, there's really nothing wrong with that, and that may become the wave of the future. I don't know if it will or it won't. But the truth of the matter is before you buy a piece of real estate today, you seriously need to think twice about it if you can afford it. I went back and I just thought it would be interesting to see.

If people are happy that they bought a house a year or two ago and there is a house power report which is a survey of US homeowners that has a very revealing insight to the challenges of home ownerships as well as their priorities in the years to come. I just want to read you this because it's important that you understand.

You can always do something, but once you've done it, all right, are you gonna be happy you did it or not?

So 83% of the homeowners had to deal with unexpected repairs last year. And that is up from 46% in the year 2023.

What were those unexpected repairs, water damage, roof damage, window or door issues were the most common everybody of all the problems. Now about half of that 83% of homeowners spent $5000 out of pocket on unexpected home repairs in 2024.

And obviously I want you to pay attention to that because the other thing is if something happens you have water damage you have roof damage and you make a claim to your insurance company if you make a claim, chances are your insurance company is going to drop you.

I was told because we had water damage in our condo from a leak in a pipe that if I made a claim they would cover the claim but they would absolutely drop me and if they drop you good luck getting insurance anywhere. I just want you to think about that.

So why am I telling you? Because you have to have now, when you buy a home, given what's happened with insurance that you have to have a maintenance fund for your home besides an emergency account for yourself, you need one for your home for unexpected damages, so you better at least when you buy a home, be able to put $300 to $400 a month in a maintenance fund for repairs when something goes wrong with that home so you don't have to make a claim on your insurance just saying everybody, then it's always interesting to me when somebody buys a home, do they have regrets?

The study found out that 73% of homeowners expressed regret about their home purchase in 2024.

Did you hear what I just said, and what was their number one regret? Unexpected maintenance issues. All right. Think about that. What's interesting is that 59% of those homeowners who expressed regrets are saying they plan to move in 2025 and just get out of it. There's a saying of learn from other people's mistakes rather than you experience it on your own.

Obviously I'm still an advocate of home ownership. But only, only if you can afford it, just that simple, everybody.

Let's talk a little bit about the stock market and really what I hoped you learned the past week or two.

It is very, very important that when you are investing in the stock market that you absolutely are doing it with dollar cost averaging doing little by little over time and taking advantage of when a stock that's a great stock happens to tank. Now one of my favorite stocks out there is IONQ, which is a quantum computing company. And I gave you that stock a week or so ago for a long term hold, and I said to everybody when I gave you a list of the stocks that when they go down you need to buy more.

So news came out by the CEO of NVIDIA where he said people have quantum computing wrong and it's gonna be 30 years before you can see profits with quantum computing and when he said that IONQ immediately went down almost 50%. It tanked on January 6th it was at about $51 a share.

And then before you knew it on January 8th, it was at like $30 a share. It went down bam.

Just on that news, I, on the other hand, as soon as it went down, what did I do? I went in and I bought more. Since that time, it has come back to about $40 a share, but for many of you you wrote me and you said, Suze, this stock is down almost 50%. Now what do I do? You are not to be paralyzed like that, people, if you do own a stock that's a good quality stock and it happens to go down on the news of others.

Guess what? Just buy more. So I felt like I was given a gift by being able to get into that stock again when it was down so much. So even the indexes, everybody at one point last week or whenever it was now went down significantly hundreds and hundreds of points. Then the next day, the day after, it went back up again.

So what did I tell all of you? I told you that this year is going to be a year of extremes up and extremes down, and your job is to take advantage of the extreme downs, not to sell. But to take advantage of the extreme downs by having enough cash on hand so you don't put all your money to work at once that you have to invest in the market, including your retirement accounts you have enough on the sidelines so when you have these extreme downs you're able to go in and pick up a little more. Not a whole lot more, but a little more because you never know it could continue to go down up down up down.

So this is the year that you are to buckle in and expect extreme ups and extreme downs, and that's even true with Bitcoin. Now, as I told you, I thought it was very possible that Bitcoin could go back down support level of 87, so it went down to about 90,000. All right, you could have picked up a little bit there. It's back up like at 104,000, but even Bitcoin and everything is going to be going up and down, just so you know.

Now gold. Gold looks like it is all staged and ready to possibly break out to go up to about 3000 and beyond, so we'll have to see what that happens. But the point of me telling you all this is that everything has a cycle where it goes up, down, up, down, up, down.

Your job when it comes to investing and things you need to do is to know what you want to own. Know why you want to own it. And then stick with it, just stick with it. Don't get afraid just stick with it, but take advantage of it when it goes down by $1 cost averaging.

OK, so this podcast today is really about just take your time right now.

Before you buy anything from real estate to stocks to exchange traded funds, understand how these markets are working now understand how real estate and the cost of owning real estate is seriously changing, seriously changing everybody. And understanding why you wanna do what you wanna do, please do not let emotions rule what you do.

Got that everybody just think about that. All right, so until Thursday when Ms. Travis joins us again on another Ask KT and Suze anything. There's just a few things that I want you to remember. The overall theme of this podcast this year is to make your money, make more money.

As well as never forget that if we work together we will rise bye bye now.